California’s minimum wage will rise to $15.50 an hour next year, the Gavin Newsom administration announced Thursday.
The increase is required by state law passed in 2016. But it’s a good time as America’s most populous state Democrats are rushing to find ways to increase taxpayers’ bank accounts in an election year marked by rising inflation. consumer purchasing power.
In a preview of the upcoming budget proposal on Thursday, Newsom doubled its plans to send checks of up to $800 to car owners to offset this year’s record gasoline prices, despite Democrats in the legislature. And he unveiled a new proposal to send at least $1,000 in checks to 600,000 hospital and nursing home workers who did risky work during the pandemic.
It is part of a new spending proposal that puts $18.1 billion in taxpayers’ pockets through a combination of rebates and assistance for rent, health insurance and utilities.
“We are still seeing a very strong economic recovery in the state from the COVID-19 recession,” said HD Palmer, California Department of Treasury spokesperson.
California state legislators decided to raise the minimum wage to $15 an hour in 2016, but the increase has been phased out over several years. The current minimum wage is $15 per hour for companies with 25 or more employees and $14 per hour for companies with 25 or fewer employees.
The law requires that if inflation rises by more than 7% between fiscal years 2021 and 2022, the minimum wage must rise to $15.50 an hour for everyone. On Thursday, the California Department of the Treasury said it expects inflation for the 2022 fiscal year, which ends on June 30, to be 7.6% higher than the previous year, triggering the gains.
Official inflation figures won’t be final until this summer. But the Newsom administration believes that growth will be sufficient to trigger auto-growth.
According to a conservative estimate by the California Department of Treasury, there are about 3 million minimum wage workers in California. The minimum wage increase is about $3 billion, less than 0.1% of the $3.3 trillion in personal income Californians are expected to earn.
California Department of Treasury Commissioner Keely Martin Bosler said the increase could lead to a surge in prices at low-margin restaurants. But overall, she said, the minimum wage increase is “expected to have a very minimal impact on overall inflation in the state’s economy.”
The increase will have the biggest impact on small businesses, where the minimum wage increases by $1.50 in January. Kerry Jackson, a research fellow at the conservative Pacific Research Institute’s Center for California Reform, said the increase could force some employees at smaller companies to work fewer hours. .
“It can be very painful for them,” he said.
Inflation has become a problem everywhere, as consumer prices surged 8.3% nationwide last month from a year ago. Labor shortages throughout the pandemic have caused many companies to raise salaries, sometimes above the minimum wage, to attract and retain employees.
The average gasoline price in California hit an all-time high of $5.91 per gallon in March. Newsom and Democratic legislative leaders have promised taxpayers a portion of the state’s record surplus budget. However, even though they are from the same political party, they have not been able to agree on what to do.
Newsom’s plan is to send car owners a check of up to $800 ($400 per car for up to two cars per owner) and $750 million in free public transit rides for three months.
Democratic leaders in the legislature rejected the plan, preferring to send $200 checks to lower-middle-income taxpayers and their dependents instead.
“Democrat senators don’t think rebates related to car ownership are working,” Senate Interim Speaker Tony Atkins said. “The plan excludes non-car owners, including low-income and elderly Californians who are affected by the current high cost of consumer goods and deserve relief.”
Republicans are in favor of temporarily halting the nation’s second-highest gasoline tax at 51.5 cents a gallon. But Newsom and Democratic leaders rejected the plan, arguing that it would be better to send the relief directly to the taxpayers.
Newsom’s plan to send checks to health care workers applies to anyone who works in a hospital or nursing home, including doctors, nurses and other support staff. Workers will be guaranteed a check for $1,000. However, if the company agrees to add an additional $500, the state will match that to a total of $2,000.
Dave Regan, president of SEIU-United Healthcare Workers West, said the workforce problem in hospitals and nursing homes is exacerbating as workers leave the industry during the pandemic “due to increased health risks, emotional and mental stress and overwork”.
“These workers were at the forefront during the COVID-19 pandemic,” Bosler said. “They also have very significant conservation issues and shortages, and we hope that the additional payments will help address these issues.”
Newsom also proposed new spending of $2.7 billion Thursday to fully fund the state’s rental assistance program, $1.2 billion to a fund that helps people pay their utility bills, and a temporary cut in taxes on diesel fuel. Proposed an additional $439 million to suspend and an additional $157 million to waive child support. The cost of care for low-income families.