Inflation likely to put minimum wage above $15

California’s minimum wage, already the highest in the country, is likely to hit $15.50 — 50 cents an hour more than expected — on Jan. 1, according to the state Department of Finance.

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 — which is currently soaring because of supply chain issues, labor market shortages and the war in Ukraine. An inflation rate above 7% will accelerate the minimum wage increase, add

ing 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,” Gov Gavin Newsom’s office wrote in a statement.

The administration’s projections were included in a broader announcement of Newsom’s plan to use the state’s massive budget surplus to counteract the toll of inflation, including with new funding for rent relief, child care, health insurance premiums and utilities.

The projected wage increase will be finalized in July after fourth-quarter inflation numbers are released, but it’s unlikely that inflation will dip below 7%, Bosler said.

If inflation were below 7%, the minimum wage for all companies, both large and small, would be $15 an hour on Jan. 1, 2023.

“Some people are gonna say, ‘Hey, isn’t this gonna further drive inflation?’ ” Bosler said. But with only about 3 million minimum wage workers in the state, “it’s expected to have very minimal overall inflation in the economy.”

Still, some industries, such as low-margin restaurants, may see price increases, she said.

Some California cities have minimum wage ordinances that go beyond the minimum wage set by the state. San Francisco’s minimum wage is currently $16.32 and is set to rise to rise to $16.99 on July 1.

Proponents of a ballot measure to raise the state minimum wage to $18 an hour over the next three years said Thursday that they’d gathered enough signatures to qualify the initiative for the November ballot. The signatures must still be verified by the secretary of state.

“Californians simply cannot afford to support a family on the current minimum wage — which amounts to just $31,200 a year for someone working full time,” entrepreneur Joe Sanberg, who’s leading the effort, said in a statement. “Raising the minimum wage in the Golden State is a moral imperative.”