California's minimum wage and the Living Wage Act
How the state wage floor is set, what Proposition 32 proposed in 2024 and how voters decided — in plain language, without campaign messaging.
How the state wage floor works
California's minimum wage is a legal floor that applies to nearly every employee in the state, whatever the size of the business. For years the law set two schedules — one for employers with 25 or fewer workers and a slightly higher one for larger employers — and both climbed step by step until they met at $15.50 an hour in 2023.
Since then the rate has been adjusted every January for inflation. The increase follows the national consumer price index for urban wage earners and clerical workers (CPI-W), it is capped at 3.5 percent a year and the wage can never go down. That rule took the statewide minimum to $16 in 2024, $16.50 in 2025 and $16.90 on January 1, 2026.
The statewide figure is only the starting point. Many cities and counties set their own, higher minimums, and some industries have separate rates — covered fast food workers, for example, have earned at least $20 an hour since April 1, 2024. When more than one rate applies, the employer must pay the highest one.
What the Living Wage Act proposed
The Living Wage Act of 2022 was a citizen initiative that set out to raise the statewide minimum wage faster than the inflation formula allows. Its signature drive ran in the first half of 2022, but the verification of signatures was not finished before the deadline for that year's ballot, so the measure qualified in July 2022 for the next general election and appeared on the November 2024 ballot as Proposition 32.
According to the Legislative Analyst's Office, it would have set the minimum at $18 an hour in 2025 for employers with 26 or more employees and $17 for smaller employers, with every employer reaching $18 in 2026. From 2027 the existing inflation adjustments would have resumed.
Voters turned the measure down: 7,469,803 votes (49.29%) were cast in favor and 7,686,126 (50.71%) against. Because it did not pass, the existing schedule and annual adjustments remain in place.
Minimum wage and living wage are not the same
A minimum wage is a legal requirement: the lowest hourly rate an employer may pay. A living wage is an estimate of what a worker or a household needs to cover basic costs — housing, food, transport, health care — in a particular place, and it changes with local prices and family size.
The gap between the two is widest in expensive regions. In its 2024 voter guide CalMatters cited the MIT Living Wage Calculator, which estimated that a single adult needed about $20.32 an hour in California's least expensive county and $27.32 on average statewide. Those estimates are not legal rates, but they explain why debates about the wage floor keep returning to the ballot and to city councils.
Explore the guide
Wage history 2017–2026Every statewide rate for small and large employers, and how inflation adjustments work.Read more →
Proposition 32 timelineFrom the 2022 signature drive to the November 2024 result.Read more →
For & againstThe main arguments on each side and the state's fiscal estimate.Read more →
Questions & answersLocal rates, fast food, who is covered and where to find official information.Read more →