Minimum Wage Hike for CA Health Workers Will Cost Billions

Alvin Mauricio Medina works three jobs six days a week to support his family as the sole provider for their Los Angeles household. He’s a certified nursing assistant with a dream to move up to a higher-paying position in health care.

“I’m trying to better myself, I’m trying to move on to being a registered nurse. But here in California, with the low wages that we have, either you work or you’re going to school,” he said.

Now 45, he has been working in health care for more than 20 years and makes less than $22 an hour. While his main job is at a hospital in Hollywood, he picks up shifts as a nurse assistant at other hospitals to provide for his husband, who is unable to work, and two kids.

He’s expecting to get a break come January, thanks to a law Gov. Gavin Newsom signed last month that creates a higher minimum wage for health care workers. The measure, which gradually raises the industry minimum wage to $25 an hour,  had support from both unions and the lobbying group that represents California hospitals. But lawmakers passed the bill — and Newsom signed it — without a cost estimate.

The costs are beginning to come into focus now that the Newsom administration is releasing projections for how the wage hike could drive up the price of providing health care to Californians for government agencies. That figure, at least $4 billion with about $2 billion from the state’s general fund and another $2 billion from the federal government, does not include anticipated pay increases for public employees.

The unions and lawmakers who advocated for the wage increase say it is necessary to improve the lives of overworked health care workers. Union representatives say many workers have quit their jobs, leaving health care systems understaffed and exacerbating conditions for other employees.

“These are everyday people doing their jobs, struggling to make ends meet, struggling to pay rent,” said Todd Stenhouse, spokesperson for AFSCME 3299, the union that represents blue-collar workers in the University of California health system. “They deserve stability, security. Their work deserves value.”

The new cost estimates are unsurprising to Republican lawmakers who opposed the wage increase. Democratic lawmakers passed the measure despite the state’s projected $31 billion budget deficit.

“This bill places astronomical labor costs on health care providers when hospitals across the state deal with financial losses,” said Republican Assemblymember Vince Fong of Bakersfield. “We were concerned that this bill will lead to reduced services, increased premiums, more hospital closures, reduced job opportunities.”

What minimum wage hike means for payroll

Lawmakers did not have cost estimates when they voted on the wage increase in part because the final bill reflected a last-minute deal between major health care employers represented by the California Hospital Association and the labor organization Service Employees International Union. Their pact replaced an earlier version that would have raised pay faster for workers.

While the original bill would have increased wages immediately to $25, the signed version would lead to a gradual increase in wages. Most workers will start making $25 an hour around 2027 or 2028.

About 500,000 health care workers are expected to see their pay eventually go up because of the new law. Some of them already earn $25 an hour or more, but wages could increase because of salary competition.

Some of the workers are employed by the state, either at the UC health system or in agencies such as the Department of State Hospitals.

An early fiscal analysis of the bill also estimated a $25 minimum wage for University of California health care workers would cost the state as much as $180 million. The UC does not have a new estimate for what the law will cost its hospitals and health centers.

The Newsom administration and the Legislative Analyst’s Office also are tallying up the payroll costs for other state offices. Finance Department spokesman H.D. Palmer said 26,000 state employees across 12 bargaining units will also see an increase in wages.

In the private sector, a consultant working for a coalition of health care providers estimated the original bill with the immediate wage increase to $25 an hour would have cost the industry $8 billion. The California Hospital Association did not have a new estimate of projected costs when CalMatters requested one.

SEIU California Executive Director Tia Orr in a written statement said that most health care employers supported the wage increase. She said the union “has committed to working with the administration and the legislature to ensure safeguards are in place to guarantee that this critical measure is taken in a way that preserves California’s fiscal health, just as we did when negotiating the last statewide minimum wage increase. This is how you make progress –– through flexibility and compromise in achieving shared goals.”

Health care workers on public assistance

Newsom did not comment on the law when he signed it. In contrast, he attended an event hosted by SEIU when he signed a similar law that creates a $20 minimum wage in the fast-food industry.

Sen. María Elena Durazo, the Los Angeles Democrat who wrote the original health care wage increase, pointed to a different cost estimate for the law created by the UC Berkeley Labor Center. It projected the new law could save money by ensuring workers earn enough money to avoid using public assistance.

“This historic investment in the workers who take care of us and make our health care system function and accessible reminds us the true low-wage nature of most of these jobs. Hundreds of thousands of Californians will see their wages increase, and this means money in the pockets of healthcare workers to help support their families,” she said in a statement.

Gabriela Guevara, a medical receptionist at Clinica Sierra Vista in Fresno, believes the law will ease staffing challenges in her industry.

“It is going to better serve all the patients. The more staff we have, we are going to be able to give that quality of care for all the patients that are coming in,” she said.

Medina, the certified nursing assistant in Los Angeles, is hoping he’ll be able to quit one of his jobs when the new wage law takes effect. But he said he’ll have more free time.

“It is definitely going to let me spend more time with my kids,” Medina said. “It will let me go to school. And I don’t have to worry about being late to my third job or my second job, I can just focus on one.”

Shreya Agrawal is a reporter with CalMatters.


  1. Well if you don’t like your pay you go go work in fast food. They are making the same with those increases.

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