Inflation triggers California minimum wage increase in 2023

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A new minimum wage will take effect in California next year, an increase triggered by soaring inflation.

Gov. Gavin Newsom's administration announced Thursday that the state's minimum wage will jump to $15.50 per hour.

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The increase is required by a state law passed in 2016. 

The law says the minimum wage must increase to $15.50 per hour if inflation increased by more than 7% between the 2021 and 2022 fiscal years.

California Gov. Gavin Newsom (AP Photo/Rich Pedroncelli, File, Pool)

The California Department of Finance said they project inflation for the 2022 fiscal year will be 7.6% higher than the year before, triggering the increase.

Inflation cooled on an annual basis for the first time in months in April, but rose more than expected as supply chain constraints, the Russian war in Ukraine and strong consumer demand continued to keep consumer prices running near a 40-year-high. 

INFLATION SOARS 8.3% IN APRIL, HOVERING NEAR 40-YEAR HIGH

California lawmakers voted to increase the minimum wage to $15 per hour in 2016, but the increase was phased in over several years. 

The minimum wage is currently $15 per hour for companies with 25 or more workers and $14 per hour for companies with 25 or fewer employees.

California has about 3 million minimum wage workers.

Gov. Gavin Newsom’s administration announced on Thursday May 12, 2022, that soaring inflation will trigger an automatic increase in California’s minimum wage to $15.50 per hour next year. (AP Photo/Rich Pedroncelli)

In a budget proposal preview, Newsom's plan includes sending up to $800 checks to car owners to offset this year's record-high gas prices despite opposition from Democrats in the Legislature.  That would be $400 per car for a max of two cars per owner — plus another $750 million to give everyone free rides on public transportation for three months.

NEWSOM'S PLAN FOR FREE GAS CARDS WILL DRIVE PRICES, INFLATION EVEN HIGHER, EXPERT WARNS

Democratic leaders instead favor sending $200 checks to low-to-moderate income taxpayers and their dependents.

In California, average gas prices hit a record high in March of $5.91 per gallon.

 On Thursday, May 12, 2022, Gov. Gavin Newsom’s administration proposed sending $1,000 checks to workers in hospitals and nursing homes in recognition of their dangerous work during the pandemic. (AP Photo/Jae C. Hong, File)

The proposal also revealed a new plan to send at least $1,000 checks to 600,000 hospital and nursing home workers in recognition of their dangerous work throughout the pandemic.

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Newsom also proposed new spending on Thursday to $2.7 billion to fully fund the state's rental assistance program.

The Associated Press contributed to this report.

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