California Lawmakers Agree to Union-Backed Wage Hike

Backroom deal would mandate $15 minimum wage by 2022

California Gov. Jerry Brown / AP
March 29, 2016

California lawmakers struck a backroom deal with labor unions to raise the state’s minimum wage to $15 an hour just days after labor activists put the issue on the November ballot.

Democratic Gov. Jerry Brown announced Monday that California would implement the nation’s highest statewide minimum wage while standing alongside union officials, including a local leader from the Service Employees International Union, the animating force behind the Fight for $15 movement.

"California is proving once again that it can get things done and help people get ahead," Brown said in a release. "This plan raises the minimum wage in a careful and responsible way and provides some flexibility if economic and budgetary conditions change."

Brown emphasized in his announcement of the deal that economic factors would play a part in how quickly the increases take effect.

Brown’s deal will increase wages to $10.50 in January 2017 and ultimately reach $15, more than double the federal $7.25 rate. The agreement came less than a week after SEIU and labor activists presented more than 400,000 petition signatures to raise the minimum hourly wage to $15 by 2020. Brown’s proposal pushes the full implementation date back to 2022 and allows for an exemption for small businesses employing fewer than 25 workers.

Brown’s initial failure to rally behind the SEIU cause spurred opposition not just from labor groups but from members of his own party. Lt. Gov. Gavin Newsom, his running mate, endorsed the ballot initiative in January.

"I’m proud to stand with the workers who are leading the Fight for $15 and ask California voters to join us. Together we can pass this measure and give hope to millions who are working their hearts out so the next generation can live the California Dream," Newsom said in an SEIU release.

Michael Saltsman, a researcher at the Employment Policies Institute, said in a statement that California’s minimum wage increase would exacerbate higher-than-average unemployment rates for entry-level workers in the state. High labor costs often lead employers to seek more experienced workers to fill vacancies, or else leave the positions unfilled.

"California may be the first state to pass a $15 minimum wage, but it will also be the first to find out why that’s a bad idea," Saltsman said.

Nearly 17 percent of California residents between the ages of 18 and 24 are unemployed, according to the California Workforce Association. Several major cities, including Oakland , San Francisco, and the Silicon Valley suburbs, have already passed substantial wage hikes. Saltsman said that cities without tech industry jobs will suffer from Brown’s wage hike.

"Dramatic wage mandates are already forcing difficult decisions in relatively wealthier areas, with low margin businesses being forced to lay off employees or close entirely," Saltsman said in the release. "This pain from a $15 minimum wage will only be exacerbated in more troubled counties."

This is the second major increase that Brown has passed as governor. In 2013 he signed a 25 percent increase of the minimum wage, raising it from $8 to $10 per hour.

Brown’s deal will not be adopted until it is passed by the Democratic Party-controlled state legislature. Leaders in both chambers of the legislature have already endorsed the deal.