California Prop. 32: A Closer Look at Minimum Wage Increases

Topics: Wage & Hour Issues

Should Proposition 32 be voted into law this year, California faces yet another minimum wage hike.

Current Minimum Wage Landscape

The Golden State has surely lived up to its name, offering employees one of the highest state minimum wages in the country, trailing only the District of Columbia ($17.00 per hour) and Washington ($16.28). Juxtaposed with the Federal minimum wage, which has remained at $7.25 for the past 15 years, California’s minimum wage has doubled since 2010 and currently stands at $16.00 per hour.

Upcoming Changes to California Minimum Wage

Due to annual inflation, the state is currently scheduled to see another wage increase on January 1, 2025, regardless whether Proposition 32 is enacted or not. If the ballot measure should fail, all employers can expect to pay employees at least $16.50 per hour. However, should the measure pass, this rate would raise even higher. Employers with 25 or fewer employees would be required to pay non-exempt employees at least $17.00 per hour beginning January 1, 2025, and employers with 26 or more employees—$18.00.

If passed, Proposition 32 would also include a subsequent wage hike in 2026 for employers with 25 or fewer employees, thereby matching the minimum wage for all non-exempt employees at $18.00 per hour. Afterwards, any further increases year after year will be tied to the U.S. Consumer Price Index (CPI-W).

Interplay With Other Minimum Wage Laws

These increases would not immediately impact persons already subject to a higher minimum wage, such as certain fast-food workers earning at least $20.00 per hour and certain health care workers earning $25.00 per hour, or employees in various locales where minimum wage is higher than that set by the State. 

Competition Among Employers

One major concern with these increases is the impact on competition among employers. As wages rise, industries may feel pressure to match these rates to attract and retain talent. Workers are likely to gravitate towards positions that offer better pay, compelling employers across various sectors to reconsider their compensation strategies. This, coupled with anticipated increased overhead costs, could have a significant impact on many employers in the coming years.

Current Polling Status

As for the political landscape surrounding Proposition 32, polls indicate a mixed response from voters, but are trending towards opposition to the ballot measure. While some surveys continue to show support for higher wages across the job market, others reveal hesitance regarding the broader implications of such measures. Predictions about the outcome of Proposition 32 passing remain uncertain, but at least one poll released by the Public Policy Institute of California recently showed that only 44% of voters back the measure, down from approximately 50% in September, 2024.

Conclusion

Whatever the result, one thing is clear: the outcome will not only shape California’s labor landscape, but also set a precedent for minimum wage policies across the nation. Ultimately, the decision rests in the hands of voters, who will be forced to weigh the benefits of higher wages against potential challenges for employers and the broader economy.

Stay tuned for updates as we monitor the developments leading up to and following the election!