California Offers to Hike Minimum Wages to $18 From 2025

Progress is good, but we can always do better. California is exploring the option of increasing the state’s minimum wage to $18 per hour in the coming years. A Californian ballot, Proposition 32, is considering hiking the minimum wage to $17 per hour for the rest of 2024, along with a plan to bring it up further starting next year. 

The California minimum wage law increased the minimum wage in the state to $16 per hour on January 1, 2024, and Healthcare Facility employees saw the same minimum rates extend to them on October 16, 2024. If the minimum wage decision moves in favor of a hike, there is a plan in place for a gradual increment over the next two years. 

Workers are happy about the proposal but the decision is a lot harder on business owners. The minimum wage vote in California has been met with resistance from many who believe it would upset the balance of the economy and cause employers to cut down on the number of jobs they can offer, due to the higher expenses on wages.

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Voters to Decide Whether California’s Minimum Wage Moves up to $18

California’s minimum wage law is seeking change via Proposition 32. According to the proposal, employers with 26 or more employees will have to start paying $18 per hour in 2025. Employers with 25 employees or lower will be expected to pay workers $17 per hour. In 2026, the minimum wage for all employees will go up to $18 per hour.

If Californians do not approve the minimum wage hike to $18 per hour, the minimum wage for all employees will stand at $16.50 per hour in 2025. In 2026, this will be standardized at $17 per hour.

According to the Legislative Analyst’s Office, the inflation adjustments to the wages will be paused until 2027 to accommodate these changes, and in 2027, the appropriate adjustments will be considered once more. The state typically adjusts the minimum wage every year on the basis of the inflation numbers. If there is negative inflation then no adjustments are made and if inflation exceeds 3.5%, the adjustment is also set at 3.5%.

The minimum wage vote in California will make a big difference to how workers in the state earn in the next two years, which will have an immediate effect on their quality of life. If the minimum wages increase, workers will be able to gain higher purchasing power and access to more resources. Those who earn above the minimum could see their income move up to adjust for the change as well. 

The California Fast Food Wage Hike Sets the Precedent

Earlier, in April, California’s minimum wage law provided a hike for fast-food restaurant employees, increasing their wages to at least $20 per hour. Workers highly applauded this decision, but fast food chains complained that their business and the job market were going to be negatively affected by the changes. As a result of having to pay more, businesses expected that they would have to increase their prices for customers. With the higher prices, customers could be expected to spend less, hurting the business in the end. 

Despite these concerns, USA Today reported results from a study by the University of California Berkeley’s Institute for Research on Labor and Employment, which found that the California fast food wage hike did not lead to more job losses or price hikes overall. 

It is impossible that there was zero impact of the wage hike as some fast-food chains admitted to raising prices, but after an initial settlement period, it is likely that the businesses and their prices were able to find a stable middle ground. 

What Are Some of the Concerns Around the Decision to Increase Minimum Wage?

Even if California’s minimum wage is raised to $18 per hour for all employees, it is possible that businesses will be faced with higher expenses, and employment opportunities across industries will take a temporary hit. Business owners are already faced with concerns over lower profits due to inflation, so the increase in minimum wages at such a delicate time will push them closer to seeing uncomfortable numbers.

The hope remains that organizations will be able to make the necessary adjustments to their business over the course of the next two years to accommodate the change. Many Californian cities already have a higher minimum wage compared to the state regulations, but the California minimum wage law could standardize a higher limit for a wider number of citizens. 

The demand for higher wages is something that we have witnessed across the county, in multiple industries. The Boeing workers’ strike and demand for higher pay has resulted in a layoff notice while hotel workers in Boston are setting up their own picket lines. 

These workers might be engaged in union-led efforts for a better contract with their employer, however, their demands align with the kind of change the evolution of the California minimum wage law would guarantee for its residents.

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