California minimum wage will rise to $15.50 in 2023

California’s minimum wage will rise to $ 15.50 an hour next year, an increase caused by rising inflation which will benefit about 3 million workers in the state.

The increase is required by a state law passed in 2016. But it comes at a good time for Democrats in the country’s most populous state, as they rush to find ways to increase taxpayers’ bank accounts in a year. marked by rising prices that have been diluted. the purchasing power of consumers.

In a preview of his next budget proposal, Gov. Gavin Newsom doubled his plan to send checks of up to $ 800 to car owners to offset this year’s record gasoline prices despite the opposition of Democrats to the Legislature. And it unveiled a new proposal to send checks from at least 1,000 to 600,000 hospital and nursing home workers in recognition of their dangerous work during the pandemic.

It is part of a new spending proposal to put $ 18.1 billion in taxpayers’ pockets through a combination of discounts and assistance with rent, health insurance premiums and utility bills.

“Overall we are having a very strong economic recovery in the state after the COVID-19 recession,” said HD Palmer, a spokesman for the California Department of Finance. “But it is clear that we are facing a lot of headwinds: gas prices are still high, food prices are high due to inflation.”

The California governor’s office released details of the proposed $ 18.1 billion inflation relief package on Thursday.

California lawmakers voted to raise the minimum wage to $ 15 an hour in 2016, but the increase was gradually implemented over several years. Today, the minimum wage is $ 15 per hour for companies with 25 or more employees and $ 14 per hour for companies with 25 or fewer employees.

The law says the minimum wage should be raised to $ 15.50 an hour for everyone if inflation rose more than 7% between fiscal years 2021 and 2022. On Thursday, the California Department of Finance went say they anticipate that inflation for fiscal year 2022, which ends June 30, will be 7.6% higher than the previous year, causing the increase.

Official inflation figures will not be final until this summer. But the Newsom administration believes growth will be more than enough to trigger auto-growth.

California has about 3 million minimum wage workers, according to a conservative estimate from the state Department of Finance. The minimum wage increase will be about $ 3 billion, or less than 0.1% of the $ 3.3 trillion in personal income that Californians are expected to earn.

“Minimum impact on global inflation”

California Department of Finance Director Keely Martin Bosler said the increase could cause restaurant prices, which have low profit margins, to rise. But overall, he said raising the minimum wage “is expected to have a very minimal impact on general inflation in the state’s economy.”

The increase will further affect smaller businesses, which will see the minimum wage rise to $ 1.50 in January. Kerry Jackson, a member of the Conservative-oriented Center for California Reform at the Pacific Research Institute, said the increase could cause some employees of smaller companies to work fewer hours.

“It can be very painful for them,” he said.

Inflation has been a problem everywhere, like consumer prices rose 8.3% nationally last month from a year ago. The pace of inflation in the United States cooled in April, the first drop in eight consecutive months of ever-increasing price increases.

Labor shortages throughout the pandemic have led many companies to raise wages sometimes beyond the minimum wage just to attract and retain workers.

In California, average gas prices reached one maximum record in March $ 5.91 per gallon. Newsom lawmakers and Democrats have pledged to return taxpayers part of the state’s record budget surpluses. But so far, despite being from the same political party, they have not agreed on how to do it.

Gas rebate plan

Newsom’s plan would send checks of up to $ 800 to car owners, $ 400 per car for up to two cars per owner, plus $ 750 million more to give everyone free travel on public transportation for three months.

Democratic leaders in the Legislature have rejected this plan, instead of favoring one that would send $ 200 checks to low- to moderate-income taxpayers and their dependents.

“Senate Democrats don’t believe a car-related discount will do the job,” said Pro Tempore Senate President Toni Atkins. “This plan sets aside non-car owners, including low-income, elderly Californians, who are also affected by the current high costs of consumer goods and also deserve relief.”

Republicans favor the temporary suspension of the state gasoline tax, which at 51.1 cents per gallon is the second highest in the country. But Newsom and Democrat leaders have rejected the plan, arguing that it is better to send aid directly to taxpayers.

Controls to health workers

Newsom’s plan to send checks to health workers would apply to anyone working in a hospital or nursing home, including doctors, nurses, and other support staff. Workers would be guaranteed a $ 1,000 check. But if the companies agree to add another $ 500, the state will match them for a total of $ 2,000.

Dave Regan, president of SEIU-United Healthcare Workers West, said staffing problems at hospitals and nursing homes have only gotten worse as workers left the industry en masse during the pandemic “due to the increase health risks, emotional and mental stress and overwork. “

“These workers have been at the forefront during the COVID pandemic,” Bosler said. “They also have very critical retention and shortage issues and we hope that the extra payment will help solve these problems.”

Newsom also proposed a new $ 2.7 billion spending on Thursday to fully fund the state’s rental assistance program, adding an additional $ 1.2 billion to a fund that helps people pay their utility bills , $ 439 million to temporarily suspend the diesel tax and $ 157 million to exempt children. care expenses for low-income families.