Minimum Wage Initiative
8 mins read

Minimum Wage Initiative

This fall, California voters will decide whether to raise the state’s minimum wage by $2 to $18 an hour. The referendum initiative is the latest in a series of efforts to boost workers’ wages in the Golden State.

Official title on the ballot: Not released yet.

You are asked: Should California raise its minimum wage from $16 to $18 an hour? The proposal would increase the minimum wage at different rates based on the size of the business. For employers with 26 or more employees, the minimum wage would increase on January 1, 2025. For smaller businesses, it would increase on January 1, 2026. Annual increases would be tied to the Consumer Price Index.

What does your voice mean?

  • A “yes” vote would mean an increase in the minimum wage.
  • A “no” vote would mean the minimum wage would remain the same.

Understanding the $18 Minimum Wage Initiative

Currently, California has a number of minimum wage laws, with most cities having no minimum wage at all and state laws in effect.

Several cities pay more than $18 an hour, including West Hollywood, Berkeley and San Francisco.

On July 1, Los Angeles’ minimum wage will rise to $17.28. It increases annually based on increases in the consumer price index. Meanwhile, hospitality workers at hotels with 60 or more rooms in the city will soon earn more than $20 an hour under a measure approved by the City Council last year.

Understanding the Consumer Price Index

  • The Consumer Price Index is one of the most frequently cited measures of inflation. The federal government tracks the costs of a wide range of goods and services—such as food, transportation, health care, and housing—and calculates how much those costs are rising over time. Rent control policies often tie allowable increases to changes in the local consumer price index. As a result, as inflation rises in Southern California, allowable rent increases also rise.

How did we get here

In recent years, the labour movement has been demanding wage increases in specific industries.

  • In March, Long Beach voters approved a union-backed initiative raising the minimum wage for city hotel workers to $23 an hour by July and then to $29.50 an hour by 2028. That is the highest minimum wage in the country, according to Los Angeles New Economy Alliance.
  • In April, a new state law mandated that fast-food workers in California be paid at least $20 an hour. The law applies to workers at restaurants with at least 60 stores nationwide. California has the biggest number fast food workers in the US The state is still working out the details of who will benefit from the new law, according to CalMatters.
  • On July 1, a new law will begin a gradual increase in the minimum wage for health care workers in California. The law calls for annual increases, with health care facilities set to reach $25 an hour by June 1, 2028, and for some rural facilities by 2033.

Understanding the rules

  • Resources for Employees and Employers

    • The state Department of Industrial Relations has released a list of frequently asked questions for fast food workers.
    • Here’s more information about the minimum wage for workers in Los Angeles County
    • Los Angeles County also released information for employers regarding the minimum wage.

What do people who support this say?

For hundreds of thousands of workers, the pay raise could be much-needed relief from the state’s high costs of housing, food and gasoline.

The vast majority of Los Angeles County’s 88 cities operate under the state minimum wage.

“Ordinary working people can barely afford to put food on the table for their families, and I think raising the minimum wage is a small step in the right direction,” said Brian Justie, a senior researcher at the UCLA Labor Center.

Justie understands concerns about the impact this bill will have on small businesses.

“I have a certain amount of sympathy for small businesses,” Justie added. “I think if you can’t afford to pay your employees a living wage, you probably don’t have a viable business model.”

What do people who oppose this say?

These actions are not liked by stakeholders.

“We think this is just another unfortunate plan by progressives and unions to bankrupt small businesses and put more people on the unemployment rolls,” said John Kabateck of the National Federation of Independent Business. Kabateck is the California director of the federation, which represents about 14,000 small and independent businesses in the state.

He added that “no job paying the minimum wage will be long-term work.”

What state analysts say

Analysis The Legislative Analyst’s Office estimates that many businesses will incur higher costs as a result of the measure, which in turn “will likely cause an increase in the prices they charge for the products they sell.”

The LAO report also said the measure would increase costs for local governments while reducing the number of people receiving public assistance. It estimates the measure would affect about 2 million workers statewide.

Separate LAO report looked at the minimum wage and workers. He found:

  • For a single parent with three children, the state minimum wage is near the poverty level. For a single parent with four or more children (not shown), the minimum wage is below the poverty level.
  • For a single parent with one or two children, the statewide minimum wage is slightly above the poverty level.
  • For the most common groups of low-wage workers — those who have no children or live with at least one other worker — the minimum wage is at least twice the poverty level.

When considering housing costs, the LAO found that “housing in California’s major metropolitan areas and much of the Central Coast is unaffordable for minimum-wage workers.”

Under federal guidelines, households that spend more than 30% of their income on housing are considered “affordable.”

History

The man behind this year’s bill to increase the minimum wage is Joe Sanbergan early investor in the food delivery service Blue Apron. Sanberg is a co-founder of Aspiration Inc., an online banking and investment firm.

Sanberg initially tried to get the minimum wage increase on the 2022 ballot, spending more than $10 million to do so, but missed a key deadlineSecretary of State Shirley Weber, after verifying that Sanberg had collected enough signatures, placed the bill on the 2024 ballot.

According to him online biographySanberg was raised by a single mother who struggled to make ends meet on her salary as a public school teacher. His family lost their home to foreclosure after falling deeply into debt.

“Although his own family had managed to break the cycle of poverty, Joe knew there were millions of families like his living paycheck to paycheck, struggling to put food on the table and emptying their bank accounts every time an unexpected expense came up,” his biography reads.

Sanberg first got involved in California politics by lobbying for the state to create its own Earned Income Tax Credit for low- and moderate-income earners, known as CalEITC, in 2015.

Sanberg did not respond to an interview request.

Governor Gavin Newsom has not yet commented on the vote.

Dornsife/Price Center for Urban Policy and Politics at the University of Southern California survey published in January a majority of voters in the state support an increase in the state’s minimum wage. When asked if they would support an increase to $18/hour, 59% of likely voters said they supported it; 34% opposed it; and 8% said they didn’t know.

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