May 16, 2022

Triggered by soaring inflation, California minimum wage to increase to $15.50 in 2023

SACRAMENTO — California’s minimum wage will bounce to $15.50 per hour subsequent yr, Gov. Gavin Newsom’s administration introduced Thursday, an increase triggered by soaring inflation that may profit about 3 million employees.

The increase is required by a state legislation handed in 2016. But it surely comes at time for Democrats in the nation’s most populous state as they rush to discover methods to enhance taxpayers’ financial institution accounts in an election yr marked by rising costs which have diluted the buying energy of customers.

Thursday, in a preview of his upcoming finances proposal, Newsom doubled down on his plan to ship up to $800 checks to automobile homeowners to offset this yr’s record-high gasoline costs regardless of opposition from Democrats in the Legislature. And he revealed a brand new proposal to ship at the very least $1,000 checks to 600,000 hospital and nursing dwelling employees in recognition of their harmful work all through the pandemic.

It is a part of a brand new spending proposal to put $18.1 billion into taxpayers’ pockets by a mix of rebates and help with hire, medical health insurance premiums and utility payments.

“We’re still overall having a very strong economic recovery in the state from the COVID-19 recession,” California Division of Finance spokesman H.D. Palmer stated. “But it’s clear that we face a lot of headwinds: gas prices remain high, food prices are high because of inflation.”

California lawmakers voted to increase the minimum wage to $15 per hour in 2016, however the increase was phased in over a number of years. Right this moment, the minimum wage is $15 per hour for corporations with 25 or extra employees and $14 per hour for corporations with 25 or fewer workers.

The legislation says the minimum wage should increase to $15.50 per hour for everybody if inflation elevated by greater than 7% between the 2021 and 2022 fiscal years. Thursday, the California Division of Finance stated they mission inflation for the 2022 fiscal yr – which ends June 30 – shall be 7.6% greater than the yr earlier than, triggering the increase.

Official inflation figures will not be remaining till this summer time. However the Newsom administration believes the expansion shall be greater than sufficient to set off the automated increase.

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California has about 3 million minimum wage employees, in accordance to a conservative estimate from the state Division of Finance. The increase in the minimum wage shall be about $3 billion, or lower than 0.1% of the $3.3 trillion in private revenue Californians are projected to earn.

California Division of Finance Director Keely Martin Bosler stated the increase may trigger costs to bounce for eating places, which have low revenue margins. However total, she stated the minimum wage increase is “expected to have a very minimal impact on overall inflation in the state’s economy.”

The increase will affect smaller corporations essentially the most, which can see the minimum wage bounce $1.50 in January. Kerry Jackson, a fellow on the conservative-leaning Pacific Analysis Institute’s Middle for California Reform, stated the increase may trigger some workers at smaller corporations to work fewer hours.

“It may be very painful for them,” he stated.

Inflation has been an issue all over the place, as shopper costs jumped 8.3% nationally final month from a yr in the past. A labor scarcity all through the pandemic has prompted many corporations to increase pay typically past the minimum wage simply to entice and retain employees.

In California, common gasoline costs hit a file excessive in March of $5.91 per gallon. Newsom and Democratic legislative leaders have pledged to return a few of the states’ record-breaking finances surplus to taxpayers. However to this point, regardless of being from the identical political get together, they have not agreed on how to do it.

Newsom’s plan would ship up to $800 checks to automobile homeowners – $400 per automobile for a max of two automobiles per proprietor – plus one other $750 million to give everybody free rides on public transportation for 3 months.

Democratic leaders in the Legislature have rejected that plan, as an alternative favoring one that will ship $200 checks to low-to-moderate revenue taxpayers and their dependents.

“Senate Democrats do not believe a rebate tied to car ownership does the job,” Senate President Professional Tempore Toni Atkins stated. “That plan leaves out non-car owners, including low income and elderly Californians, who are also impacted by the current high costs of consumer goods and are also deserving of relief.”

Republicans favor quickly suspending the state’s gasoline tax, which at 51.1 cents per gallon is the second highest in the nation. However Newsom and Democratic leaders have rejected that plan, arguing it is higher to ship reduction instantly to taxpayers.

Newsom’s plan to ship checks to well being care employees would apply to anybody who works inside a hospital or a nursing dwelling – together with medical doctors, nurses and different assist employees. Staff could be assured a $1,000 test. But when corporations agree to add in one other $500, the state will match it for a complete of $2,000.

Dave Regan, president of SEIU-United Healthcare Staff West, stated staffing issues at hospitals and nursing houses have solely worsened as employees left the trade in droves in the course of the pandemic “because of increased health risks, emotional and mental stress, and overwork.”

“These workers have been on the front lines throughout the COVID pandemic,” Bosler stated. “They also are suffering very critical retention issues and shortages and we hope that additional payment will help to address those issues.”

Newsom additionally proposed new spending on Thursday to $2.7 billion to totally fund the state’s rental help program, including one other $1.2 billion to a fund that helps individuals pay their utility payments, $439 million to quickly droop the tax on diesel gasoline and $157 million to waive youngster care charges for low-income households.