Health Care Minimum Wage Hike Delay Leaves Some Workers Behind

Updated 4:45 p.m. Thursday

The state budget deal that delays gradually increasing the minimum hourly wage in health care to $25 will have a greater impact outside of the San Francisco Bay Area, according to economic experts. That’s because some large health care employers already pay workers higher wages, especially in the state’s most expensive regions.

But that doesn’t lessen the sting for those who currently earn much less than $25 an hour.

California lawmakers gave final approval Thursday to a compromise deferring the first programmed wage hikes until mid-October, if state revenues exceed projections by at least 3% for the next three months. If they don’t, the raises would be effective no later than January 1, 2025.

Democrats had already delayed the health care wage boost once from June 1 to July 1 due to concerns that costs would exacerbate the state’s multibillion-dollar budget deficit. The legislation outlining the increases, SB 525, was approved last year to try to ease labor shortages in the industry and improve patient care.

“Workers led the way in this victory for wages that will lift 400,000 workers out of poverty,” said state Sen. María Elena Durazo (D-Los Angeles), who authored SB 525, in a statement after the latest delay was announced. “The impact of this community win will be greatest in our most underserved communities, a critical step forward for health care for all.”

Earlier figures by the Department of Finance pointed to $4 billion in costs to the state in the first year of implementing the legislation, which worker advocates criticized as too high. The department has since revised its cost estimates to $1.4 billion in 2025, and more later on, including increased pay for 26,000 state employees and higher Medi-Cal reimbursements for providers that will also be required to raise salaries.

Where health care workers are paid less

Large health care employers in the Bay Area tend to offer higher wages for their lowest-paid workers than smaller hospitals in the Central Valley, the Inland Empire and northern rural counties, said Joanne Spetz, an economist who directs the Institute for Health Policy Studies at UCSF.

State hospital data reviewed by Spetz for KQED show that medical assistants and other aides at the Walnut Creek Medical Center, a Kaiser hospital, for instance, earned on average $40.73 in 2022, compared to $16.99 at an Adventist Health hospital in Tulare.

“The Bay Area definitely has among the highest average wages that you see across California for the jobs that tend to have the lowest wages in the hospital,” Spetz said, adding that employers in the Bay Area and other pricey regions face more competitive labor markets.

“If you are in San José or Santa Barbara, you’ve got a limited talent pool that you are competing against all these other employers to get, so you are going to have to raise your wages,” she added. “In areas like the Central Valley, you’ve got a combination of the housing being cheaper, in general, the cost of living is lower, so wages tend to be lower.”

About 426,000 people statewide — or about 36% of the health care workforce — will benefit from the minimum wage hike, said Laurel Lucia, who directs the health care program at the UC Berkeley Labor Center.

Some workers disappointed with the delay

Workers who are set to get higher pay include clerical and food service staff, medical and nursing assistants, and hemodialysis technicians. Some, like Tessa Tuliao, who works at a dialysis clinic in San José, said the delay saddened them. Tuliao, 23, said her plans to become more financially independent and help support her parents, so they don’t have to work two jobs, will have to wait.

“When I found out, it was very, very disappointing because many private hospitals, which is a majority of California’s health care system, have the money to implement that minimum wage,” said a crestfallen Tuliao, who expected her hourly wage to jump from $19.75 to $23 on July 1. “And actually, many hospitals and clinics already have. So there’s no reason that others like ours shouldn’t start.”

Tuliao believes the higher pay would help retain workers in the industry and attract new ones, easing the staffing shortages that make her job more difficult and stressful.

She often has to take on more patients during her shifts at a dialysis clinic, while patients with kidney disease face longer wait times for the life-saving treatment they need, she said.

A spokesperson with Satellite Healthcare, Tuliao’s employer, said the nonprofit company had already increased its minimum wage to $23 an hour — which is also the first change outlined for dialysis clinics under SB 525 — but only for workers who are not part of ongoing collective bargaining negotiations. The raise excluded Tuliao and other employees at 11 Satellite Healthcare clinics who SEIU United Healthcare Workers said it has represented in contract negotiations that began in September 2023.

“A small portion of our employees have chosen to be represented by SEIU and we continue to bargain in good faith,” the Satellite Healthcare spokesperson said in a statement.

The California Kidney Care Alliance and California Hospital Association confirmed some of its members have also raised employee pay while others are working to meet the new requirements when they go into effect.

“Dialysis providers in California value their caregivers and are following the requirements laid out in SB 525, and in the new state budget deal, to establish a health care minimum wage,” said Jaycob Bytel, spokesperson for California Kidney Care Alliance. “In fact, many providers have already increased wages well ahead of the requirements of the bill.”