Friday, April 22, 2016

California to phase in $15 minimimum wage over five-year period

The California State Legislature and Governor Jerry Brown reached a deal with the Service Employees International Union's (SEIU) on March 31 to raise the state’s minimum wage to $15 per hour by Jan. 1, 2022. Governor Brown signed it into law on Monday, April 4. The deal was passed by the assembly by a 48-26 vote and the Senate by a 26-12 vote. The increase from the current $10 per hour starts on Jan. 1, 2017. Below is the phase-in of the raise:

January 1, 2017                 $10.50
January 1, 2018                 $11.00
January 1, 2019                 $12.00
January 1, 2020                 $13.00
January 1, 2021                 $14.00
January 1, 2022                 $15.00

Companies with 25 or fewer employees have an extra year to comply. Raises in the wage after 2022 will be based on the Consumer Price Index (CPI). The bill will affect 2.2 million California workers who earn minimum wage and will have a potential ripple effect for another 5.6 million workers who could see their pay increase by an average of 24 percent over the same time period.

The California golf industry opposed the ballot initiative from the SEIU that would have gone to vote in November through the California Consumers Against Higher Prices Coalition, but business/industry was not brought to the table for the hastily-put-together negotiations between the legislature, the governor and the unions. Initial projections were that the ballot initiative would have passed in November, so the governor and the legislature likely cut the deal early to receive some concessions including the ability to temporarily suspend the hikes in the event of poor economic conditions or a large budget deficit.

It's difficult to predict what overall effect the raise will have on business in California, but speaking from the golf industry perspective it could prove to be very difficult with the game’s inability to attract new participants or raise rates to offset the wage increases. Please keep in mind that our industry was well aware of the issue and have been submitting comments on it over the past several years.

If you have any further questions on the increases, please feel free to contact me at jjensen@gcsaa.org.