New health care minimum wage hike will cost California billions

In short

More than 500,000 California health care workers are expected to receive a raise in January thanks to a law raising the industry’s minimum wage. Gov. Gavin Newsom signed the law without a clear estimate of how much it would cost the state.

Alvin Mauricio Medina worked six days a week and three jobs to support his family, becoming the sole breadwinner for a Los Angeles family. He was a certified nursing assistant who dreamed of advancing to a higher-paying position in the health care field.

“I’m trying to better myself, I’m trying to be a registered nurse. But in California, the wages are low and you either work or go to school,” he said.

Now 45, he has worked in the health care field for more than 20 years, earning less than $22 an hour. While his main job was at a hospital in Hollywood, he also worked shifts at other hospitals as a nurse’s aide to care for his husband and two children who were unable to work.

He expects a break in January as Gov. Gavin Newsom signed a law last month raising the minimum wage for health care workers. The measure, which gradually raises the industry’s minimum wage to $25 an hour, is supported by labor unions and lobbying groups representing California hospitals. But lawmakers passed the bill without a cost estimate and Newsom signed it.

Costs are starting to come into focus as the Newsom administration is releasing projections about how rising wages will push up the price of health care for Californians at government agencies. The figure is at least $4 billion, with about $2 billion coming from the state general fund and another $2 billion from the federal government, not including expected pay increases for public employees.

Unions and lawmakers advocating for the pay increases say it’s necessary to improve the lives of overworked health care workers. Union representatives say many workers have resigned, leaving the health care system understaffed and exacerbating the situation for other employees.

“These are ordinary people doing their jobs every day, trying to make ends meet, trying to Pay rent.” “They deserve stability and security. Their work deserves value.”

Students and workers from AFSCME 3299 attend a rally at UC Riverside on November 13, 2019.Photo by Watchara Phomicinda, The Press-Enterprise/SCNG

The new cost estimates come as no surprise to Republican lawmakers who oppose the raises. Democratic lawmakers passed the measure despite the state’s projected $31 billion budget deficit.

“At a time when hospitals across the state are facing financial losses, this bill imposes astronomical labor costs on health care providers,” said Rep. Vince Fong, R-Bakersfield. “We are concerned that this bill will result in a loss of services. Decreases, increased premiums, more hospital closures, fewer jobs.”

What a minimum wage increase means for wages

Lawmakers did not provide cost estimates when they voted on the raises, in part because the final bill reflected a last-minute agreement between major health care employers, represented by the California Hospital Association, and the labor group Service Employees International Union. Their agreement replaces a previous version that would have raised workers’ wages more quickly.

While the original bill would have immediately increased the wage to $25, the signed version would have resulted in a gradual increase in wages. Most workers will start earning $25 an hour around 2027 or 2028.

About 500,000 health care workers are expected to eventually see their wages rise as a result of the new law. Some of them already make $25 an hour or more, but wages may increase due to wage competition.

Some workers are employed by institutions such as the University of California Health System or state hospital departments.

Learn more about the legislators named in this story

Maria Elena Durazo

State Senate, District 26 (Los Angeles)

Maria Elena Durazo

State Senate, District 26 (Los Angeles)

How She Vote 2021-2022

liberal Conservative

District 26 Demographics

Voter registration

Democratic Party 62%

republican party 9%

Independent twenty three%

Event donations

senator.María Elena Durazo At least $1.4 million from labor since her election to the Legislative Council.That means 54% Her total campaign donations.

Vince Fang

State House District 32 (Bakersfield)

Vince Fang

State House District 32 (Bakersfield)

How he voted 2021-2022

liberal Conservative

District 32 Demographics

Voter registration

Democratic Party 26%

republican party 47%

Independent 18%

Event donations

compilation. Vince Fong at least achieved $608,000 from Finance, insurance and real estate Since being elected to the Legislative Council.That means 13% His total campaign donations.

An early fiscal analysis of the bill also estimated that a $25 minimum wage for UC health care workers would cost the state as much as $180 million. UC did not provide new estimates of the costs the law would cost hospitals and medical centers.

The Newsom administration and the Legislative Analyst’s Office are also tallying payroll costs for other state offices. Treasury spokesman HD Palmer said wages for 26,000 government employees in 12 bargaining units would also rise.

In the private sector, hospitals estimate that if wages were immediately increased to $25 an hour, the initial bill would cost them $8 billion. The California Hospital Association did not provide a new projected cost estimate when CalMatters asked for one.

SEIU California Executive Director Tia Orr said in a written statement that most health care employers support the pay increase. She said the union is “committed to working with the administration and the Legislature to ensure safeguards are in place to ensure that this critical measure is taken in a manner that preserves California’s fiscal health, just as we did when we last negotiated a statewide minimum wage increase. Do that.” That’s how you make progress—through flexibility and compromise to achieve a common goal. “

Healthcare workers receiving public assistance

Newsom had no comment when he signed the law. By contrast, he attended an event hosted by SEIU when he signed a similar law setting a $20 minimum wage in the fast food industry.

Sen. María Elena Durazo, D-Los Angeles, who originally proposed the health care wage increase, noted that the law developed by the UC Berkeley Labor Center had different cost estimates. It expects the new law to save money by ensuring workers make enough money to avoid using public assistance.

“This historic investment in the workers who care for us and make our health care system functional and accessible reminds us of the truly low-wage nature of most of these jobs. Hundreds of thousands of Californians will see their wages increase, which means leaving money in the pockets of health care workers to help support their families,” she said in a statement.

Gabriela Guevara, a medical receptionist at Clinica Sierra Vista in Fresno, believes the law will ease staffing challenges in the industry.

“This will better serve all patients. The more staff we have, the better we can provide quality care to all patients who come in,” she said.

Medina, a certified nursing assistant in Los Angeles, hopes he can quit a job after the new wage law takes effect. But he said he would have more free time.

“It will definitely give me more time with my kids,” Medina said. “It allows me to go to school. And I don’t have to worry about being late for a third job or a second job, I can focus on one job.”

Supported by the California Healthcare Foundation (CHCF), which works to ensure people can get the care they need, when they need it, at an affordable price.access learn more.

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