Governor Dismisses Dept. of Finance Report – 2021 Minimum Wage Increase to Move Forward

In January, California will be heading into the 5th year of a multi-year stair-stepped increase in minimum wage eventually capping out at $15 per hour.  Current state law provides the Governor with an “off ramp” if certain economic conditions are met.  The state labor code specifically requires the Department of Finance annually to determine whether or not the economy can support a minimum wage increase, and sets for the criteria by which the Governor can suspend the minimum wage.

On Wednesday, July 27th, the Department of Finance released their “Determination and Certification” that stated the “current economic and General Fund fiscal conditions allow the Governor to make the determination whether to temporarily suspend the next minimum wage increase on January 1, 2021 (see attached letter).  As you know on January 1, 2021 minimum wage will increase $13 per hour for employers with 25 or fewer employees, and $14 per hour for employers with more than 25 employees.

In response, today the Governor issued a press release today summarily dismissing the DOF information and said the minimum wage increase will move forward as planned stating, “As we continue our efforts to slow the spread of COVID-19, we must also ensure that as our economy recovers, all Californians can benefit in its growth. Not allowing this increase to go forward will only make life harder for those Californians who have already borne a disproportionate share of the economic hardship caused by this pandemic. Many of them are on the front lines of the pandemic, providing child care, working in our hospitals and nursing facilities and making sure there’s food on grocery store shelves.”

This despite the release of a recent economic report on the impacts to agriculture from COVID -19 that estimates the direct economic impact to agriculture to be between $5.9 billion to $8.6 billion, and secondary impacts to be between $4.1 and $6.5 billion.  The report prepared by ERA Economics LLC entitled “Economic Impacts of the COVID-19 Pandemic on California Agriculture” estimates the impact on cotton to be $166 million and tree nuts to be between $486 million to $728 million.

Director of Finance Determination and Certification