State's Minimum Wage Hits $8

California's minimum wage joined the ranks of the nation's highest this year, increasing 50 cents to $8 an hour.

California's cost of living continues to far outpace purchasing power, but the state's $8 minimum wage will be significant for low-wage earners, said one local analyst.

"Purchasing power hasn't kept pace, but this will make an impact," said Jean Ross, executive director of the Sacramento-based California Budget Project, a group of fiscal and policy analysts who focus on low- and middle-income Californians. "That's a significant increase."

The wage boost is the second of a two-step increase triggered by 2006 legislation that raised California's minimum wage to $7.50 last January.

The hike will put the state's minimum wage on par with Massachusetts, and the two fall into the No. 2 spot just behind Washington state's $8.07. The federal minimum wage is $5.85 an hour.

"The increase will also be good because employees will pump the money back into neighborhood businesses, Ross said.

"A modest increase in the minimum wage has a minimal impact on employment," Ross said. "Employees spend their paychecks in the local community in ways that create more jobs."

The 50-cents-an-hour raise translates to $2,600 more in annual earnings for full-time workers than two years ago.

It's enough to pay for nearly three months' rent on the average one-bedroom unit, but it will raise the average worker's annual pay to $16,640. That falls roughly $250 below the federal poverty line for a family of three, according to the California Budget Project.

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