Hundreds of thousands of California health care workers are poised to receive wage increases under a bill signed late Friday by Gov. Gavin Newsom that will gradually raise the minimum wage for health industry workers to $25 an hour over the next several years.
The legislation, introduced by State Sen. Maria Elena Durazo, D-Los Angeles, makes California the first state to enact a minimum wage for health industry workers.
It will likely mean a significant wage boost for many workers. The state’s current minimum wage, which all employers including health industry employers must abide by, is $15.50 an hour — though it’s higher in jurisdictions such as San Francisco and Oakland that have their own local minimum wage requirements.
“Today California is putting a stop to the hemorrhaging of our care workforce by ensuring health care workers can do the work they love and pay their bills — a huge win for workers and patients seeking care,” said Tia Orr, executive director of Service Employees International Union California, which sponsored the legislation. “We applaud Governor Newsom for signing this bill and making history for California as the first state to lift the floor on health care worker wages to $25.”
The mandated increase comes at a time of enormous financial and staffing pressure on the health care sector in the wake of the COVID-19 pandemic — as exemplified by a three-day strike this month by Kaiser Permanente workers in which employees were seeking salary increases and more hiring to relieve under-staffing and stress.
Kaiser and the unions representing 75,000 licensed vocational nurses, laboratory technicians, respiratory therapists and behavioral health workers reached a tentative settlement on Friday that establishes new minimum wages for employees over the next three years of $25 an hour in California and $23 an hour in other states where Kaiser operates. It also guarantees across-the-board wage increases totaling 21% over four years.
Under the new California law, an estimated 450,000 health care workers will receive a wage increase, according to a June analysis of the bill by the UC Berkeley Labor Center. That represents 40% of the state’s health care workforce and nearly 3% of the state’s overall workforce, the analysis found.
Home health workers and skilled nursing facility employees are expected to see the largest increases in average annual earnings, according to the analysis.
The newly passed minimum wage requirement will be applied at different times, depending on the size of a health care employer’s workforce and source of revenue.
Large health systems and dialysis clinics with 10,000 or more full-time employees will have to pay workers a minimum of $23 an hour starting June 1, 2024; $24 starting June 1, 2025; and $25 starting June 1, 2026.
Hospitals that get most of their funding from Medi-Cal and Medicare, and small rural hospitals, will have to pay workers at least $18 an hour starting June 1, 2024, with annual 3.5% raises. They will have to pay workers a minimum of $25 an hour starting in 2033.
Primary care clinics, community clinics and urgent care clinics owned by primary care providers will have to pay employees at least $21 an hour starting June 1, 2024; $22 starting June 1, 2026; and $25 starting June 2027.
All other health care facilities must pay workers at least $21 an hour starting June 1, 2024; $23 starting June 1, 2026; and $25 starting June 1, 2028.
The bill was sponsored by the SEIU California and backed by other labor unions. The legislation includes language that prohibits local jurisdictions from raising health care worker wages for 10 years, other than via ordinances that raise wages across the board for local workers or for public servants.
It was opposed by a number of hospitals and medical centers, originally including the California Nurses Association.
A coalition of groups that opposed the measure estimated it would cost $8 billion annually in higher premiums and costs to state and local governments.
The California Hospital Association later pivoted to support it, saying it “strikes an important balance between supporting workers and protecting jobs and access to care in some of our most vulnerable communities.”