California voters have rejected a ballot measure that would have increased the state’s minimum wage to $18 on January 1, 2025. Defeated by a narrow margin of 50.82 percent to 49.18 percent, Proposition 32 would have made California the first state in the Union to have an $18 minimum wage. The California Chamber of Commerce and California Restaurant Association praised the outcome as a win for businesses and consumers who have seen costs rise in recent years.

The failure of Proposition 32 marks a break with previous increases that have doubled the minimum wage since 2010. In 2016, Governor Jerry Brown signed SB 3 into law, setting annual increases to the minimum wage until it reached $15 in 2022 and allowing further annual increases to match inflation. These inflation adjustments brought the minimum wage to $16 in January 2024. And then in April, Governor Newsom signed legislation that set a $20 minimum wage for fast-food workers. Proposition 32, if passed, would have followed with an immediate increase to $17 before rising to $18 on January 1, 2025 for employers with 26 or more workers. For employers with 25 or less, the increase to $18 would have been delayed a year to 2026.

Employers should note that many cities and counties have separate minimum wage ordinances that exceed the state minimum wage.