What does the new California minimum wage agreement mean for workers?
Income inequality is the defining issue of our time. While the economic recovery continues, all gains are concentrated at the top. Most California workers – those in the lower and middle income levels – are not reaping our share of the growth. We are more productive, better trained, and better skilled than we have ever been. Yet, our wages have been stagnant for over a decade. Inflation, health care and housing costs, food and gas have all eaten away at whatever raises we have earned.
There is a fundamental problem with people working 40 hours a week and still living in poverty. Many of these workers make so little they are forced to depend on Medi-Cal, food stamps, food banks, and other taxpayer-funded safety net programs just to meet basic necessities. This destructive cycle requires taxpayers to subsidize profitable corporations paying low wages.
There is little that we can do at the state level to directly address this inequality. One powerful tool is to increase the minimum wage.
A reasonable and responsible proposal
This proposal is phased in over a long period of time. Small businesses are given an additional year to catch up. Indexing only applies after initial wage increases are implemented. The Governor will be able to temporarily pause the increase if we are in a recession or the budget is in significant deficit.
Shared economic prosperity
This proposal guarantees that, while our economy is growing, workers are sharing in the economic gains. Both the wage increases and the indexing guarantee that workers will not have inflation swallowing their raises. No one who works full-time should live in poverty. This proposal takes a responsible approaching to lifting millions of working Californians out of poverty.
Levels the playing field
Thanks to worker organizing, we have higher minimum wages in some cities and counties of California. This patchwork creates situations where a worker on one side of the street makes less than a worker doing the same job on the other side of the street. Workers also live in different cities from where they work. This agreement raises the floor for all workers and addresses growing inequities between local minimum wages.
Predictability and stability for employers and workers
No longer will our state’s minimum wage be subject to politics. Indexing allows for businesses to plan for incremental increases and workers to plan for family budgets. Rather than large legislative jumps going forward, incremental increases can be planned for.
Fight for $15 Minimum Wage
The Administration has agreed to a legislative minimum wage increase:
- January 1, 2017 $10.50/hour
- January 1, 2018 $11/hour
- January 1, 2019 $12/hour
- January 1, 2020 $13/hour
- January 1, 2021 $14/hour
- January 1, 2022 $15/hour
Timeline for small businesses
Small businesses (25 or less employees) lag 1 year behind.
They will be at $15 on January 1, 2023.
Cost of living increase
Beginning January 1, 2024, the minimum wage will be indexed for inflation, based on the national Consumer Price Index, with a floor of zero (no decreases) and a ceiling of 3.5%.
Paid sick days for IHSS homecare workers
Implementation of one paid sick day in July 2018. Second day added in the first July following $13/hour implementation for larger businesses, and third day added following $15/hour implementation.
Pause in case of economic or budget crises
- Governor has ability to pause the following year’s raise.
- Governor announces August 1 if conditions are met and he thinks a pause is needed.
- Legislature has 30 days to hold hearings and propose alternatives to a pause.
- Authority to pause yearly increases only lasts until wage rate reaches $15 and only exists if triggered by economic or budget conditions:
- Economy – if job growth is negative for the prior 3 or 6 months AND sales tax receipts are in decline. The economy pause can be activated any year up to $15.
- Budget – if the budget is forecast to be over 1% in deficit over the next two years. The budget pause can only be activated twice.
- Nearly 6 million California workers will receive a raise, over 1/3rd of our total workforce.
- Already, more than 750,000 workers will reach $15 under local minimum wage laws. Taken together, 6.5 million Californians will get a raise.
- Workers will, on average, get a $3,700 annual raise.
- 96% of those workers would be over 20 years old and 36% have children.
- 74% of those workers are workers of color; 55% Latino, 44% immigrant.
- More than two-thirds (67%) work full-time.
- Child care workers and others paid as contractors rather than hourly workers won’t see the immediate impact of this policy.