Consumer Federation of California

California’s minimum wage of $8 per hour has been frozen for five years and a battle is likely in the 2013 legislative session over whether it should be increased and whether it should be automatically indexed to inflation.

Assemblyman Luis Alejo, D-Salinas, tried to win passage of a minimum wage hike and automatic indexing in 2011, but after Assembly Bill 10 easily cleared the Assembly’s Labor and Employment Committee with Democratic votes, it died without a hearing or a vote in the Assembly Appropriations Committee, having drawn stiff business opposition.

Alejo is back with a new bill, also tagged as AB 10, that’s slightly less ambitious. It would boost the minimum wage to $8.25 in 2014, with two 50-cent boosts in subsequent years, and then automatic adjustment to inflation beginning in 2017.

Backers of change – labor unions and advocates for the poor – contend that low-income workers lose purchasing power due to inflation. Opponents – restaurants and other employers with large numbers of minimum wage workers – say that raising it would increase their costs and force them to reduce payrolls.

With a years-long political stalemate on the issue, some California cities have imposed their own, higher minimum wages. San Francisco’s, now $10.24 per hour, will rise to $10.55 next year and will be the nation’s highest, according to a new compilation by the business-backed Employment Policies Institute. San Jose’s minimum, now $8, will rise to $10 next year.

The Employment Policies Institute says that 10 states have minimum wage hikes on tap in 2013. Washington state will maintain the nation’s highest state wage with a boost from $9.04 to $9.19 per hour.

California is one of 18 states with a minimum wage higher than the $7.75 federal rate and among them, six have wages higher than California, plus Washington, D.C, according to federal labor data. Twenty-three states adopt the federal minimum, four have rates lower than the federal minimum and five have no minimum wage. In the latter nine, the federal minimum prevails.

Nine states have minimum wages linked to the Consumer Price Index, which would also govern California’s minimum wage should AB 10 be enacted.