California Minimum Wage Increase Raises Taxes

The 25% increase to California’s minimum wage for fast food workers comes as the state faces a $58 billion budget deficit. Cutting expenses and increasing tax revenue would lower that number. Notably, the new wage increase could accomplish both, as payroll taxes climb and businesses raise prices in response to higher labor costs.

State lawmakers have not yet weighed in on the new wage’s potential impact on California’s budget. However, projections for previous minimum wage increases documented by California’s Legislative Analyst’s Office (LAO) shed some light on what could happen.