Californian Governor Schwarzenegger signed AB 1835 that will raise the minimum wage to $8 an hour by January 1, 2008, which is greater than any other state.

"Raising the minimum wage is something I have wanted to do for a long time and I am happy that this year, we have the right bill and the powerhouse economy we need to get this done," said Gov. Schwarzenegger. "Since I came into office, we have added nearly 600,000 new jobs, unemployment is less than 5 percent, and the state's revenues are up by almost $20 billion. The California economy is a raging, roaring success and now is the time to make sure that everyone is getting to share in this prosperity."

Currently, the minimum wage is $6.75 an hour. The $1.25 increase in the minimum wage will be phased in, with an increase of 75 cents on January 1, 2007 and an increase of 50 cents on January 1, 2008. The last time the minimum wage was raised was more than 4 years ago in January 2002.

In 2004, Gov. Schwarzenegger vetoed a bill that would have hiked the minimum wage by $1 because it was "not the time to create barriers to our economic recovery or reverse the momentum we have generated." In 2005, he said he would have been willing to sign a $1 minimum wage increase, but was forced to veto a measure that contained indexing, saying the "autopilot mechanism fails to account for changes in the economy which could have deleterious effects on the economic health of the state."