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California reaches deal for US$15 minimum wage

[SACRAMENTO] California Governor Jerry Brown said on Monday he had reached a deal with top legislators and labor leaders to gradually raise the minimum wage to US$15, the latest in a wave of minimum wage increases at the state level following a push by Democrats.

The proposal, which still must win approval from moderate lawmakers in the California assembly, would gradually raise the state's minimum wage to US$15, but give the governor the right to opt out if the economy faltered.

Such a move would give California the highest statewide minimum wage. The federal minimum wage has remained at US$7.25 an hour for more than six years.

Raising the minimum wage has cropped up on many Democratic Party candidates' agendas ahead of the November presidential, congressional and state elections. The issue could help mobilise Democratic voters and galvanize support from labor unions.

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"An agreement has been reached with key labor leaders, legislative leaders and my administration to raise the minimum wage over time to US$15 an hour, making California the first state to do that," Mr Brown said at a press conference in Sacramento. "It's a matter of economic justice and it makes sense," Mr Brown said.

The deal would commit California to raising the minimum wage to US$15 an hour by 2022 for large businesses and 2023 for smaller firms.

The measure's chances of passing the legislature will depend on support from moderate Democrats, who have held up other measures backed by the governor.

Democratic Party presidential hopeful US Senator Bernie Sanders of Vermont has called for raising the federal minimum wage to US$15 an hour by the year 2020.

The idea has been opposed by Republicans and some business groups, who have said a higher minimum would harm small businesses and strain the budgets of government agencies.

Christopher Thornberg, founding partner at Beacon Economics, said increasing the minimum wage was not an effective tool in reducing poverty because those most at risk of falling into poverty tend lose their jobs when employers cut positions. "This is not costless," Mr Thornberg said. "These are the people that businesses will say, "If I'm going to pay US$15 bucks an hour, I'm not going to hire them.'" Fourteen states and several cities began 2016 with minimum wage increases, typically phasing in raises that will ultimately take them to between US$10 and $15 an hour.