Gov. Arnold Schwarzenegger signed a bill Tuesday to give California one of the highest minimum wages in the nation.

The law gives more than 1.4 million people an increase of 75 cents an hour in January and another 50 cents the following year, boosting the rate from $6.75 an hour to $8.

Schwarzenegger and legislative Democrats have been at odds over the shape of a minimum wage increase in California for the past several years. Democrats sought annual automatic increases, which Schwarzenegger opposed.

The governor supported a straight $1-an-hour increase but compromised on the $1.25-an-hour boost with no annual adjustment.

"This is a great accomplishment in an election year, an election year when everyone usually tries to derail each other in Sacramento," Schwarzenegger said during the bill-signing ceremony, which was held at a Hispanic marketplace near downtown.

With the new law, California joins Massachusetts as having the nation's highest minimum wage. Massachusetts also will boost its rate to $8 an hour by 2008 after lawmakers were able to override a veto this summer by Republican Gov. Mitt Romney.