A wildly ambitious new bill would raise the minimum wage for hundreds of thousands in California

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How to help health care workers live where they are employed.

By Mark Kreidler, Capital & Main

This story is produced by the award-winning journalism nonprofit Capital & Main and co-published here with permission.

The latest legislative effort to give hundreds of thousands of health care workers a wage that enables them to afford living in California is facing predictable headwinds. Industry lobbyists quickly forecasted mass job cuts and higher costs to patients, while the powerful California Chamber of Commerce labeled the proposal a job killer.

But behind the shouting lies a larger truth: The issue of affordability isn’t going away. And regardless of the fate of the most current bill, California’s aging population, with its growing need for health care services, virtually assures that the topic will continue to be visited.

Introduced by state Sen. María Elena Durazo (D-Los Angeles), SB 525 would raise the minimum wage to $25 for a vast array of health care workers and support staff. That includes those employed at hospitals, nursing facilities, medical offices, dialysis clinics and other settings, and it runs from nurses all the way to janitors and food service workers.

It is wildly ambitious in scope. Enrique Lopezlira, director of the Low-Wage Work Program at the UC Berkeley Labor Center, said Durazo’s bill would affect at least 469,000 workers in the state “and probably a lot more,” since the center’s data doesn’t count those employed by subcontractors. Labor sources put the number of potentially affected workers at closer to 1.5 million, but even the more conservative UC Berkeley estimate represents more than 40% of the state’s directly employed health care labor pool.

The number is huge either way, both as a percentage of the health care workforce and of the state’s labor pool in general. But what the conversation around SB 525 really underscores is just how many of California’s health care workers aren’t making enough to get by.

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Economists note that the subject of pay often includes terms that are used interchangeably but really aren’t the same. Poverty wages, minimum wages and living wages, for example, all refer to what people earn, but in vastly different ways.

California’s minimum wage, $15.50 per hour, trails only Washington state ($15.74) in the United States – but it’s nowhere close to covering what a person actually needs in order to live here. According to the MIT Living Wage Calculator, a single person in California with no children would have to earn $21.24 per hour to get by — and that’s a statewide average, not a figure set to places like Los Angeles or the Bay Area, with their skyrocketing housing costs. With one child, that average hourly wage required spikes to $43.44.

“Raising the minimum wage to $15.50 has lifted a number of people above poverty wages, but it doesn’t mean that these folks are now able to be self-sufficient,” Lopezlira said. Based on the labor center’s research, he said, anyone making less than $18 an hour in California should be considered a low wage worker.

The group beneath that line includes vast numbers of health care workers, especially those at skilled nursing facilities and in home health care. Those two groups would see the highest percentage of employees receive raises under SB 525 — 73.4% of home health services workers and 66.4% of those employed at skilled nursing facilities — with raises averaging between 37% and 41%, a sharp indication of how relatively little they’re currently paid.

Why does it matter? Turnover, in part. Among more than 1,000 nursing facilities in California that report their data, the staff turnover rate is almost 48%, a constant flipping of personnel that worsens patient care and outcomes, supporters of the wage hike contend.

“They are understaffed and undervalued, and we need to address that,” Durazo said in introducing the bill earlier this year, speaking of health care workers in general. “When we take care of those workers and they don’t feel understaffed or undervalued anymore, that’s going to make our health care system much, much stronger.”

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Durazo’s bill is championed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which has also spearheaded drives for $25 minimum wages in individual cities. Inglewood passed such a requirement last year. But a statewide measure, which the labor center says would result in an average $11,000 raise — a 31% pay bump — is another matter.

Writing in opposition, the California Hospital Association’s (CHA) vice president of advocacy, Rony Berdugo, said the cost to care for patients “will increase everywhere.” Berdugo’s letter to the Senate Labor, Public Employment and Retirement Committee also predicted that a $25 minimum wage “will leave hospitals no choice … but to cut provisions and services in order to comply with the bill.”

The Cal Chamber, meanwhile, took aim at the specific language of the proposal, noting that the $25 wage would apply not only to direct health care workers, but also “all paid work performed on the premises of any health care facility,” including janitors and gift shop employees.

And the California Nurses Association, which represents 100,000 registered nurses in the state as part of the National Nurses Union, objected to the inclusion of RNs in Durazo’s bill, pointing out that the average RN in the state already makes nearly $60 an hour. The CNA’s concern, said union Co-President Catherine Kennedy, is that employers will use the $25 figure not as a floor but as a basis for future negotiations. (Disclosure: SEIU and CNA are financial supporters of Capital & Main.)

“We completely support getting more health care workers closer to self-sufficient,” Kennedy said. “Our friendly amendment was very clear: Take us out of it. So far, they haven’t moved.”

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This isn’t the first battle over a dramatically higher minimum wage for health care workers in the state. A measure pushed by SEIU-UHW last year collapsed after talks broke down with the CHA, and Durazo’s current bill already faces fierce pushback.

Something has to give, though. According to a Mercer labor market analysis, California is projected to have a shortfall of nearly 558,000 lower wage health care workers by 2026. As people leave the market because they can’t afford to live in it, the cost of replacing them can become drastic — and the graying of the state will continue, with its attendant increase in health care needs.

“If you can reduce your turnover quite a bit, there’s a significant savings there,” said UC Berkeley’s Lopezlira. “A lot of the quote ‘increased cost’ from the wage hike [to $25] would be offset by the reductions in turnover costs, because more people would stay in their jobs and more people would want to come into the field.”

Health care workers aren’t the only Californians whose wages often aren’t enough to afford living in the state, but they’re among the most organized. They’ll keep coming. Viewed in that light, Durazo’s bill is simply this year’s attempt at getting workers closer to a living wage. Even if the industry forces aligned against it are able to fend it off, it won’t be the last such effort.

Copyright 2023 Capital & Main

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