California Health Care Employers Now Required to Raise Minimum Pay

She picks shifts up as a medical assistant at a hospital emergency room in the afternoons or overnight in nearby Hollister, where she was raised. She’s trying to make enough money to afford to move her family back there.

“It’s just been really, really hard,” she said.

Cortez is one of hundreds of thousands of health care workers expected to see paycheck raises thanks to a California law that went into effect Wednesday. After months of delays, the mandated minimum wage increase, the first in the United States to target the health care industry, aims to alleviate workforce shortages and improve patient care. The raises could help health employers recruit and retain workers in often tough, frontline jobs.

The law requires most health care employers to gradually boost their lowest wage to reach $25 an hour in the coming years. According to the phased-in schedule, large health systems must pay at least $25 an hour by mid-2026. Smaller ones will have more time to increase the pay of nursing assistants, pharmacy technicians, janitors, receptionists and other positions.

“This is a well-deserved increase,” said Tia Orr, executive director of the Service Employees International Union California, which sponsored SB 525. “This is going to prove to be more beneficial for patients, more beneficial for California, and hugely beneficial to the workers who sacrifice their lives literally every single day to provide us the health care that we all need.”

About 350,000 health care employees, most of them people of color and women, are projected to see an annual average increase of $6,400 in the first year of the policy, according to an analysis by the UC Berkeley Labor Center. In earlier estimates, the labor center calculated up to 426,000 people would be impacted, but that figure included workers at skilled nursing facilities who are currently not covered by the law, according to Laurel Lucia, who directs the center’s health care program.

California already mandates most fast-food employers pay at least $20 an hour. Fast food, as well as the retail industry, often compete with health care for workers, said Bianca Frogner, who directs the Center for Health Workforce Studies at the University of Washington School of Medicine.

“It gives health care maybe a fighting chance against other industries that might be raising wages and are competing for workers,” Frogner, a health economist, said.

Gov. Gavin Newsom signed SB 525 last fall, with an original implementation date of June 1. However, Newsom and lawmakers agreed to defer the measure twice due to concerns that costs would exacerbate a state budget deficit.

Cortez said she was crushed by the delays and kept checking social media for updates from the governor on whether the Oct. 16 implementation date would stick. Earning more at her dialysis job, she said, will allow her to spend time with her children. She said she might cry when she finally sees a paycheck from her employer, Satellite Healthcare, reflecting the raise.

“Going from $20 to $23 from one month to the next is, like, to me winning a lotto because, yeah, it’s $3, but that’s going to make a big difference for me and my family,” Cortez said.

A long list of health care employers initially opposed the measure because they worried about how to pay for it. Some said that raising their wage floor could lead to cuts in jobs or services. But many ended up supporting the bill — or withdrew their opposition — after weighing in on amendments that gave them additional time to adjust to a more expensive payroll.

Most research on minimum wage increases shows they do not lead to big job losses, as opponents often argue. Some health care employers may initially reduce hours or lay off employees, but those measures will likely be temporary, according to Frogner.

“I’m hoping that in the long run, as they see the phased-in approach of wages, that they can build that into their plan, into the future,” she said. “So it might be a very short-term challenge for a long-term gain.”

The law has already had a big impact on some workplaces.

Scripps Health, which provides a significant amount of free or discounted medical care at its four hospitals and dozens of outpatient centers in San Diego, adjusted pay for more than half of its nearly 17,000 employees, spokesperson Steve Carpowich said.

Only about 700 of those workers earned below the now required $23 an hour for large health employers, but Scripps also raised wages for others to “ensure fair pay and equity.” The move will cost Scripps about $20 million in the first year of the law’s implementation, Carpowich said.

“Scripps having to absorb the cost of this unfunded mandate comes against a backdrop of serious financial challenges for health systems,” he said in a statement. “These include government and commercial insurance payers whose reimbursements often don’t cover the cost of the care we provide; increased costs for supplies, pharmaceuticals and energy; and other unfunded government mandates, like SB 1953, the Seismic Safety Act.”