California Law Boosts Minimum Wage for Health Care Workers to $25 per Hour

A new law in California is set to significantly raise wages for health care workers, gradually increasing their pay to $25 per hour over the next decade.

Starting this Wednesday, the law will affect approximately 350,000 workers, marking one of the largest pay increases for health sector employees in the country.

Initially, wages will rise to $18 per hour for employees at smaller, rural health care facilities.

Workers at larger hospitals, particularly those employing more than 10,000 people, will see their wages jump to $23 per hour. This phased implementation will eventually provide all health care workers covered under the law with a minimum of $25 per hour.

The legislation, known as Senate Bill 525 (SB 525), was signed by Gov. Gavin Newsom in 2023.

However, budget concerns led to its delay from an original June start date, as the state grappled with an estimated $46.8 billion budget shortfall.

Gov. Newsom and fellow Democrat lawmakers ultimately agreed to push back the implementation to October, ensuring the law’s wage hikes would take effect this week​.

The law is expected to improve working conditions and increase job satisfaction among the state’s health care workforce​.

Unions and campaigners have applauded the passage of SB 525.

“SB 525 strikes the right balance between significantly improving wages while protecting jobs and safeguarding care at community hospitals throughout the state,” said Carmela Coyle, president of the California Hospital Association.

Studies estimate that state spending related to health care wages could increase by up to $278 million annually by 2028, driven largely by Medi-Cal reimbursements to hospitals and clinics​.

However, a report released by the UC Berkeley Labor Center​ earlier this year illustrated how the policy’s benefits largely outweigh its costs, potentially saving the state hundreds of millions of dollars annually.

It shows that once wages reach $25 per hour, many health care workers will no longer need to rely on safety net programs including Medi-Cal and CalFresh.

Despite its benefits, concerns remain about the shorter-term financial affect this wage hike could impose on hospitals, particularly those still recovering from the effects of COVID-19.

Like all states, hospitals in California faced significant drops in revenue, largely due to the cancellation or postponement of elective procedures and a reduction in outpatient visits during the pandemic.

These services are typically among the most profitable for hospitals, and their loss led to a severe financial affect.

California’s minimum wage for most workers currently sits at $16 an hour.

Voters will soon decide whether to increase that rate to $18 by 2026, which would make it the highest in the U.S.​

Proposition 32 is the work of antipoverty advocate and investor Joe Sanberg, who has poured millions into cementing the issue in state discourse, after failing to secure a similar measure in 2022.

Recent polling data from the Berkeley IGS poll shows that only 46 percent of likely voters currently support the increase.

Gov. Newsom has yet to take an official position on Proposition 32, leaving both supporters and opponents waiting for a potential endorsement that could shift the campaign’s dynamics before voters decide on November 5.

For now, health care providers across California are bracing for the financial and operational impacts of their workforce.

“It obviously does create financial pressures that weren’t there before,” said Sarah Bridge, vice president of advocacy and strategy with the Association of California Healthcare Districts.

“But our members are all poised and ready to enact the change.”

This article includes reporting from The Associated Press