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California voters will decide this election whether to increase the state's minimum wage to $18 an hour, which would be the highest in the United States.

The ballot measure, known as Proposition 32, would raise the threshold to $17 for the remainder of 2024 and then to $18 in January for employers with more than 25 workers. Smaller employers would have to pay at least $17 next year and $18 in 2026. It will then be adjusted for inflation, with increases not exceeding 3.5% per year.

Raising the minimum wage to $18 would give workers earning that minimum wage about $3,000 more per year. An estimated 2 million workers would be affected.

Currently, the minimum wage in the Golden State is $16 and is set to rise to $16.50 next year.
About 40 communities have minimum wages above the state threshold, including six that are above $18.

California is one of the more aggressive states when it comes to raising the minimum wage. It was the first state to pass a law raising the threshold to $15, effective in 2022 for larger employers and the following year for smaller employers.

Additionally, nearly half a million workers at major fast-food restaurant chains have been paid at least $20 an hour since April. And in October, a minimum wage law for health care workers took effect that will gradually raise the hourly wages of about 365,000 employees to at least $25.

Like most minimum wage debates, Prop 32 has attracted a range of supporters, such as labor organizations that say the increase is necessary to keep up with the cost of living, but also opponents, including restaurant and business groups wary of layoffs warn and price increases if the measure is approved.

Voter support could wane. About 44% of likely California voters said they would vote “yes” in a Public Policy Institute of California poll in October, up from 50% in September. Another 54% said they would vote no in the latest poll, up from 49% in September.

Arguments for and against an $18 minimum wage

Anti-poverty advocate and wealthy entrepreneur Joe Sanberg is behind the push to raise the federal minimum wage to $18 an hour.

“It’s personal for me,” Sanberg told CNN. “My mother raised me alone, and when I was a teenager we lost our house to foreclosure. I’ve seen firsthand how difficult it is for single parents in California to make ends meet.”

Sanberg argues that a higher minimum wage would help the economy because workers would have more money to spend. He pointed to a recent report released by the University of California, Berkeley's Institute for Research on Labor and Employment about increasing the minimum wage for fast food workers. The report found that the policy increased average hourly wages by 18% for workers, 90% of whom previously earned less than $20. Additionally, employment remained stable across the industry and prices rose 3.7%, or 15 cents for a typical $4 hamburger.

Raising the minimum wage to $18 will have less impact but will be helpful for the two million workers who will see an increase, said Enrique Lopezlira, director of the institute's low-wage program.

“At least (the increase) will help restore some of the purchasing power they have lost to inflation in recent years,” Lopezlira told CNN, pointing out that most low-wage workers are adults caring for families .

In California, a single adult without children would need to earn just over $27 to cover basic needs, while two working parents of one child would need to earn just over $26 each, according to the MIT Living Wage Calculator.

But opponents warn that approving the ballot measure would force employers to raise prices, lay off workers or reduce their hours.

“If you look at anyone's budget — a small business or a larger company — there are only so many places they can cover the costs,” Jennifer Barrera, CEO of the California Chamber of Commerce, said at a recent chamber meeting -Podcast. “This is of course particularly true for smaller companies, which sometimes operate with probably lower margins.”

Typically, minimum wage increases in the Golden State are decided by state or local lawmakers, not voters, Jot Condie, CEO of the California Restaurant Association, said on the podcast.

“This process … takes into account the interests of workers and the impact on employers,” he said. “They usually come up with numbers that most of the time no one is happy with, but they take into account the important implications for the overall economy to avoid turbulence in job growth, inflation, etc.”

The most recent statewide increase, signed by Democratic Gov. Jerry Brown in 2016, gradually increased the minimum wage and gave employers the opportunity to adjust, Condie said.

“A $1.50 increase in one fell swoop would be devastating for employers and would ultimately lead to price increases,” he said.