The California Department of Finance recently announced in a letter that the state’s minimum wage must increase from $15.50 to $16 per hour. The new minimum wage, which is set to go into effect Jan. 1, is due to an inflation adjustment required by state law.
California Labor Code section 1182.12 authorizes the Department of Finance to investigate each year if one of several certain events tied to inflation has occurred. If one has, the agency must recommend to the governor and state legislature whether an increase to the minimum wage is necessary to help workers who earn the minimum keep up with rising costs.
Consumer Price Index jumped up
One of those indicators is the Consumer Price Index for urban workers and clerical workers. The Department of Finance found that prices for those groups went up more than 6 percent from July 1, 2022, to June 30, 2023, compared to the same previous 12-month period. Thus, the agency is requiring a 3.5 percent bump to the minimum wage, which translates to a fifty-cent per hour increase.
If you work minimum wage, you should expect to see a raise in January. But this decision affects certain workers at higher wages. For example, the minimum wage for workers required to provide their own hand tools and equipment, such as technicians at auto dealerships, will rise from $31 to $32 per hour.
Wage theft is still a problem
The law seeks to protect low-wage workers from the worst effects of high inflation. But it will have little impact on your life if your employer is illegally withholding your wages. Then you could have to take legal action to fight for the money you (and maybe your co-workers) have earned.