It’s really expensive to live in California. That fact, more than anything, inspired a decade of policy changes in the Capitol to raise the minimum wage for California workers.
Today, California’s $16 minimum wage is among the highest in the nation, but there is ongoing debate about whether it is enough for low-wage workers to afford a decent living. Meanwhile, business owners say they’re passing the higher labor costs on to customers at the register.
Here’s a look at how California increased pay for low-wage workers and what the changes mean for the state’s economy.
California became the first state to commit to a $15 an hour minimum wage when then-Gov. Jerry Brown signed a law that ratcheted up the pay floor from $10.50 in 2017.
The law included an inflation adjustment, which brought the California minimum wage to $16 an hour in 2024.
California has experimented with a higher minimum wage in other ways, including local measures that require higher pay in high-cost cities and industry-specific laws for fast-food and health care workers.
Gov. Gavin Newsom signed two laws in 2023 that set a state higher minimum wage for workers in two specific industries: fast-food and health care.
Fast-food workers now earn at least $20 an hour under a law that took effect on April 1, 2024.
The union-backed law that instituted higher pay for 400,000 fast-food workers also created a fast-food industry council that has the power to set future wage increases and to advise on working conditions.
Health care workers will see a series of wage increases to gradually raise their pay floor to $25 an hour by 2033. The first step is supposed to take effect on June 1, although Newsom has said he wants to delay it because the state faces a serious budget deficit.
Minimum wage increases can lead to consumers paying more money for products and services.
Notably, fast-food restaurants such as McDonald’s, Chipotle and Chick-Fil-A increased prices after California’s law increasing the minimum wage for their employees took effect.
Research from UC Berkeley’s Goldman School of Public Policy found that a “10% minimum wage hike translates into a .36% increase in the prices of grocery products.”
Economists have found that minimum wage increases can cause employers to offer fewer jobs, but there’s ongoing debate about the severity of potential job losses.
In California, some fast-food franchises say they are lowering labor costs by accelerating a shift to automated service. They are installing self-service kiosks, experimenting with robots in the kitchen and outsourcing food delivery to apps like DoorDash and Uber Eats.
A 2023 report from the Congressional Budget Office projected that increasing the federal minimum wage from $7.25 an hour to $17 would reduce employment by about 700,000 jobs. That’s .4% of the overall workforce.
The minimum wage doubled in two states — California and New York — since 2014. A recent study found the higher minimum wage in those states actually increased employment in the fast-food sector.
“We find that these large minimum wage increases both raised pay for workers at the bottom of the earnings ladder and increased employment,” wrote the authors, a group of economists from the University of Victoria, UC Berkeley and UC Davis.
California’s minimum is high enough to ensure that full-time workers earn more than the federal poverty threshold.
The state’s expensive cost of living, however, means a minimum wage income might not be enough to make ends meet.
About 8% of California workers — 1.3 million people — were living in poverty in 2023, according to a poverty measure by the Public Policicy Institute of California that takes into account the state’s housing costs and safety-net benefits.
While there is no official living wage measure, the Massachusetts Institute of Technology’s living wage calculator puts the living wage in California at $23.81 for a working couple with one child, and $21.24 for a single adult with no children.
