Why one system is spending $14 million to give employees a raise

Plan will apply to direct employees and contractors

University of California (UC) President Janet Napolitano announced on Wednesday that the university system will increase its hourly minimum wage to $15 by 2017.

"This is the right thing to do—for our workers and their families, for our mission and values, and to enhance UC's leadership," Napolitano said.

The announcement comes on the heels of a budget battle between Napolitano and Gov. Jerry Brown—which took months to resolve and ended only after the two isolated themselves in a special committee to informally review the budget.

Details of pay increase

Under the Fair Wage/Fair Work Plan, UC's minimum wage will increase gradually from the current rate of $9 an hour to $15 an hour by 2017.

The plan will apply to UC-employed workers and contractors who work at least 20 hours per week.

UC estimates that the pay increase will affect about 3,200 direct UC workers. It is unclear how many contract workers will be affected, but UC spokesperson Dianne Klein says the number of contractors who currently make less than $15 an hour is "many times larger" than the number of affected UC employees.

The pay increase is projected to cost about $14 million annually. UC officials say funding for the plan likely will come from hospital revenues, parking fees, and bookstore sales.

Meanwhile, UC under the initiative also will:

  • Expand its monitoring and compliance efforts for contractors' wages and working conditions; and
  • Require all contractors to undergo compensation audits to ensure they are providing wages at or above the new minimum wage (Rauber, "Bay Area BizTalk," San Francisco Business Times, 7/22; Koseff, "Capitol Alert," Sacramento Bee, 7/22; Gordon/Willon, "L.A. Now," Los Angeles Times, 7/22' Lovett, New York Times, 7/22).

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