California’s minimum wage will be raised to $15.50 due to inflation, Gov. Newsom announces

California’s minimum wage will jump to $15.50 per hour next year, Gov. Gavin Newsom’s administration announced Thursday, an increase triggered by soaring inflation that will benefit about 3 million workers.

The minimum wage rose to $15 an hour for companies with 26 or more employees at the beginning of this year. It is $14 an hour for smaller companies, which were slated to reach $15 an hour next year.

As soon as all employees reach $15 an hour, however, the minimum wage will be tied to inflation. An inflation rate above 7% will accelerate the minimum wage increase, adding 50 cents an hour, said Keely Bosler, director of the California Department of Finance, on a conference call Thursday.

“The wage increase will benefit millions of California households that are struggling to keep pace with the highest rate of inflation in decades,” Newsom’s office wrote in a statement.

In a preview of his upcoming budget proposal on Thursday, Newsom doubled down on his plan to send up to $800 checks to car owners to offset this year’s record-high gas prices despite opposition from Democrats in the Legislature. And he revealed a new proposal to send at least $1,000 checks to 600,000 hospital and nursing home workers in recognition of their dangerous work throughout the pandemic.

It’s part of a new spending proposal to put $18.1 billion into taxpayers’ pockets through a combination of rebates and assistance with rent, health insurance premiums and utility bills.

“We’re still overall having a very strong economic recovery in the state from the COVID-19 recession,” California Department of Finance spokesman H.D. Palmer said. “But it’s clear that we face a lot of headwinds: gas prices remain high, food prices are high because of inflation.”

California lawmakers voted to increase the minimum wage to $15 per hour in 2016, but the increase was phased in over several years. Today, the minimum wage is $15 per hour for companies with 25 or more workers and $14 per hour for companies with 25 or fewer employees.

Official inflation figures won’t be final until this summer. But the Newsom administration believes the growth will be more than enough to trigger the automatic increase.