Home / BUSINESS / California’s Minimum Wage Surge: A $16.00/Hour Game-Changer for Workers and Businesses

California’s Minimum Wage Surge: A $16.00/Hour Game-Changer for Workers and Businesses

-Editorial

California has increased its minimum wage in 2024. The decision, which comes after months of deliberation and input from various stakeholders, is expected to have far-reaching implications for both employees and businesses across the state. The minimum wage in California, effective January 1, 2024, is $16.00/hour for all employers.

Wages in more than 30 California counties are already higher and most of them will rise again in either January or July. Employers always must pay the local minimum wage in the employer’s place of business if it is higher than California’s minimum wage.

The state minimum wage has increased every year for employers of all sizes since 2017 following legislation signed into law by former Gov. Jerry Brown. That law capped the minimum wage at $15. Employers with 26 or more employees reached the cap in January 2022; employers with fewer than 26 employees reached the $15 cap this year.

However, a provision in the law allows wages of at least $15 to be raised annually up to 3.5% (rounded to the nearest 10 cents) for any increase in inflation of over 7% as measured by the National Consumer Price Index. This adjustment happened in 2023, increasing the minimum wage to $15.50, and is happening again now. All California employers of every size will begin paying a minimum wage of $16 beginning Jan. 1, 2024. 

In 2023, the minimum wage was $15.50 for all employees regardless of employer size. Fast-food employees will earn $20 per hour, beginning April 1, 2024. The legislation, AB 1228 by Assemblymember Chris R. Holden (D-Pasadena), authorizes the Fast-Food Council to set fast-food restaurant standards for minimum wage and develop proposals for other working conditions, including health and safety standards and training.

“California is home to more than 500,000 fast-food workers who – for decades – have been fighting for higher wages and better working conditions. Today, we take one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table,” Governor Newsom said. 

One of the protections of the minimum wage law is an annual review of the wage rate using the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W). The Department of Finance calculated that the U.S. CPI-W increased by 6.16 percent for the period from July 1, 2022, to June 30, 2023, compared to the prior 12-month period. The minimum wage increases each year by the lesser of 3.5 percent, and the rate of change in the averages of the two most recent U.S. CPI-W, unless those averages are negative. If the averages are negative, there is no change in the minimum wage for the following year. On July 31, 2023, Governor Newsom certified the minimum wage increase for all employers for 2024.

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