California Reaches Deal to Raise Minimum Wage

California’s minimum wage could rise from $10 to $15 an hour thanks to an agreement between California legislators and labor unions. Governor Jerry Brown announced that the minimum wage would raise gradually, reaching $15 an hour by 2022 for large companies and 2023 for small businesses. The total would be the highest for a U.S. state.

The proposal is still subject for approval by the California Legislature, which is expected to vote on the measure by the end of the week. If approved, no ballot action would be necessary for the issue. (Two previous proposals by union leaders had already qualified to be put on November’s ballot.) “It’s a matter of economic justice and it makes sense,” Governor Brown said at a press conference in Sacramento on Monday.

If approved, the minimum wage is expected to increase to $10.50 next year, $11 the year after and then by an additional dollar each year through 2022. The governor has the option to suspend hikes if the economy downturns or significant budget deficits arise. Starting in 2024, the minimum wage would rise annually if there are increases in the Consumer Price Index, with a limit of a 3.5% increase per year.

“We are excited to see the lowest wage workers finally reaping some of the productivity gains made over the past 25 years,” says Michael McCarron, president of A+ Wine Designs (asi/30223) in San Diego, CA. “Besides being the morally right thing to do, it will create happier, more reliable employees who in turn will be more productive. Furthermore, workers having more money to spend will stimulate more demand for goods and services which is great for all businesses.”

While the gradual increases are slower than previous proposals, labor advocates and others expressed pleasure with the agreement. Others were not as pleased. “While voters may favor a reasonable minimum wage increase, $15 turns those numbers on their head,” said California Consumers Against Higher Prices in a statement, as reported by the Los Angeles Times. The group is a coalition made up of several organizations, including the California Restaurant Association and the L.A. Area Chamber of Commerce.

Craig Scharton, owner of farm-to-table restaurant Peeve’s Public House in downtown Fresno, didn’t share the enthusiasm either. After the minimum wage was recently increased from $9 to $10 an hour, he said he was forced to close on Mondays and Tuesdays and reduce his staff. “We’re trying our best to revitalize downtown,” Scharton told The New York Times. “This just kind of kicks our legs out from under us.”

New York Governor Andrew Cuomo has also proposed a $15 minimum wage starting in 2019 for New York City and in 2021 across the entirety of the state. Fast-food and state government workers are already set to receive wage increases. Experts believe that other states will follow suit and put pressure on the government to raise the federal minimum wage.