Californians will be able to vote on a new measure in 2024 that would raise the state’s minimum wage to $18, as inflation and cost of living increases have exacerbated the effects of income inequality in the state.
An initiative, called the Living Wage Act of 2022, has been qualified by the secretary of state for next year’s ballot.
Should it pass, the measure would extend the phased increases implemented in 2017, bringing the second highest-in-the-nation statewide minimum wage up to $18 over the next few years.
The last bump under the phased increases to minimum wage was in 2022, with inflation becoming the driver of baseline raises this year. As of Jan. 1, 2023, minimum wage became $15.50 per hour for all employers.
Proponents began collecting signatures for the measure in February of 2022, in an attempt to secure its place on the California ballot during last year’s midterms.
However, it ultimately failed to get through the lengthy signature verification process by the June 31 deadline. The measure was deemed eligible for the 2024 ballot just days later, according to records from the California Secretary of State.
Under the Living Wage Act’s initial timeline for increases, the minimum wage would have increased to $16 earlier this year and $17 next January for businesses that employ more than 25 employees. For businesses with less than 25 workers, the raise to $16 baseline would have gone into effect in January 2024.
If the measure passes in next year’s election, the $17 minimum wage would take effect immediately, before raising to $18 in 2025 the following January.
About 37 municipalities – including San Diego, San Francisco and Los Angeles – already have minimum wages that exceed the state’s in varying amounts. That is estimated to account for about a third of the state’s private sector jobs, according to the U.S. Census Bureau.
Changing the mechanism for minimum wage increases, advocates say, would be a critical measure to help other counties and the state catch up to the rising cost of living, as inflation drives prices higher, crippling the financial resources of low-income households.
“The reality is that there’s hundreds of thousands of people in California for whom an extra $20 a week is going to mean days where their kids are eating three meals instead of two meals a day,” Joe Sandberg, the main proponent behind the measure, said to KSWB. “We can’t settle for anything less than a wage that helps people afford life’s basic needs.”
A bump in minimum wage to $18 could restore the purchasing power of that income that is lost by inflation, according to a 2022 policy brief by Michael Reich, chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment.
However, minimum wage increases are a point of contention for economists, with some research suggesting that higher pay baselines could contribute to job losses, as higher costs for employers hold back growth – an impact that could be acutely felt by small businesses.
“The pressures of wages will affect employers’ ability to maintain their staffs at current levels,” Rebeckah Paxton, director of research and state coalitions for the Employment Policies Institute, said to KSWB.
“As minimum wage hikes may cause some to lose their jobs while others receive wage boosts, the job losses may put some workers and families into poverty while others may be lifted out,” she continued.
Compared to other policies like the Earned Income Tax Credit, some economists, like UC Irvine professor David Neumark, argue that increases to minimum wage are less effective at combating poverty as they are less targeted to the broader group of low-income households.
Estimates from the California’s non-partisan Legislative Analyst’s Office prior to the state’s last major action on minimum wage indicate that nearly 30% of its workers, which is roughly five million people, are considered “low-wage workers.”
The majority of these workers in the state, according to the report, are over the age of 20 and about 32% are the only workers in their family.
Based on the LAO’s data, women and Latinos also make up a large portion of low-wage workers, both accounting for more than 50% of the state’s minimum wage workforce.
Under current law, statewide minimum wage could see an increase to about $16 next year based on inflation, according to Reich’s brief.
Voters will be able to decide whether to implement the Living Wage Act’s set increases to the minimum wage at the ballot box on Nov. 4, 2024.