New CA law raises minimum wage for health care workers

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In summary

More than 400,000 Californians are expected to get a pay increase under the new law, which gradually raises the minimum wage to $25 an hour for health care employees.

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What earlier this year seemed like a long shot is now a done deal: Gov. Gavin Newsom today signed a law that will raise the pay for hundreds of thousands of California health care workers and set them on a path to a $25 minimum wage. 

Newsom’s signing of the law means medical technicians, nursing assistants, custodians and other support staff will see a gradual wage hike that rolls out starting next year. He got behind the law on the same day that unions representing lower-paid Kaiser Permanente employees announced a new contract with a $25 minimum wage for the health care giant’s California workers.

“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 SEIU California. “Californians saw the courage and commitment of healthcare workers during the pandemic, and now that same fearlessness and commitment to patients is responsible for a historic investment in the workers who make our health care system strong and accessible to all. 

Newsom’s approval of the new minimum wage for medical workers follows his signature on a separate law mandating a new pay floor for fast-food workers. Starting next April, fast food employees will make at least $20 an hour.

Between the two new industry-specific minimum wage increases, about 900,000 Californians are expected to see their pay climb thanks to new state laws.

The victory for health workers was long in the making. It unfolded in the final days of the legislative year when the hospital lobby and health care providers announced a rare deal with labor unions.

Health care employers got behind the plan to raise the minimum wage for their industry, and unions agreed to a 10-year moratorium on sponsoring local ballot measures to force pay raises at hospitals and other medical facilities. That concession was valuable to health care employers because unions last year floated local pay ballot measures in several Southern California cities. 

Kidney dialysis providers scored a separate deal: for four years the Service Employees International Union will not push for legislation or ballot measures targeting dialysis centers. SEIU has gone after dialysis centers three times in the last five years via the ballot, with each one costing the health care industry tens of millions of dollars in political spending. Voters rejected all three dialysis initiatives. 

“Gov. Newsom’s signature on landmark legislation to improve wages for California’s health care workers will create meaningful change for families struggling to keep pace while at the same time protecting access to care in vulnerable communities,” said Carmela Coyle, president of the California Hospital Association. “This bill strikes the right balance between significantly improving wages while protecting jobs and safeguarding care at community hospitals throughout the state.”

‘Motivating’ for California health workers

Having both labor and industry on board allowed Senate Bill 525, authored by Sen. María Elena Durazo of Los Angeles, to get through the Legislature. 

“This wasn’t an easy bill to get done, and it’s across the finish line because groups that often disagree came together and achieved a hard-won consensus. I hope this encourages others to be open to compromise to solve problems, because that is what Californians expect and deserve,” said Assembly Speaker Robert Rivas, a Salinas Democrat.

The new law is expected to benefit about 469,000 employees statewide, including some who earn slightly more but who would get a corresponding boost, according to an analysis by UC Berkeley’s Labor Center. 

Eneryk Santana is one of those employees. He works as a medical assistant at a clinic in Chula Vista but lives in Tijuana. He makes an early morning cross-border commute everyday. Sometimes he sits in hours-long traffic. It’s exhausting, but Santana says many colleagues do the same as a way to avoid expensive housing costs on the California side of the border. 

He recently started earning $25.50 an hour, up from the $22 he was making a few months ago. He expects he’d be eligible for another corresponding increase when the minimum wage for all health workers goes up. 

“It is motivating, and it’s starting to feel like I am getting closer to my goal” of moving back to San Diego, Santana said. 

Minimum wage hikes through 2033

How soon workers reach this level of pay will depend on the type of facility they work in. For example, community clinics like where Santana works will be required to implement a $21 minimum wage by next year and reach $25 by 2027. 

  • Dialysis clinics and large health systems with more than 10,000 workers would pay a minimum wage of $23 an hour in 2024, $24 in 2025, and $25 in 2026.
  • Hospitals with a high mix of Medi-Cal and Medicare patients, as well as rural independent hospitals would have to pay workers $18 an hour in 2024. That rate would increase 3.5% annually until it reaches $25 in 2033. 
  • Community clinics would start the pay increase at $21 per hour in 2024, rising to $22 in 2026 and $25 in 2027.
  • Other health care employers would increase their minimum wage to $21 per hour in 2024, $23 in 2026 and $25 by 2028. 

The new law will drive up state spending because it would apply to the thousands of public employees who work in University of California hospitals and in state-run health care facilities.

An earlier version of the bill Newsom signed would have instituted a $25 minimum image immediately. That would have cost the state approximately $973.7 million a year, according to the legislative analysis. It’s unclear how much the version of the bill Newsom signed will cost the state.

State agencies did not weigh in on the bill. A few medical clinics were in opposition even though the statewide group representing health centers was neutral. Some individual hospitals and business groups also remained opposed.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.

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