The California legislature approved a bill Thursday to raise the state’s minimum wage to $15 an hour, up from $10. The legislation passed both houses in the state legislature and is now headed to the desk of Democratic Gov. Jerry Brown, who said he would sign it.
The rate will be phased in stages through 2022. The legislation includes a provision sought by Brown that allows the governor to freeze the rate if the California economy gets worse or if the state budget falls into deficit. Brown had initially resisted the increase — the state’s $10 rate was already one of the highest in the nation — but struck a deal with the legislature over the weekend.
The passage is a major victory for the union-backed movement that promoted the $15 rate, which initially focused just on fast-food restaurants. Unions have long backed higher minimum wages since they make non-union labor more expensive for employers to use.
The current federal minimum wage is $7.25 an hour, but states are free to set their rates higher. California is tied with Massachusetts for the highest state-level one at $10, while the District of Columbia’s rate is $10.50. New York has a $15 rate for fast-food restaurants and $9 for all other businesses.
The state’s move pushes it into unknown economic territory. There is no prior example of a state or similar entity raising their rate that high that quickly. Economists on both sides say there is no way to know what the effect will be.
Advocates have cheered the rate as a benefit for low-income workers, while critics, especially business groups, have argued that it will force many companies to cut back on hiring and hours to balance out their sharply higher labor costs.
