Gov. Gavin Newsom’s office announced Thursday that California expects to see the minimum wage increase of $15.50 in January 2023 due to a state provision that triggered inflation that exceeds 7 percent.
The announcement comes a day after Newsom unveiled a revised budget plan of just over $300 billion for the next fiscal year, making it the highest in the State's history.
The COVID-19 pandemic resulted in persistent supply chain disruptions and labor market frictions that drove inflation to its highest in 40 years, according to Newsom’s office, which cites Russia’s war on Ukraine to have exacerbated these conditions.
“The wage increase will benefit millions of California households that are struggling to keep pace with the highest rate of inflation in decades. For years, the state minimum wage has increased steadily while inflation numbers remained modest,” the release noted.
According to the California Department of Finance, the projected inflation for the 2022 fiscal year, ending June 30, was 7.6 percent higher than the year before.
According to the California Department of Industrial relations, the state currently requires a minimum wage of $14.00 an hour. The department said that employers with fewer than 26 employees will be required to raise the minimum wage to $15 starting January 1, 2023.
State lawmakers voted in 2016 to gradually increase the minimum wage over several years to $15 per hour. The minimum wage for companies with fewer than 25 employees is required to pay $14 an hour.