Sweeping Agreement Raises Minimum Wage for California Healthcare Workers to $25 an Hour
A landmark agreement reached between unions and the healthcare industry in California will result in a gradual increase of the minimum wage for hundreds of thousands of workers to $25 an hour, making it the highest in the country. This agreement, which also resolves a long-standing battle over dialysis clinics, was approved by state lawmakers on the final day of this year’s legislative session and now awaits the signature of Governor Gavin Newsom.
Under SB 525, the minimum hourly pay at large health centers and dialysis clinics will increase to $23 next year, followed by $24 in 2025, and ultimately reaching $25 by 2026. Community clinics will see their minimum wage raised to at least $21 in 2024, $22 in 2026, and $25 in 2027. In the rest of the health centers, the minimum wage will be $21 per hour in 2024, $23 in 2026, and $25 in 2028.
Carmela Coyle, President and CEO of the California Hospital Association, commended the agreement for striking a balance that supports workers, protects jobs, and ensures access to care in vulnerable communities. This agreement is a significant victory for unions amidst what has been dubbed a “hot labor summer,” marked by strikes from various industries. In addition to the minimum wage increase for healthcare workers, unions also secured a $20 minimum wage for fast food workers in California.
Union leaders argue that lower-income healthcare workers, many of whom are from racial minorities, require the additional income to make ends meet. By improving the incomes of the lowest-paid healthcare workers, the agreement aims to promote accessibility and equity in healthcare services.
The phase-in process will be slower for hospitals with a high percentage of patients covered by Medicare or Medicaid, independent rural hospitals, and small county facilities. These facilities will incrementally increase their minimum hourly wage to $25 by 2033, with annual increases of 3.5%. Additionally, all centers will have their $25 minimum wage increased annually to keep up with inflation, unless they demonstrate to state officials that adhering to the requirement would jeopardize the viability of their business.
State Senator María Elena Durazo, the bill’s sponsor, hailed the agreement as a historic investment in healthcare workers and a crucial step to address staffing shortages. As part of the agreement, the Service Employees International Union-United Healthcare Workers West (SEIU) union agreed to abandon its attempts to impose regulations on dialysis clinics through legislation and at the ballot box. In return, the dialysis industry is protected from any state or local legislation or ballot measures by the SEIU or the industry for four years.
Although the opposition to the bill was fierce, with business owners and Republicans arguing that it would harm rural health centers and threaten services, the measure ultimately passed. The California Nurses Association also opposed the bill, suggesting that it could lead to salary reductions for both male and female nurses. However, labor experts estimate that more than 469,000 healthcare workers will benefit from this wage increase, with workers of color and women being the majority beneficiaries.
The increase in wages is expected to have ripple effects, reducing the reliance on Medi-Cal for 40% of healthcare workers and potentially saving between $181 million and $363 million in the second year of the pay increase. The opponents’ estimate of an annual cost of $8 billion is viewed as exaggerated since it does not consider the billions in state aid already provided to hospitals.
This agreement represents a significant step towards fairer wages and better working conditions for California’s healthcare workers, with the aim of creating a more accessible and equitable healthcare system for all.