Inflation Triggers Mandatory Minimum Wage Increases in California

“When California passed a massive boost in its minimum wage six years ago so that it would eventually reach $15 an hour, the law included a component that tied the minimum to inflation levels. If inflation starts getting too high, the law forces a mandatory increase in the minimum wage.

This week, Gov. Gavin Newsom’s budget director, Keely Martin Bosler, announced that the massive inflation America is seeing is going to force the minimum wage in the state to automatically increase to $15.50 next January. The law requires this automatic adjustment if the inflation rate grows past 7 percent. The Los Angeles Times reports that it’s possible that the minimum wage might rise by another 50 cents if inflation continues.

Bosler, of course, sees only the positive here, saying it will help poor families pay for the higher food prices we’re all enduring: “They have a huge impact to those families that are living off of those lower wages and their ability to cover the cost of goods.””

“ising wages during this time frame is natural, but it’s also worth noting that California’s unemployment rate continues to be higher than the national average, sitting at 4.9 percent. Just four states and Washington, D.C., have a higher unemployment rate. According to data from California’s Employment Development Department, almost every county in California has higher unemployment rates than the average, and some are running more than twice the national average. Two counties—Colusa and Imperial—have double-digit unemployment rates.

At the same time, businesses have also been hit hard by inflation, and those that operate on tight margins (retail stores, restaurants, and pretty much every small business) are going to have new struggles. Combined, inflation and a higher minimum wage will make it difficult for these businesses to take on new employees and keep the ones they already have.”

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