California’s statewide minimum wage will increase to $17.40 an hour on Jan. 1, 2027, continuing the state’s annual cost-of-living adjustments aimed at helping workers keep pace with inflation. The increase comes as many Californians continue to face rising housing, food and transportation cos ts, while businesses navigate higher operating expenses of their own. The statewide minimum wage serves as a baseline, though many cities and counties have adopted higher local rates. In the City of San Diego, the current minimum wage is $17.75 an hour, while the unincorporated areas of San Diego County follow California’s statewide minimum wage. Some industries, including fast food workers and certain health care employees, are also covered by separate statewide minimum wage laws that already require higher hourly pay. For North Park small business owner Gary McIntire, the upcoming increase won’t directly affect payroll at his specialty bartending supply store, Collins Coupe. “We’re already paying above minimum wage,” McIntire said. “I fully support minimum wage increases — the cost of living continues to rise.” McIntire said higher labor costs are only one part of the financial pressures businesses face, noting that the prices he pays for inventory have also increased over time. “It would be nice if inflation were not going up so quickly,” he said. “But I certainly want to take care of my employees, and I want them to be able to live comfortably for the time they put in here.” Just down El Cajon Boulevard, Logan Mitchell, owner of the vintage kitchen supply store Tablespoon and McIntire’s wife, shares a similar philosophy. “I think that people deserve to be paid a living wage no matter what they’re doing,” Mitchell said. She acknowledged that rising costs can make running a small business more difficult but said supporting employees remains a priority. “I’m not going to say that if things keep going up, that it won’t hurt our business,” Mitchell said. “But I’m not willing to sacrifice my employees for that.” Economists remain divided over the broader impacts of minimum wage increases. Alan Gin, an associate professor of economics at the University of San Diego, said supporters argue that higher wages give low-income workers more purchasing power, helping them better afford necessities while boosting consumer spending. “This would put more buying power in the hands of people on the lower end of the income distribution, which is particularly suffering right now from these higher prices,” Gin said. He added that many lower-income households continue to struggle with the state’s high cost of housing. “The big problem is housing costs, particularly along the coast,” Gin said. Critics, however, argue that increasing labor costs can create challenges for employers. “Some people argue that it would hurt jobs,” Gin said. “Businesses have to pay a higher minimum wage, their costs go up.” He said some economists believe employers could respond by hiring fewer workers, while others warn businesses may raise prices to offset higher payroll expenses. “On the other hand, other economists think that if you give people more buying power, then they’d go out there and spend that money,” Gin said. McIntire believes higher wages can ultimately benefit small businesses as well. “From purely a business standpoint, the more everyone’s making, the more likely they’re going to come and be my customer,” he said. “When everyone’s feeling a little more affluent, they’re more likely to come and splurge a little bit, take care of themselves a little more, maybe buy a gift for somebody that they wouldn’t otherwise.” The statewide increase is tied to inflation and is intended to preserve workers’ purchasing power over time. According to Gov. Gavin Newsom’s office, California’s minimum wage will remain among the highest in the nation. Meanwhile, the federal minimum wage has remained at $7.25 an hour since 2009, the longest period without an increase since the federal minimum wage was established in 1938. If a worker is covered by both state and federal minimum wage laws, employers are required to pay whichever wage is higher. The City of San Diego has approved a phased minimum wage increase for certain hospitality workers, including employees at hotels and amusement parks. Covered workers are set to earn $25 an hour by 2030, with wages increasing by $1.50 annually after reaching $19 an hour in 2026. This story was originally reported for broadcast by NBC San Diego. AI tools helped convert the story to a digital article, and an NBC San Diego journalist edited the article for publication. ...read more read less