SACRAMENTO, Calif. (KERO) — California's minimum wage is set to go up again next year. Governor Gavin Newsom's office says it will rise to $15.50 per hour starting in January.
But what impact will the wage increase have on local businesses? And what will the governor's plan do to help curb inflation despite the rise in wages?
Governor Newsom's office says labor market frictions have driven inflation to its highest rate in 40 years and as the COVID-19 pandemic has resulted in persistent supply chain issues some small businesses are being faced with financial challenges.
“We enacted the most comprehensive economic stimulus program in the nation last year, getting billions in immediate relief to millions of Californians. But many folks are still struggling, especially with high costs due to inflation, so we’re leveraging this historic surplus to get money back into the pockets of Californians,” said Governor Newsom. “This inflation relief package will help offset the higher costs that Californians are facing right now and provide support to those still recovering from the pandemic.”
Sergio Aguilar, co-owner of Fresco’s Mexican Grill says that the increase in the minimum wage has a domino effect when it comes to other aspects of operating the restaurant's three Bakersfield locations. With the current rate of inflation at 8.3 percent, Aguilar says they've already had to increase the prices on their menu.
“The restaurant has to make a profit to stay afloat to have employees, to pay our taxes, and to pay our rent," he said. “We know that we are in inflation. Gas is up, straws are up, chicken breast is up. Every item that we use in the restaurant is up. Including our gas to do deliveries and wages. It affects the restaurant's bottom line.”
It is no surprise that the depths of the pandemic took a toll on the profit that comes into small businesses and as inflation has risen Congressman Kevin McCarthy says many small business owners are simply just trying to recover financially.
“We just came out of a pandemic hoping it would be better. Then you’ve got higher regulations. In a small business, you really learn the economic responsibilities.”
Governor Newsom has proposed an inflation relief package with $4 billion to be invested in direct grants to California's small businesses on top of $6.2 billion in tax relief.
“For small businesses, you add up what we did in the early action, with what we’re proposing, and what we did. You’re getting close to $5 billion is the long-winded point in grants to small businesses when you add those three up,” said Newsom.
Newsom adds that these investments will help put more money directly into the pockets of hundreds of small business owners and help offset the higher costs that Californians are facing right now.
23ABC In-Depth
Governor Newsom’s inflation relief package includes:
- $11.5 Billion for Tax Refunds to Help Address Inflation. As the entire country faces increasing costs due to inflation, Governor Newsom proposed getting $400 checks to every eligible registered vehicle owner, capped at two checks per individual.
- $2.7 Billion for Emergency Rental Assistance. Governor Newsom is proposing significant state funds for qualified low-income tenants who requested rental assistance before March 31, helping these Californians get the support they need.
- $1.4 Billion to Help Californians Pay Past-Due Utility Bills. As Californians continue to face difficulties in paying for utility bills, this investment expands upon last year’s utility relief program to continue this vital support – $1.2 billion for electricity bills and $200 million for water bills.
- $933 Million for Hospital and Nursing Home Staff. Providing up to $1,500 to hospital and skilled nursing facility workers who have been delivering care to the most acute patients during the COVID-19 pandemic and saved thousands of lives.
- $750 Million for Free Public Transit. Governor Newsom is proposing incentive grants to provide three months of free public transportation for communities throughout the state.
- $304 Million to Make Health Coverage More Affordable for Middle-Class Families. This extends health insurance premium assistance under Covered California for families of four earning up to $166,500 annually, upwards of 700,000 Californians.
- $439 Million to Pause the Diesel Sales Tax. Bringing relief to the commercial sector and drivers, Governor Newsom is proposing a 12-month pause in the sales tax rate for diesel fuel that would provide upwards of $439 million in relief.
- $157 Million to Waive Child Care Fees for Low-Income Families. Making state-subsidized preschool and child care more affordable, benefitting 40,000 low-income California families with savings of up to $595 per month.