An $18 minimum wage? California entrepreneur kicks off initiative to raise workers’ pay

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California’s minimum wage could rise to $18 an hour by as soon as 2025 under a ballot measure proposed by Los Angeles anti-poverty activist and entrepreneur Joe Sanberg.

The 2022 initiative, if passed, would make California the state with the highest minimum wage in the country.

California’s minimum wage will hit $15 an hour by January for the state’s bigger employers. Companies with 25 or fewer employees will need to pay their workers at least $15 an hour by 2023, increasing from $10 an hour in 2017.

The full impact of the state’s rising minimum wage is yet to be known. Sanberg said the state’s high rents and cost of living, as well as income inequality, make it necessary for California to adopt an even higher minimum wage.

“The time is now, because the pandemic has heightened the people’s understanding of the realities so many Californians face,” he said. “Cost of living is rising faster and faster,... but wages haven’t increased commensurately.”

Under the proposal, California’s minimum hourly wage would go up by $1 each year on Jan. 1, until 2025 for bigger employers and 2026 for smaller employers. Afterward, the minimum wage would go up each year by the rate of inflation of up to 3.5%.

Sanberg’s proposal would keep an off-ramp allowing a governor to suspend minimum wage increases for a year if the state has a significant budget deficit, a decline in job growth or sales tax revenue. Gov. Gavin Newsom declined to take the off-ramp last year during the pandemic.

Sanberg has said he believes the minimum wage should be closer to $24 an hour, given the rise of workers’ productivity in the last few decades. He said his $18 proposal reflects the “reality and the political consideration” needed to get the support from the majority of Californians.

Needs 1 million signatures to reach California ballot

Sanberg, a founding investor of the meal delivery service Blue Apron and co-founder of Aspiration personal finance company, has previously advocated for California to launch and expand its own earned income tax credit.

The measure is one of the 2022 ballot proposals that altogether could set records for campaign spending. Four dueling proposals for sports betting are or will soon be gathering signatures, as well as measures to gut public unions and provide money to those attending private schools.

Sanberg and other proponents need to gather at least 1 million signatures in the next few months to place their measure on the ballot for next year.

“This is an issue that speaks to people’s every day lives. It’s easy to explain and easy to understand and I expect we’re going to win. We’re planning this to win,” Sanberg said.

California’s $15 an hour minimum wage

California’s journey to a $15 minimum wage did not lead to extensive job losses as feared, according to The Sacramento Bee’s September review of the state data. The unemployment rate in California fell at about the same rate as did the rest of the country between 2016 and 2020, according to the data.

Meanwhile, the lowest-paid workers in California saw their wages grow faster than the national average.

“The economic reality is when consumers have more money, everyone does better, especially small businesses.”

Some industries, such as hospitality and retail, saw their rates of job growth slow even before the pandemic that hammered those industries. The cost of living has continued to go up as well. Even though the lowest-paid workers in the Sacramento region saw their income grow 28% between 2016 and 2020, rents for a one-bedroom apartment grew even faster, negating much of the wage gains.

Small businesses are also already raising wages on their own to attract workers, said John Kabateck, California state director for the National Federation of Independent Business, an advocacy organization representing small businesses.

“Market, not politicians and bureaucrats, ought to be dictating the financial growth and success of working men and women in California,” he said. “Let the market dictate this and let’s stop sending the message that mediocrity is a pathway to professional success in California.”

Proponents of Sanberg’s measure said they believe $18 an hour minimum wage will have a positive impact on the state’s economy.

“Thousands of restaurants nationwide are already raising wages to try to recruit staff, but many are finding that workers will not come back to the industry until these wage increases are permanent,” said Saru Jayaraman, president of One Fair Wage and director of the Food Labor Research Center at UC Berkeley, in a statement. “This ballot measure is critical to allow service workers to come back to work in restaurants and to allow California restaurants to fully reopen.”