California Governor Jerry Brown will sign the state’s $15 minimum wage plan into law Monday, making the progressive state the first to impose such a wage hike.
Under the new plan, the state’s $10 minimum wage will rise 50 cents next year and then to $11 in 2018. After that, the wage mandate will rise $1 each January until 2022, unless the governor delays raising the minimum wage because of an economic recession.
Once the minimum wage reaches $15, it will rise with inflation. Businesses with 25 or fewer employees will be given an extra year to comply with the law.
Most Republicans and moderate Democrats opposed the wage hike, arguing that it was rushed through the legislature and that it would damage the economies in poorer parts of the state where a $15 minimum wage is out of step with the cost of living.
The bill, passed by the state’s legislature Thursday, came as a compromise between Brown and the labor unions after the groups threatened to launch a competing ballot initiative with a shorter deadline for implementing the $15 mandate and fewer government safeguards.
In California, around 2.2 million people make the minimum wage, according to University of California Irvine economics professor David Neumark. Between 110,000 and 220,000 of those people are expected to lose their jobs because of the new mandates.
Cost to taxpayers
According to a legislative analysis, the measure will cost California taxpayers $3.6 billion per year in higher salaries for government workers.
Despite the warnings from Republicans and business groups, Brown is moving ahead with the plan, though he did include a few options in case the state’s economic outlook changes in the future.
"California is proving once again that it can get things done and help people get ahead," Brown said earlier this week while introducing the deal. "This plan raises the minimum wage in a careful and responsible way and provides some flexibility if economic and budgetary conditions change."
The plan will allow the governor to pause wage hikes if future economic or budgetary shortfalls emerge. Each year, by September 1, the governor can delay the next year’s scheduled wage increase if there is expected to be a budget deficit or negative job growth and retail sales.
California already has the country’s highest statewide minimum wage, tied with Massachusetts at $10. Washington, D.C., has a minimum wage of $10.50. Several other cities, including Los Angeles and Seattle recently approved $15 minimum wages.