SACRAMENTO, Calif. - California's minimum wage would rise to $10 an hour within three years under a bill passed Thursday by the state Legislature, making it one of the highest rates in the nation.
Washington state currently has the top minimum wage at $9.19 an hour, an amount that is pegged to rise with inflation. Some cities, including San Francisco, have slightly higher minimum wages.
The state Senate approved AB10 on a 26-11 vote and the Assembly followed hours later on a 51-25 vote, both largely along party lines. Gov. Jerry Brown indicated earlier this week that he would sign the bill, calling it an overdue piece of legislation that would help working-class families.
The bill would gradually raise California's minimum wage from the current $8 an hour to $10 by 2016.
It would be the first increase in the state's minimum wage in six years and comes amid a national debate over whether it is fair to pay fast-food workers, retail clerks and others wages so low that they often have to work second or third jobs.
Democrats said the bill by Assemblyman Luis Alejo, D-Watsonville, would help workers left behind during the recent recession.
"It simply gives hardworking Californians the dignity and respect to provide for their families with their own hard-earned wages," Alejo said in arguing for the bill before his Assembly colleagues.
Sen. Marty Block, D-San Diego, said raising the minimum wage will stimulate the economy by giving lower-wage workers more money to spend.
"They're not going to put it into a hedge fund," he said.
But Republican lawmakers said it would do the opposite, encouraging businesses to cut jobs and automate.
"This is a classic example with how out-of-touch state leaders are," said Sen. Jim Nielsen, R-Gerber.
Sen. Ted Gaines, R-Rocklin, said liberals want to raise the cost of tobacco to discourage its use without realizing the same principle applies to labour: "If you make something more expensive, people will buy less of it."
The California Chamber of Commerce opposed the bill, saying it will drive up businesses' costs by ratcheting up other wages and workers' compensation payments.
"We have it tagged as a job killer, given the increased costs businesses will be faced with," Jennifer Barrera, an advocate for the chamber, said before the vote.
Federal law sets a minimum wage of $7.25 per hour, but California is among 19 states and the District of Columbia that set a higher state minimum wage.
The federal minimum provides $15,080 a year assuming a 40-hour work week, which is $50 below the federal poverty line for a family of two. More than 15 million workers nationally earn the national minimum, which compares to the median national salary of $40,350, according to the U.S. Bureau of Labor Statistics.
President Barack Obama has sought an increase of the federal minimum wage to $9 an hour. San Francisco currently has the nation's highest minimum wage at $10.50 an hour.
California's minimum wage would increase to $9 an hour next July 1 and to $10 on Jan. 1, 2016. The bill does not index the rate to inflation, however, meaning it would remain at $10 per hour unless the Legislature raises it again in the future.
Washington and other states that index minimum wage rate hikes to inflation each year would, over time, outpace California's rate unless the state made an adjustment.
A $10 minimum wage would increase earnings for a projected 2 million Californians by $4,000 a year and put $2.6 billion into the economy, Assembly Speaker John Perez, D-Los Angeles, estimated in a statement supporting the increase.
Opponents say businesses would suffer because owners also face voter-approved increases in sales and income taxes, and because of the uncertain costs of the federal Affordable Care Act.
Businesses are likely to cut jobs, increase consumer prices or both, they argue, citing a study by the National Federation of Independent Business. The group projects that mean the loss of between 46,000 and 68,000 jobs by 2023, depending on other factors including inflation.
Associated Press writer Laura Olson contributed to this report.