May 13, 2022 - Politics & Policy

California will raise minimum wage to $15.50 due to inflation

Photo of Gavin Newsom speaking from a podium while gesturing with his hands raised

California Gov. Gavin Newsom speaks during a press conference at the Native American Health Center in Oakland, Calif., on Dec. 22, 2021. Photo: Jane Tyska/Digital First Media/East Bay Times via Getty Images

California will raise its minimum wage to $15.50 per hour for all workers on Jan. 1, 2023, Gov. Gavin Newsom (D) announced Thursday.

Why it matters: Inflation skyrocketed to a 40-year high this past year, leading to soaring prices and hurting low-income Americans in particular.

Details: California law requires a minimum wage increase to $15.50 when inflation exceeds 7%, which the state Department of Finance projects will happen by the end of the year, AP reports. It was announced Thursday as part of Newsom's inflation relief package.

  • "The COVID-19 pandemic has resulted in persistent supply chain disruptions and labor market frictions have driven inflation to its highest rate in 40 years," according to a release from Newsom's office. "These conditions have further been exacerbated by Russia’s war in Ukraine."
  • "For years, the state minimum wage has increased steadily while inflation numbers remained modest," the release noted.
  • "The wage increase will benefit millions of California households that are struggling to keep pace with the highest rate of inflation in decades."

The big picture: A key measure of consumer prices surged ahead in April, diminishing hopes that inflation will fade in the near future, Axios' Neil Irwin reports.

  • President Biden said this week that addressing inflation is his "top domestic priority" ahead of midterm elections.

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