California Approves Landmark Deal to Raise Minimum Wage for Health Workers to $25 an Hour
A groundbreaking agreement has been reached in California to gradually increase the minimum wage for health workers to $25 per hour, setting a new national standard. The deal, which brings an end to a prolonged battle over dialysis clinics, has been approved by state lawmakers on the final day of the legislative session. Now, it awaits the evaluation of Democratic Governor Gavin Newsom before it can be signed into law.
Under SB 525, which is set to become law, the minimum wage at large health facilities and dialysis clinics will rise to $23 next year, $24 in 2025, and $25 in 2026. Community clinics will see hourly wages increase to at least $21 in 2024, $22 in 2026, and $25 in 2027, while other health facilities will reach at least $21 an hour by 2024, $23 by 2026, and $25 by 2028.
The comprehensive agreement has been hailed as a milestone win for labor unions, especially during what has been dubbed a hot labor summer in California. Thousands of nurses are expected to benefit from the wage increase, joining other workers who have already secured a $20 minimum wage in the fast-food industry.
Union leaders argue that this wage boost is crucial for lower-income health workers in roles such as certified nursing assistants, patient aides, and food service workers, many of whom come from racial minority backgrounds. They believe that this raise will not only improve their financial well-being but also enhance healthcare accessibility and equity in California.
The phase-in period will be slower for hospitals with a high percentage of Medicare or Medicaid patients, rural independent hospitals, and small county facilities. In these cases, the minimum wage will increase to $18 next year and then rise incrementally by 3.5% each year until it reaches $25 in 2033. Furthermore, the minimum wage at all sites will be adjusted annually to keep pace with inflation.
However, provisions have been made to allow health care facilities to apply for a temporary pause or slower phase-in if they can demonstrate that meeting the required minimum wage would pose a threat to their ability to operate effectively.
Senator MarÃa Elena Durazo, the bill’s sponsor, called it a significant investment in the state’s healthcare workforce and an important step toward addressing the healthcare labor shortage. The agreement also involves Service Employees International Union-United Healthcare Workers West dropping its campaign for regulations on dialysis clinics through legislation and ballot measures. Both the union and the dialysis industry are barred from pursuing these initiatives for four years.
Notably, local governments will be restricted from imposing higher local minimum wages for health care workers for the next ten years, until 2034. While they can still set higher local minimum wages, these increases must include all workers.
Opponents of the bill, including the California Nurses Association, argue that it could lead to a decrease in wages for registered nurses and may adversely impact rural health facilities. The bill faced strong resistance from employers, with concerns being raised about affordability. However, supporters of the measure believe it will benefit over 469,000 health workers, particularly workers of color and women, while reducing reliance on public programs like Medi-Cal.
The University of California-Berkeley Labor Center estimates that the wage increase will provide an average annual boost of $10,352 to approximately 40% of California’s health workers. This additional income is expected to save between $181 million and $363 million in the second year alone, as workers become less dependent on public assistance.
The approval of this landmark deal signifies a significant step forward in improving the financial well-being of health workers, ensuring equitable access to healthcare, and addressing labor shortages in California’s healthcare industry.
