California’s minimum wage is increasing 50 cents on Jan. 1, 2025.

It’ll be $16.50 an hour.

Of course, most fast food workers bestowed special privileges by Gov. Gavin Newsom and the California Legislature, won’t be getting a pay hike on New Year’s Day as they already have a state-mandated $20 an hour pay rate.

Rest assured that oversight will likely be addressed in 2025.

The California Fast Food Workers Union in August demanded an increase in fast food minimum pay to $20.70 hour at the first ever meeting of the Fast Food Council.

The legislature created the council to weigh such requests after putting on place a mandatory 25 percent pay hike to $20 an hour earlier this year.

Their pitch was for McDonald’s workers et al to start earning $20.70 as of Jan, 1, 2025. 

It clearly won’t happen then, but the odds are it will some time next year.

That’s because the council as created by the legislature answers to no one. And its membership is stacked to favor fast food workers.

It is against that background California voters on Nov. 5 rejected Proposition 32.

Had it passed, the basic minimum wage would have jumped to $17 on Dec. 1 and then $18 on Jan. 1, 2025.

Then, going forward, there would be annual adjustments for inflation.

The minimum wage law passed in the form of Senate Bill 3 in 2016 when minimum wage was $9, took it initially to $10 in 2017 and then in annual steps initial it reached $15 in 2023.

It needs to be noted that law contained game changing language.

Senate Bill 3 required the minimum wage be adjusted annually for inflation starting in 2024.

That is something that has never been done before.

It eliminated having to secure passage of a bill to raise minimum wages in the legislature and signed by the governor.

That was big.

It meant the minimum wage floor established would not be undermined by inflation.

As such, it addressed a major flaw in the existing wage law.

Since its inception in 1916, that state minimum wage law was never automatically adjusted for inflation.

In the first four years, the legislature did make annual hikes from the 16 cents an hour it was established at until it reached 33 cents in 1920.

It was raised again until 1943 when it became 45 cents.

After that, it was ratcheted up 22 times in 73 years until it reached $10 an hour in 2016.

The lack of annual adjustments to keep up with inflation meant those receiving minimum wage had their buying power eroded for an average of 3.5 years.

Meanwhile, those employees with bargaining groups typically secured cost of living increase on an annual basis including virtually all government workers.

It effectively created a “bottom” to pay for a large chunk of the workforce that benefited 100 percent of those laboring in hourly and even salaried jobs for the government.

It did as well for private sector employees in the private sector, although primarily those working for large corporations.

The philosophy of government having what could be described as an oversized role in driving wage levels in the private sector, has a side effect no one talks much about.

And that side effect makes the cost of government more expensive.

Cities, counties, and schools have jobs that pay minimum wages.

Overall, it is a relatively small number.

But when the minimum wage floor is raised, that small hiccup aimed at a basically minuscule part of the government workforce, quickly turns into financial fever that escalates other wages in the public sector.

That’s because most government labor contracts contains language that you could call a “compaction clause.”

It reflects the fact contract language often are written with the slinky effect.

It imposes a separation between pay stems for various job categories.

That means if for some reason outside the normal bounds of agreed to pay adjustments in contact the wage of someone in a lower step is raised, the step above it increases by the same amount and then on and on until it bumps up the top step.

Minimum wage hikes trigger pay increases in such a manner.

Is that fair?

It is a judgment call based on one’s perspective.

But what it does without debate is raise the government agency’s payroll costs beyond just the minimum wage workers.

And it does so with a much greater cost to taxpayers.

It also means such labor contracts put significantly more money collectively in the pockets of non-minimum wage employees than minimum wage employees when the state hikes the minimal wage.

That is not a reason to not increase the minimum wage.

But it does underscore the financial ramifications of straying beyond the California minimum wage in place that is adjusted annually for inflation.

That’s somewhat a small part of why someone who gave Proposition 32 serious thought to end up voting to help send it down to defeat.

People are not stupid.

They saw what raising the minimum wage by $4 an hour to $20 did to the price they pay for fast food.

And although it didn’t result in the loss of 10,000 jobs since going into effect as those who opposed it often cite; the state’s action dictated there would be losers.

Labor statistics gleaned since January by the state Economic Development Department have now been seasonally adjusted.

The $20 fast food hike did cost 4,400 Californians their jobs.

Those workers instead of getting 25 percent more in fast food pay ended up getting 100 percent less.

Proposition 32 deserved to have been rejected.

More importantly, what is in place is sound given the annual inflation adjustment.

The best way to increase the buying power of hourly workers making the minimum wage is to sharpen skills to pursue better opportunities.

In doing so, they won’t simply be running in place whether it is with an inflation adjust minimum wage or imposed going forward at the ballot box or via the California Legislature.

All Proposition 32 would have done if it passed, was raise the floor and eventually bump everyone up.

There would ultimately no lasting net gain in buying power by those making minimum wage.

And that have been accompanied by the short term loss of a number of jobs.