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The City of San Diego will increase its minimum wage to $17.75 per hour on Jan. 1, 2026, city officials announced. The raise applies to all employees who work at least two hours in one or more calendar weeks within the city limits, regardless of industry. Tips and gratuities cannot be counted toward meeting the minimum wage requirement.
The increase is part of the city’s Earned Sick Leave and Minimum Wage Ordinance, approved by voters in 2016. The law requires annual adjustments based on the Consumer Price Index for All Urban Consumers (CPI-U), which tracks the cost of living in urban areas across the country. San Diego’s minimum wage has risen every year since 2019, ensuring that local wages keep pace with inflation. California’s statewide minimum wage will rise to $16.90 per hour on the same date, leaving San Diego’s rate higher than the state baseline.
The ordinance also guarantees paid sick leave. Employees may accrue leave or receive it upfront (“front load”), and it can be used for personal or family medical needs. Employers may limit usage to 40 hours per benefit year. Updated workplace notices are available on the city’s Minimum Wage Program website and must be posted in a conspicuous location at all job sites.
Economic indicators show why the increase is necessary. According to the U.S. Bureau of Labor Statistics, the CPI-U rose 0.4% in August 2025, following a 0.2% increase in July. Over the past 12 months, the all-items index increased 2.9%, driven largely by rising shelter, food, and energy costs. Housing costs increased 0.4% in August, while the food index rose 0.5%, with grocery prices climbing 0.6% and restaurant meals up 0.3%. Energy costs increased 0.7%, including a 1.9% rise in gasoline prices. Excluding food and energy, prices increased 3.1% over the past year, reflecting inflation in housing, medical care, used cars, and household goods.
San Diego’s minimum wage has historically outpaced California’s baseline, in part due to the city’s higher cost of living. Analysts say the increase aims to help low-wage workers manage rising expenses, particularly in housing and food. A full-time worker earning $17.75 per hour would make roughly $36,920 annually before taxes, compared with $35,152 at the new statewide minimum.
The Earned Sick Leave and Minimum Wage Ordinance, codified in San Diego Municipal Code Chapter 3, Article 9, Division 1, is designed to protect workers’ wages while ensuring access to paid sick leave. City officials say the law promotes economic fairness while supporting local businesses in a competitive labor market.
