CALIFORNIA – The California Department of Finance sent a letter to Governor Gavin Newsom and other lawmakers on August 1, stating the minimum wage would increase statewide in 2026 to $16.90 per hour.

The increase is 40 cents higher than the current $16.50 rate.

According to the department, Labor Code section 1182.12(c) requires the director of finance to calculate a new minimum wage each year by August 1, starting after the $15-per-hour-wage took effect on January 1, 2023.

The adjusted minimum wage must be based on the lower of 3.5% or the annual change in the U.S. CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers).

This year, the department found the CPI-W rose 2.49% from July 2024 to June 2025, compared to the same period the year before. As a result, the minimum wage will rise 2.49% to $16.90 per hour for all employers on January 1, 2026.

The letter was signed by Department of Finance director Joe Stephenshaw.

Prop 32 would have raised minimum wage to $18 per hour

Although the $16.90 rate applies to all employers, regardless of size, some workers are exempt, including outside salespeople, family members of the employer, and registered apprentices.

While local governments and industries such as fast food and health care, may enforce higher minimums, the annual inflation adjustment is designed to help workers keep pace with rising living costs.

In November 2024, California voters rejected Proposition 32 which would have raised the statewide minimum wage to $18 per hour by 2026. Approximately 50.7% voted “No” and about 49.3% voted “Yes”  

As a result, future wages increases will continue under current law and be tied to inflation.

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