4 / State-Level Wage and Labor Policies and Regulations in California
California’s local economies have unifying features in their histories
The regional profiles demonstrate the vast diversity of California’s local economies as well as the challenges and opportunities such diversity offers. As with occupational and wage polarization, California’s local economies have unifying features in their histories.
At the state level, California is known for its progressive labor regulations and workers’ rights campaigns, the history of which is evident in the evolution of the state’s Labor Code.
Events preceding the time period of focus in this report shaped the trajectory of work and employment throughout the state: The 1913 Workmen’s Compensation, Insurance, and Safety Act, passed shortly after Wisconsin pioneered with its 1911 law; protections for industrial workers in the late 1930s into the mid-1940s; the California Occupational Safety and Health Act of 1973; and the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations Act of 1975, the first state law intended to protect farm labor rights.
Much of the content of these early actions simply aimed to reduce death and serious injury on the job.
More recently, California’s work and labor policies have evolved to include regulations on wages, medical/sick day allowances, and paid family leave.
The state’s annual adjustment of minimum wage, for example, was codified into law after initially being proposed as a potential ballot measure. Through a state law passed in April 2016, California established a new incremental minimum wage phase-in approach requiring all employers to increase their wages annually in order to provide a $15 hourly minimum wage by January 1, 2023.
Likewise, California’s cities are among the first in the nation to enact local minimum wage ordinances to account for differences in cost-of-living between regions (commonly referred to as a “living wage”).
Beyond these regulatory and legislative actions, the state routinely finds itself at the forefront of government, worker, and organization negotiations over the “gig economy” and contract worker rights.
During the pandemic, there has been renewed attention to the outdated underlying systems government agencies and programs used to meet the needs of California’s residents. Even for those who are able to navigate unemployment and other social safety net programs, outcomes can be varied and point to a need for reassessment of how the program is administered.
California is among the richest and most productive states in the nation, yet unemployment payouts lag behind many other states. Analysis from the Stanford Institute for Economic Policy Research found that California’s top weekly state unemployment pay hovers around the national average, outpaced by comparable states such as Texas and Washington. Moreover, laid-off Californians receive 50 percent of their most recent earnings, but the weekly payout is capped at $450 for a maximum of 26 weeks.
Therefore, despite taxing employers for unemployment benefits equally regardless of their employees’ wages, California’s system still causes low-wage workers to receive significantly less support through unemployment insurance than high-wage workers are eligible to collect. Augmenting unemployment benefits and improving programs’ ease-of-use will be a crucial component of reducing inequality and promoting economic mobility.
The core takeaway from all of these indicators is that incomes and wages in California are on a trajectory of increasing polarization—a high proportion of workers earning low- and high-wages, with little growth in the wage percentiles that represent middle-class occupations.
