Minimum wage still falls short of living costs, MIT estimates show
California Governor Gavin Newsom announced Friday that the state’s minimum wage will increase to $17.40 per hour on Jan. 1, 2027, making it the highest state-level minimum wage in the United States. The current rate of $16.90 will rise by 50 cents under the new law.
In a news release, Newsom contrasted the increase with the federal minimum wage of $7.25, which was last raised during the presidency of George W. Bush. “For years, Donald Trump and Republicans have blocked efforts to raise the federal minimum wage while handing tax breaks to billionaires and big corporations,” Newsom said.
“California has chosen a different path – one that rewards work, grows the economy and puts working families first,” Newsom said. “We believe if you work hard, you deserve a decent paycheck. They think $7.25 an hour is enough. We don’t.”
Thirty states and Washington, D.C., have set minimum wages above the federal floor. Washington state will trail close behind California in 2027 with a minimum wage of $17.13, according to Department of Labor data. In New York City and three nearby counties, the minimum wage is currently $17 per hour.
Since Newsom became governor in 2019, the state’s minimum wage has grown from $12, his office said.
Despite the increase, researchers at the Massachusetts Institute of Technology estimate that a two-adult, two-child household in California requires each adult to earn $36.38 per hour to cover food, childcare, healthcare, housing, transportation and other basic necessities.
Cost-of-living concerns have been a central issue in the upcoming midterm elections. The Trump administration has faced criticism over the protracted war with Iran, which has contributed to a surge in gas prices. In California, which mandates a special reduced-emission gasoline blend, fuel prices topped $6 per gallon in recent months.