California's Minimum Wage Will Increase In 2026, But By How Much?

California will continue to offer one of the highest minimum wages in the U.S. when it raises the statutory lowest hourly wage from $16.50 to $16.90 an hour on January 1, 2026. In contrast, the minimum wage in the United States is $7.25. The rise in California's minimum wage doesn't just affect hourly wage earners. The minimum pay for full-time white-collar professionals will rise from $68,640 to $70,304 per year in 2026. That means an entry-level office worker in California will receive more money than many people in Mississippi, which, at $54,203, is the state with the lowest average income in the U.S.

Under state law, California must increase its minimum wage every year by either 3.5% or the rate of inflation for consumer goods and services obtained by urban wage earners and clerical workers across the U.S., whichever is lower. Because prices rose 2.5% in 2025, the California minimum wage increased by 40 cents.

Various cities and counties set their own minimum wages, reaching as high as $23.15 an hour in Sonoma County in the northern San Francisco Bay Area as of the summer of 2025. In San Francisco, as of 2026, minimum wage rates will range from $21.54 at for-profit businesses to $23 an hour for non-profits and public agencies. As of July 2025, Los Angeles County's minimum wage is $17.81 an hour.

With these wage hikes, California might look like the land of milk and honey — especially for fast food workers, who since 2024 earn a $20 statewide minimum at chains with more than 60 locations. The Golden State also lays claim to being the fourth-largest economy in the world with a gross domestic product of $4.1 trillion in 2024.

But California is still one of the five most expensive states to live in. The Missouri Economic Research and Information Center ranked California as the second most expensive state to live in after Hawaii as of the second quarter of 2025. And while the value of $100 in South Carolina is $106.82, in California $100 is worth just $87.42, according to a recent GOBankingRates.com study. In the western region, including California, the overall consumer price index went up 3% from 2024 to July 2025, compared to a 2.7% increase nationwide, per the U.S. Bureau of Labor Statistics.

As for housing costs, the typical price for a California home was $775,058 at the end of July 2025, versus $368,581 across the U.S. The average listed rent in California was $2,800 a month, about 33% higher than the national average as of September 2025.

With $100 worth so little in California due to the high cost of living, a minimum wage hike probably won't do much to make lives easier for working Californians — unless they manage to snag affordable or workforce housing. It might also make life harder for business owners. Carlos Guaman, president of accounting and insurance firm El Triunfo Corporation, told NBC Palm Springs that aside from having to pay higher wages, employers will also have to pay more in payroll taxes and costs for workers' compensation and disability. 

This could make California cities even more expensive as businesses pass those costs on to consumers. For example, Santa Monica, rated as the most expensive California city in 2024 to do business in, has a cost of living that is 112% higher than the rest of the U.S., per Payscale. 

California is a big state, and some areas remain relatively affordable. Fallbrook, a Southern California city that is considered to be the avocado capital of America, has an average cost of living that is 7% lower than the state's average.  In that area, someone can live on $72,000 a year instead of the nearly $112,000 annual cost of living throughout California.