Since even before the pandemic, healthcare workers were suffering from burnout and relatively low wages with respect to their skill and time. After the pandemic, this has only gotten worse, and some healthcare workers have taken action, striking or even quitting their jobs. Now, California has drafted a new Senate Bill, to give healthcare workers a fairer minimum wage. But is this Bill likely to work, and is it worth the monetary costs?
Illustrated by Emma McColgan
Written by Novak and Vanessa
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On October 4th, 2023, 75,000 Kaiser Permanente workers in their northern California facilities went on a three-day strike, marking the largest healthcare worker strike in U.S. history. After the workers’ old contracts expired, the Coalition of Kaiser Permanente Unions and Kaiser clashed on issues regarding workers’ pay and staffing. The coalition, a group of eight unions representing all types of medical occupations, wanted a 24.5% raise in pay over 4 years and a $25 minimum wage for all healthcare workers compared to the previous minimum wage pay of $15.50 per hour. Ultimately, the final version of SB525 that passed would include a guarantee of a $25 minimum wage for all qualifying healthcare workers, some as early as 2025, others as late as 2033.
The workers cited a variety of reasons for this, the most notable being that many healthcare workers were leaving following burnout from the Covid-19 pandemic, leading to long wait times for patients.
Current wages were also not holding up for employees due to inflation. One of these employees, Rolando Medina, said that despite her making $35 an hour, gas and other necessities are becoming too expensive to manage. It has become “very difficult to make a living without having to look for a second job.” This issue has been seen even by outsiders such as ultrasound technologist Georgette Bradford, who noted that although she is in a comfortable position, numerous others are not, since they have to “live in their cars while working at hospitals” in order to make ends meet.
This strike comes after a similar one in 2022 when mental health workers at Kaiser Permanente’s northern California facilities went on a 10-week strike to fight for lower patient wait times, more time for therapists to do assessments, and committees to discuss mental health practices. In the end, the strike was successful, and five committees were created to talk over six months.
In response to the healthcare workers’ demands, Kaiser made proposals for California and other states involved in the coalition. For California, Kaiser suggested a $23 minimum wage in 2024 and a $25 minimum wage in 2026, along with a 16% raise over 4 years in the North and a 12.5% raise in the South.
Senator Maria Elena Durazo then brought up Legislation SB525, a bill to officially raise the healthcare workers’ minimum wage that will go into effect on June 1st, 2024. This came after she realized that with California’s $15.50 minimum wage, some healthcare workers only made $32,420 a year, which was not nearly enough of the $50,000 usually needed to survive in California. Durazo also aimed to increase the number of people in the healthcare industry, as 1 in 5 hospitals were currently in need of more staff.
In order to ease different parts of the healthcare sector into these changes, SB 525 designed four distinct pathways for hospitals to take with regard to how fast they increase the wages of their healthcare workers based on their organizational capacity, employee count, and location, among other metrics.
The first pathway refers to the largest hospitals in the state, which must include 10,000 or more full-time equivalent employees in their hospital network. Employees in those hospitals will see their wage increase from $23 per hour applicable June 1, 2025, to $24 in 2026, and finally to $25 in 2027.
The second pathway is designed for rural hospitals with over 75% of patients covered by federal/state medical programs. Their minimum wage will increase to $18 an hour in 2024, with an annual increase of 3.5% until 2033, when their new wage is $25 an hour.
Third, unaffiliated primary care clinics, community care clinics, rural clinics, and other specific urgent care clinics take a slightly slower approach. The minimum wage for workers in these facilities increases to $21 an hour on June 1, 2024, $22 an hour in 2026, and $25 in 2027.
For all other qualifying healthcare locations, the minimum wage will increase to $21 in 2024, $23 in 2026, and $25 in 2028. In addition to all of these increases, 12 months after the final wage increase is applied, every single wage will increase annually by the lesser of 3.5% or the Consumer Price Index, a calculated percentage designed to quantify the effect of inflation on the average consumer.
Despite these widespread wage increases, SB 525 does leave some healthcare occupations out of a minimum wage increase, most notably tribal hospitals and stand-alone skilled nursing facilities, both of which are not included in SB 525’s definition of ‘covered health facility’. Examples of the latter include independent physical therapy, occupational therapy, or speech therapy nursing facilities not owned or controlled by a hospital network.
While this increase in minimum wage has become a huge win for employees, this has significant monetary ramifications for hospitals. While larger healthcare networks like Kaiser Permanente and CommonSpirit Health may manage to cover the increase in wages with little trouble, smaller clinics that don’t have the financial backing will likely find it difficult to keep their facilities open. According to Community Health System CEO Craig S. Castro, “SB 525 is another crushing blow for hospitals struggling in the inflation-laden, economic aftermath of COVID-19 without a commensurate increase in Medi-Cal and Medicare reimbursement rates.” Moreover, just by increasing the minimum wages of the workers in state hospitals, SB525 will cost California an additional 937 million dollars a year.
Despite these monetary concerns, the beneficiaries of the bill will see lots of improvements. Most healthcare workers would see up to a 30% increase in wages according to this report by UC Berkeley’s Labor Center, increasing quality of life while adjusting wages to inflation. In addition, their wages have guaranteed increases included in SB 525: to either increase by the lower of either 3.5% or the increase in the Consumer Price Index, an economic statistic designed to measure inflation for the average consumer in America.
Furthermore, as healthcare workers receive higher pay, many healthcare facilities will end up with higher employee retention and lower turnover rates, likely resulting in an overall increase in quality of care. Patients who go to hospitals, emergency rooms, or for appointments, should experience shorter wait times, if their healthcare location is now adequately staffed. Elderly patients, including those who live in nursing homes, will also have more options, or gain access to care they previously could not utilize: more than half of nursing homes have limited admissions because they’re understaffed, something the increase in wages will help address. This development is even more critical to those who need assistance care but can’t receive it; home healthcare providers reportedly turned away more than 25% of referred patients because of staff shortages, according to a report in March 2022 by the Home Care Association of America.