Calif. raises minimum wage to $6.75

SACRAMENTO, Dec. 31 (UPI) -- Minimum wage workers in California will get a mandatory pay raise on New Year's Day.

On Tuesday, the state's minimum wage rises by 50 cents to $6.75 -- $1.60 above the federal hourly rate -- to match Massachusetts' as the second highest in the nation, behind Washington state's rate of $6.90.

"This increase in minimum wage comes at a time when economic conditions are hitting low wage earners the hardest," Gov. Gray Davis, D-Calif., said. "The minimum wage boost recognizes the value of labor by some of the hardest working Californians."

In a report issued earlier this year, the state's Employment Development Department estimated that more than 2.1 California workers earn less than $6.75 per hour.

The study found that nearly half of minimum wage earners in California are under age 25 and had neither a high school diploma nor a GED. The study also found that minimum wage earners varied little by race, ethnicity or sex and that workers in the service industry would benefit most from the increase.

Despite the economic benefits a minimum wage increase would bring to those employed in the service industry, the California Restaurant Association has lobbied against government-mandated increases in the wage, arguing they put pressure on restaurants to raise pay for workers across the board.

The organization also said the increase would eat up restaurant profits, forcing owners to either layoff staff or to cut workers' hours.

However, nobody knows exactly how many jobs will be lost in the next few months due to the increase, but there is no doubt that the wage hike will hurt business owners with a large minimum wage payroll.

An estimated 8,700 restaurant and bar workers in California have lost their jobs from September to November, according to the Employment Development Department.