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SACRAMENTO — California’s minimum wage will rise $1 an hour to $6.75, one of the highest in the nation, under a decision Monday by the state Industrial Welfare Commission. 

The commission voted 5-0 for the minimum wage increase, which will take effect starting Jan. 1 with a 50-cent raise followed by another 50-cent raise Jan. 1, 2002. 

“I would have preferred it to go higher,” said Commissioner Barry Broad, who earlier acknowledged that he was in the minority on the board in seeking a bigger increase.  

“It should definitely go above $6.75 to help the families that are already struggling.” 

California last raised the state’s minimum wage in March 1998. 

Washington state and Oregon currently have the nation’s highest minimum wage, $6.50 an hour. In 2002, only Washington’s would be higher than California’s.  

Washington’s minimum wage is indexed to keep up with inflation and is expected to be slightly above $6.75 then, said Jean Ross with the California Budget Project, a liberal research group. 

The California increase was a blow to some business leaders who asked commissioners to wait until the federal government considered an increase in the federal minimum wage , which now stands at $5.15 an hour. 

Business leaders said a higher minimum wage would make it difficult for them to compete with companies in other states, which would have lower overhead costs because they could pay workers less. 

Farmers also protested the higher wages, arguing they would be unable to recoup their costs in the tight agriculture market. Grape grower John Baranek of Sacramento was the only speaker objecting to the increase Monday.  

He said the raise could keep California farmers from making their loan payments and leave them unable to compete internationally. 

“This will have a ripple effect, especially in the Central Valley,” Baranek said. “I ask that you postpone making a decision until it is determined what the shakeout is going to be.” 

California unions are pushing for a minimum wage of at least $8 an hour. They say a $1 increase is still not enough for minimum wage earners given California’s high cost of living. 

The increase approved Monday would affect 1 million workers currently making the minimum wage and 2 million workers who make less than $6.75, according to the California Labor Federation. 

The five-member Industrial Welfare Commission also withdrew exemptions for several classes of workers – including home health care assistants, actors and carnival workers – who were not covered by the state minimum wage law. 

An exemption for an estimated 100 shepherds in California was not removed Monday. 

The commission voted 3-2 to let a wage board examine the exemption before a final decision is made. That is expected to take six months. 

Shepherds work 24 hours a day and under federal law must be paid at least $900 a month and given free meals, housing and medical care. 

The shepherds’ employers were the only group to protest an end to the exemption, which persuaded commissioners to take a closer look at the issue, Bosco said. 

“It could be challenged in court if we try to take away that exemption, as most decisions are now days,” he said. “We want to make sure we are doing things the right way.”