A new minimum wage will go into effect in California next year, an increase triggered by soaring inflation.
Governor Gavin Newsom’s administration announced on Thursday that the state’s minimum wage would increase to $15.50 an hour.
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The increase is required by a state law passed in 2016.
The law says the minimum wage must increase to $15.50 an hour if inflation has risen more than 7% between fiscal years 2021 and 2022.
The California Department of Finance said it expected inflation for fiscal year 2022 to be 7.6% higher than a year earlier, triggering the increase.
Inflation cooled on a yearly basis for the first time in months in April, but rose more than expected as supply chain constraints, the Russian war in Ukraine and strong consumer demand continued to hold consumer prices close to their highest level in 40 years.
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California lawmakers voted to raise the minimum wage to $15 an hour in 2016, but the increase was phased in over several years.
The minimum wage is currently $15 per hour for businesses with 25 or more employees and $14 per hour for businesses with 25 or fewer employees.
California has about 3 million minimum wage workers.
In a preview of the budget proposal, Newsom’s plan includes sending checks for up to $800 to car owners to offset record gas prices this year despite opposition from Democrats in the Legislature . That would be $400 per car for up to two cars per owner — plus an additional $750 million to provide everyone with free public transit rides for three months.
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Democratic leaders instead prefer to send $200 checks to low-to-moderate income taxpayers and their dependents.
In California, average gasoline prices hit a record high in March of $5.91 a gallon.
The proposal also revealed a new plan to send checks for at least $1,000 to 600,000 hospital and nursing home workers in recognition of their dangerous work throughout the pandemic.
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Newsom also proposed $2.7 billion in new spending on Thursday to fully fund the state’s rental assistance program.
The Associated Press contributed to this report.