Living in California is filled with perks. The Golden State boasts over 840 miles of coastline with more than 420 public beaches. If you don’t like the beach – it’s not a problem; about a fourth of California, 25 million acres, is made up of dessert. If that sounds too dry and hot, the mountain ranges comprise about half of California. And let’s not forget that Hollywood, Disneyland, the Redwood Forrest, etc., are all in California, making it a wonderfully diverse and beautiful state to visit or live.
But those living in California know that all of this comes at a price – an ever-increasing price. As of May 2023, according to U.S. News, the gas prices in California are the highest in the nation. According to 2022 Census Bureau and HUD data, California has the second highest average home prices – Hawaii is number one in that category. A July 2023 CNBC Report shows that California boasts the second highest cost of living in the United States – again behind Hawaii.
For California churches, non-profits, and small businesses trying to make ends meet throughout this inflation-riddled, post-pandemic climate, starting in January 2024, keeping costs in line may become even more challenging as the minimum wage increases again.
The History of Minimum Wage
In 1912, the state of Massachusetts passed the first law in the U.S. requiring a minimum wage for employees. However, in 1923, the Supreme Court ruled that imposing a minimum wage violated the Fifth Amendment, invalidating state-mandated minimum wage. Amid the Great Depression, newly elected President Franklin D. Roosevelt attempted to relieve suffering workers through the Fair Labor Standards Act, which established the first federal minimum wage – 25 cents per hour. Since its inception, the federal minimum wage has increased over 22 times. In 2009, the federal minimum wage increased to $7.25 per hour and remains unchanged as of 2023. Interestingly, the federal minimum wage is not set or adjusted based on inflation or the cost of living.
California Wage Increases
Employers in California know that the state’s minimum wage has exceeded the federal minimum for quite some time. In 2016, California instituted a phased approach to raise the minimum wage to $15 by 2023. However, inflation outpaced the phased schedule and increased the minimum wage to $15.50 on January 1, 2023.
In 2023, the Department of Finance, using the U.S. Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, determined that the CPI increased by more than 6%, causing yet another increase in the minimum wage in California.
California Minimum Wage as of January 1, 2024
As of January 1, 2024, all employees in California must make at least $16 per hour. In California, to calculate the minimum salary for exempt employees, the employer doubles the minimum wage ($16×2 = $32), multiplies it by 40 hours a week ($32×40 = $1,280), and then multiplies that by 52 weeks ($1,280×52 = $66,560). Exempt employees in California must earn an annual salary of at least $66,560 to meet the new minimum threshold.
Are Churches Exempt?
As many churches face a decline in attendance and donations, they may wonder if they must keep up with the increase in the minimum wage. Licensed or ordained ministers are exempt from federal, state, and local wage laws, but churches must be sure the employee fulfills the requirements of the license or ordination. In other words, the receptionist, janitor, bookkeeper, etc., do not meet the ministerial requirements and are therefore subject to the new minimum wage of $16 per hour in California that begins on January 1, 2024.
The price tag for living and operating a church is steep in California, especially during these financially trying times. Many churches may consider cutting compensation costs to align the budget, especially since compensation costs comprise 45-55% of the budget. But before cutting compensation, churches must consider that wage stagnation and record-setting inflation are real. In the Apostle Paul’s letter to Timothy, he wrote, For the Scripture says, “You shall not muzzle the ox while it is threshing,” and “The laborer is worthy of his wages.” -1Timotny 15:18. Churches should set the example and lead the way in demonstrating outrageous generosity – especially to those who work hard in the ministry.
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