U.S. News

California deal could make state first with $15 minimum wage

SACRAMENTO (Reuters) - California Governor Jerry Brown announced a deal with legislative and labor leaders on Monday to raise the minimum wage to $15 an hour by 2023, saying the nation’s most-populous state would lead the way toward higher pay for the working poor.

The proposal, which still must gain support from business-friendly moderate Democrats, would make California the first to raise the statewide minimum wage to $15 an hour - the highest in the nation - while giving the governor the right to opt out if the economy falters.

“I’m hoping that what happens in California will not just stay in California but will be exported to the rest of the country,” Brown said at a news conference in Sacramento.

Raising the minimum wage has cropped up on many Democratic Party candidates’ agendas ahead of the November elections and the issue could help mobilize Democratic voters to the polls.

According to the governor’s office, 2.2 million Californians currently earn the state minimum wage of $10 an hour.

The idea of raising the minimum wage, which at the federal level has remained at $7.25 an hour for more than six years, has been opposed by Republicans and some business groups, who say it would harm small businesses and strain government budgets.

If passed, Brown’s plan would commit the state, home to one of the world’s biggest economies, to raising the minimum wage to $15 an hour by 2022 for large businesses and 2023 for smaller firms.

It would also head off a pair of competing ballot initiatives championed by labor leaders to raise the minimum wage to $15 an hour without allowing the governor to halt increases in bad times, a deal-breaker for Brown.

But passage of the proposal is not guaranteed without support from more moderate members of the Democrat-controlled legislature. Absent from the press conference was Anthony Rendon, speaker of the state Assembly, where the bill was expected to face opposition.

“This deal was placed on my desk over the weekend,” said Rendon, who supports the measure but said he was not involved in negotiations over it. “I don’t know how many folks are in support of the bill or how many are against it.”

Democratic presidential hopeful U.S. Senator Bernie Sanders has called for raising the federal minimum wage to $15 an hour by 2020.

Economic consultant Christopher Thornberg, founding partner at Beacon Economics, said increasing the minimum wage would not reduce poverty because low paid workers were most at risk of losing their jobs when employers cut positions.

“These are the people that businesses will say, ‘If I’m going to pay $15 bucks an hour, I’m not going to hire them,’” Thornberg said.

Fourteen states and several cities began 2016 with minimum wage increases, typically phasing in raises that will ultimately take them to between $10 and $15 an hour.

Reporting by Sharon Bernstein, Robin Respaut and Dan Whitcomb; Writing by Dan Whitcomb; Editing by Sara Catania, Alan Crosby and Mary Milliken