A recent bit of news has some of my small business owner clients worried. Every small business owner is concerned with the cost of labor, regardless of how large their workforce is. And nothing gets an owner biting down on their last finger-nail than a minimum wage increase.
On April 4, Governor Jerry Brown signed into law a set of increases that would make California’s minimum wage the highest in the country, eventually reaching $15.00.
So while that’s a substantial increase over the current minimum wage let’s break this down so you understand the specifics:
Ten Dollars is the current minimum wage in the state of California.
The minimum wage would increase to $10.50 in 2017, and then increase to $11.00 in 2018. After that, the minimum wage would increase one dollar an hour, so it would be $12.00 in 2019, $13.00 in 2020, $14.00 in 2021, and finally reaching $15.00 in 2022.
How does California stack up to the rest of the country? If California makes it to 2022 with this law still in place, then it will be the highest in the country. But there are several safeguards in place to protect California’s economy if our job markets stagnate.
One of the things this law allows is for the Governor to decide by September 1st of a calendar year to pause the next increase in the minimum wage, if the budget deficit is forecasted to be more than one percent of annual revenue.
Another safeguard for small businesses is for those that employ 25 employees or less would have an extra year to implement the increases.
There are pros and cons to any new law. Mostly cons, but at least small business owners can relax knowing that the first two years will see a total increase of $1.00, and that if they have less than 25 employees they have an additional year to comply with the changes and prepare for the increases.
You can hear me discuss this on The Andrea Kaye Show, broadcasting on 1170AM, where Andrea and I discuss the minimum wage increase and how it will affect small business owners in the short term, and the long term.