California deal hikes minimum wage to $15

This place has the highest minimum wage in America
This place has the highest minimum wage in America

California could become the first state to approve a $15 minimum wage.

Lawmakers, Gov. Jerry Brown and labor unions struck a deal over the weekend to raise the statewide minimum wage from $10 per hour to $15 in 2022. State officials and union leaders publicly announced the deal Monday.

Under the terms of the deal, incremental increases would start on Jan. 1, 2017 with a 50 cent boost to $10.50 per hour, followed by another 50 cent raise in 2018 and three annual $1 increases.

The draft bill includes language allowing "flexibility in the event that there's a recession or a budgetary downfall," Gov. Brown said at a press conference Monday.

Future minimum wage increases would be linked to inflation. Businesses with 25 or fewer employees would have an extra year to comply with each hike.

As a part of the deal, companies also will eventually be required to grant workers three paid sick days a year.

Related: New York seals deal on $15 minimum fast food wage

About 5.6 million Californians, or about 32% of the state's workforce, currently live on the minimum wage according to Kevin De Leon, the president pro tempore of the state senate.

California residents were set to vote in November on a plan to raise the minimum wage to $15 over the next few years. But if the state legislature enacts a law reflecting the new deal, the unions will pull that ballot measure.

Los Angeles County has already agreed to increase the minimum wage to $15 per hour by 2020, making it the largest city in the nation to do so. San Francisco plans to reach a $15 minimum by 2018. And other major California cities, including San Diego and Oakland, have raised their minimum wages as well.

The statewide agreement marks a turning point in the negotiations between unions such as SEIU -- which represents more than 700,000 workers in the state -- and state lawmakers who worry about the impact on small businesses. But with a ballot measure already approved for the fall, and polls showing the measure likely to win, opponents agreed to a deal that would give them more control over how to phase in the increase.

Related: Los Angeles is now largest city in America with $15 minimum wage

Reports of the deal have already drawn criticism.

"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," said Michael Saltsman, research director of the Employment Policies Institute, a conservative think tank opposed to minimum wage hikes. He argues that many businesses will have to cut staff or close because of the deal. "This pain from a $15 minimum wage will only be exacerbated in more troubled counties in the state."

Related: NYC Mayor: Minimum wage must be $15 an hour

California's current statewide minimum wage of $10 per hour is already among the highest in the country. It's tied with Massachusetts and is second only to Washington D.C., which has a $10.50 minimum, according to the National Council of State Legislatures.

New York lawmakers are also considering raising that state's minimum wage to $15 an hour. New York state already requires large food franchises to pay at least $15 per hour.

Personal Finance


CNNMoney Sponsors