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Ana Fox-Hodess, IRLE
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Van Nguyen, Labor Center
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New Research: $18 minimum wage would give five million California workers a pay raise
Ballot initiative would help lift 3.5 million Californians out of poverty
BERKELEY, CA. June 28, 2022 – The Living Wage Act, a proposed ballot measure to increase the California minimum wage to $18 an hour by 2025, would build on existing minimum wage policies and raise pay for around five million California workers, according to two separate reports from UC Berkeley researchers.
First, a new policy brief from UC Berkeley Professor Michael Reich, estimates that an $18 minimum wage would increase pay for 4.8 million working Californians by 2025 and restore the loss in purchasing power caused by high inflation in 2022—with little to no impact on the state’s job numbers or on inflation itself.
Key findings include:
- Existing local and state minimum wages laws will provide inflation-adjusted pay increases to four million workers in 2025. The ballot initiative will increase pay over and above the inflation adjustments for those four million workers, and raise pay for an additional 800,000 workers.
- The ballot initiative would lift over 3.5 million Californians above the federal poverty threshold.
- Taking into account inflation adjustments in existing state and local minimum wage laws, $18 by 2025 would effectively increase minimum wages by another 6.1 percent, or two percent per year over three years; by comparison, 2022 inflation will exceed seven percent.
- Prices would increase by just .042 percent over three years, or .014 percent per year.
“The best evidence suggests that an $18 minimum wage would effectively eliminate poverty among California’s working families without reducing job numbers or exacerbating inflation,” said Reich, chair of UC Berkeley’s Center on Wage and Employment Dynamics (CWED).
A complementary analysis from researchers at the UC Berkeley Labor Center estimates that 5.1 million workers, or 26 percent of the California workforce, would receive wage increases under the Living Wage Act proposal by 2026. This report examines which workers stand to benefit from the proposed increase.
Among the authors’ key insights:
- On average, each affected worker will see an annual earnings increase of $1,349.
- Nearly all (96 percent) affected workers are adults and more than 70 percent work full time; 38 percent have children.
- Latinx workers constitute about 40 percent of all workers, but they represent more than half of all affected workers.
- One-third of impacted workers are in the retail or restaurant industry.
“The increase in the minimum wage will help millions of low-wage California workers deal with the rising cost of living,” said Enrique Lopezlira, director of the UC Berkeley Labor Center’s Low-Wage Work Program.
The initiative will face voters in the November 2022 election, pending signature verification by the Secretary of State.
The Labor Center and the Center for Wage and Employment Dynamics (CWED) are both projects of the Institute for Research on Labor and Employment (IRLE) at UC Berkeley. IRLE connects world-class research with policy to improve workers’ lives, communities, and society.