How California made the minimum wage obsolete

This fall, California voters will have the chance to set the nation’s highest minimum wage at $18.

Congress hasn’t touched the federal minimum wage in decades. Wage wars now play out locally, with organized labor successfully deploying ballot measures in states where legislators are resistant to organizing campaigns like the Fight for $15.

But a ballot initiative to raise California’s wage floor has been met so far with shrugs from unions and industry coalitions that fiercely fight over the minimum wage levels elsewhere. In a labor market where In-N-Out Burger cashiers make $20 an hour, Long Beach hotel workers earn $23 and medical assistants statewide can soon count on $25, it is hard to find anyone who wants to fight over $18.

Left in the lurch is Joe Sanberg, a progressive financier who’s invested in startups like the meal-prep company Blue Apron. The son of a single mother who lost the family home to foreclosure, he launched a costly quest in 2021 to deliver a four-dollar-per-hour increase to California’s minimum wage via ballot initiative.

At the same time, however, service unions shifted their approach, using their clout in Sacramento to pursue a piecemeal strategy that will this year increase wages for fast food and health care workers well beyond the state’s current $16 minimum. Simultaneous pressure on city and county governments have raised the floor in high-cost areas, in many cases automatically adjusting upward to track inflation.

Sanberg’s proposal finally comes before this voters this fall, but California Business Roundtable president Rob Lapsley, whose organization formally opposes the proposal but is doing little to defeat it, says the statewide minimum wage has “been left in the dust” by the sector-by-sector bargaining and inflation-driven bumps. One Fair Wage, which advocates for wage boosts around the country, is pushing Sanberg to drop the measure, which the organization characterizes as obsolete even though it could still benefit some two million Californians.

Across the political spectrum, those used to seeing interest groups cut deals to neutralize ballot initiatives are quietly asking: is Sanberg really planning to plow ahead with his proposal?

He says he intends to, but after spending $10 million in 2022 to qualify it for the ballot Sanberg has not raised a dime for the effort in months and recently shut down the ballot committee that was his primary vehicle for influencing the outcome. He says he is now banking on the inherent appeal and clarity of asking voters to give themselves a raise. It is a gamble in a system where ballot measures typically cost tens of millions of dollars to pass, and a test of the electorate’s progressive values at a moment of economic uncertainty.

“The polling is overwhelmingly supportive and as a result I don't think it’s going to require a huge investment in a campaign,” he said in an interview, after which his campaign pointed to a recent poll finding a clear voter majority in favor of the measure. “We can win this on an economy budget.”

Past efforts by labor unions to increase the minimum wage have consumed Sacramento. The Service Employees International Union used a ballot initiative threat to compel then-Gov. Jerry Brown into a 2016 deal to phase in a $15 wage over five years. (Inflation adjustments pushed it up to $16 per hour at the start of this year.)

More recently, SEIU and its allies have driven complex bills to Gov. Gavin Newsom’s desk that impose higher wage floors on the health care and fast-food sectors. Those fights are still fueling political strife as Newsom seeks to trim the health care boost and faces questions over which category of restaurants are covered under the law.

The $18 proposal that will come before voters this fall has taken a different path. Sanberg waded into California politics over the last decade with a focus on buoying the working class, first championing an earned income tax credit and then turning his attention to the minimum wage, arguing stagnant pay has exacerbated poverty.

He did not first assemble the type of labor coalition that has traditionally driven wage boosts. While some unions have specifically backed his quest, and labor generally supports raising pay for workers, there is disagreement within the larger world of labor politics about how to set wages. For instance, the California Nurses Association opposed SEIU’s push last year to raise health care wages to $25 out of fear it would undercut workers who would otherwise make more.

“We tried to get the unions together and say: ‘What is the magic number?’ And of course we couldn’t,” said California Labor Federation leader Lorena Gonzalez. “There were all these different proposals. However, everyone agreed $18 is absolutely reasonable and necessary.”

In late 2021, Sanberg announced plans to qualify his proposal for the following year’s ballot. He poured nearly $11 million of his own money into the project, with only modest support from a handful local labor unions that marshaled members to gather petition signatures.

But Sanberg missed a key deadline to make the 2022 ballot, and turned on Democratic officials whom he claimed had mishandled the situation and needed to rectify it. He sued Secretary of State Shirley Weber and pressed Governor Gavin Newsom to call a special election for the initiative. Sanberg even enlisted Representatives Nanette Barragán and Ro Khanna to amplify the call, and prominent progressive journalist Ryan Grim opined Newsom should be “disqualified” as a national figure if he did not heed it.

The measure was pushed to November 2024, and into a very different environment for labor economics in California. A recent flurry of minimum wage activity around California has created a patchwork of different wage floors, many of them above Sanberg’s proposed $18. Cities like Berkeley and San Francisco pay just over $18, and West Hollywood over $19. Los Angeles has phased in a minimum wage for hospitality employees that this summer will have employees in hotels with 60 or more rooms making at least $20.32 per hour.

“It’s resulted in workers we’ve talked to around the state, in all industries, saying ‘what about us?” said Saru Jayaraman, the president of One Fair Wage, a Massachusetts-based organization that promotes higher pay with a focus on service-sector jobs. “I’ve heard from legislators as well: ‘This is getting confusing because there are five or six minimum wages in California.’”

Jarayaman, whose group is currently working to qualify an $18 minimum-wage ballot initiative in Arizona, said it is important California continues to lead on the issue given its size and clout. “You can’t have Arizona and California have the same number on the ballot in 2024,” she said. “You just cannot.”

An official 2021 state analysis of California’s $18 wage measure estimated it would increase costs for local governments paying workers and contractors but could lower the number of people drawing public assistance.

“It’s like: what’s the point of this?” said Lapsley, the Business Roundtable leader. “Businesses are in a complete state of confusion between what’s going on with the fast food act and the $20 wage. And then if this passes, who’s paying what?”

The California Business Roundtable formally voted to oppose the measure more than two years ago, but has since turned its attention to what it views as more pressing threats. The organization has spent millions to pass an anti-tax measure that faces fierce opposition from a potent coalition of top Democrats, labor and local governments.

Unions, too, are more concerned about other measures on the November ballot, including a trio of tax-related initiatives and business-backed efforts targeting a law that lets people sue employers for workplace violations. Newsom is joining environmental groups and labor in opposing a referendum challenging a ban on oil wells near homes and schools. Gonzalez suggested unions could adopt a hands-off approach to the wage measure because it “probably will sell itself.”

The California Restaurant Association opposes the increase, chief executive officer Jot Condie said, but his organization has yet to commit to working to defeat it.

“When this thing becomes real, when we understand whether or not this thing is going to appear on the ballot, we’re going to absolutely weigh in,” Condie said. “There's been this fast food law for $20, efforts to go to $25 for some workers in the health care sector, so on the proponents’ side I’m just not sure the level of enthusiasm they have for this.”

Rather than asking prominent labor groups to divert resources from those higher-priority campaigns, Sanberg is looking to individual donors and to a relative newcomer to state politics. The populist, left-wing Working Families Party has a far smaller footprint in California than in New York, Connecticut or Pennsylvania, but it has become more active under the leadership of former San Francisco Supervisor Jane Kim.

Kim acknowledged in an interview that the value of a $18 wage has diminished. But she said it still made sense as a “bread-and-butter issue” for the Working Families Party. “While it’s not the number we want it to be,” she said, “it will still make a difference in the lives of working families.”

Unite Here 11, which has represented striking hospitality workers in southern California, has stood out among labor locals for its early and enthusiastic support of the $18 wage. The union’s president said in an interview that she believed the wage push could boost turnout — potentially buoying Democrats in down ballot races like a cluster of critical House contests.

“We are all in. We want to finish what we helped start,” said Ada Briceno, co-president of Unite Here Local 11 and chair of the Orange County Democratic Party. “I’m not sure what would happen in Sacramento, but I know what will happen with a ballot initiative.”

But neither Unite Here nor the Working Families Party are likely to be able to spend the kind of money that’s typically needed to move the needle on statewide campaigns. Working Families reported having around $200,000 on hand in February.

Sanberg’s campaign will also need to overcome considerable economic pessimism. California is staring down a $38 billion budget deficit. Newsom wants to pare back the $25 health care wage to soften the fiscal impact. The governor’s $6.8 billion behavioral health bond barely passed last month despite lopsided advantages in fundraising and endorsements.

Newsom did not weigh in on the $18 wage initiative in 2022 and a representative said he still has not taken a position on it. To Sanberg, events in those intervening years should make the proposal newly appealing to a Democrat balancing strong labor ties with fiscal caution.

“I believe $18,” he said, “is going to strike the governor as a pretty moderate position.”