California Minimum Wage Increasing to $7.50 an Hour on January 1, 2007.

The minimum wage (pdf) in California is set to become one of the highest in the nation starting on January 1, 2007. It will be raised again on January 1, 2008 to $8.00 an hour. If you look at the history of the California minimum wage starting with the increase on February 8, 1943, you can see that wages have gone from $0.45 an hour to $7.50 an hour over a nearly 64 year period - increasing 16 and 2/3'rds times. Annualized, this is an increase of 4.5%.

In 1943, working 40 hours a week for 52 weeks a year at minimum wage would produce an income of $936. Using the Bureau of Labor Statistics CPI inflation calculator, this amount had the equivalent buying power of $10,918.20 in 2006 dollars. Working the same number of hours after January 1, 2007 - the worker will have $15,600 worth of income. This is nearly a 43% increase over inflation, or 0.56% per year.

Interestingly, this will also impact exempt workers, who are paid salary. California law requires that these exempt managerial, professional, and administrative workers be paid at least twice minimum wage. From a good article on the subject on a law firm's web site:

"Thus, these exempt employees will have to make at least $2,600 per month (which amounts to $31,200 per year) starting January 1, 2007, and $2,773 per month ($33,280 per year) starting January 1, 2008."