California’s lowest paid health workers want a pay boost. Why industry leaders are pushing back

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Supporters of a proposal to raise the minimum wage for California health workers point to Inglewood, where last fall voters approved a wage hike that primarily applied to staff at dialysis clinics and at the city’s only hospital. But the implementation of that local measure has been bumpy, signaling potential problems for the larger effort. 

Inglewood’s ordinance went into effect Jan.1, raising the minimum wage for those workers to $25 an hour. Then in March, Centinela Hospital Medical Center, a 362-bed acute care facility owned by Prime Health Care, laid off 48 workers and reduced hours for others, according to a complaint filed earlier this month by the Service Employees International Union-United Healthcare Workers West. The local union led Inglewood’s measure and its parent organization, SEIU California, is sponsoring the statewide bill.

The union alleges hospital administrators made the cuts in retaliation to the newly implemented wage increase, even though the city ordinance prohibits health facilities from funding the pay increase by laying workers off or reducing their benefits. 

Centinela officials maintain that the hospital is complying with Inglewood’s minimum wage ordinance. They say they laid off workers after a thorough assessment that determined the hospital was overstaffed in certain units. Centinela offered nearly half of the affected staff other positions within the hospital and many accepted, according to a hospital spokesperson.

“The recent reduction in force was entirely unrelated to the ordinance and affected 2% of the staff,” Susan Lowe, Centinela’s spokesperson, said in an email. “It was related to strategic changes in operational needs and improvement measures, and staff have been added in areas that positively impact patient care and address community needs.”

While the lawsuit is pending, the union is advocating for a broader pay hike for California health workers via Senate Bill 525, by Los Angeles Democratic Sen. Maria Elena Durazo, a longtime labor leader. Durazo’s bill calls for a minimum hourly wage of $25 that would be adjusted annually for inflation. California’s minimum wage is currently $15.50, although it’s higher in some cities and counties.

“It’s not asking for the moon, this is just the baseline of a fair wage for the people who provide vital treatment.”

Renee Saldaña, spokesperson for SEIU-UHW

If the proposal becomes law, the new minimum wage would go into effect in January 2024 and benefit an estimated 469,000 health workers. It would include people who make slightly more than $25, who would likely get a corresponding pay increase, according to an analysis by UC Berkeley’s Labor Center. 

Qualifying workers would receive an average increase of $5.74 per hour, which would increase operating costs at health facilities by about 3%, the report said. Some lower paid workers in health facilities include nursing assistants, patient aides, medical technicians and janitorial workers. 

The proposal faces a great deal of opposition from industry heavy hitters, including hospital executives, clinic leaders and the doctors’ lobby, which argue this isn’t something all providers can afford or easily implement, especially when they’re dealing with other stressors in their budgets. The California Chamber of Commerce lists the bill as a “job killer.”

But union leaders say the time is now, especially as the industry grapples with workforce shortages that are burning out current staff. “Twenty-five dollars an hour breaks down to roughly $50,000 a year,” said Renee Saldaña, a spokesperson for SEIU-UHW. “It’s not asking for the moon, this is just the baseline of a fair wage for the people who provide vital treatment.”

Who would benefit 

Eneryk Santana last month joined the tens of thousands of people who commute daily across the San Diego-Tijuana border for work or school. He’s a medical assistant at San Ysidro Health Center in Chula Vista and the high cost of living on the U.S. side, he said, forced him to look for housing in Mexico.

To avoid rush hour traffic at the border crossing, he tries to leave his place by 4 a.m. While the border cities are less than 20 miles apart, the process of crossing the border can take up to a few hours on busy days. The commute has been an adjustment, but he said his monthly rent in Tijuana is about $1,000 less than what he was paying in Chula Vista  — a significant difference for someone making $22 an hour. 

For Santana, a boost in pay would allow him to consider moving back to the U.S., he said. Ideally it could also mean more people attracted to this type of work. “Being short-staffed, when someone calls off, we don’t have much staff who can cover,” Santana said. “And it’s hard not only for workers, but also for the patients, who sometimes have long wait times.”

Workers in clinics and hospitals account for about half of all workers who would see a boost in pay under Durazo’s bill, according to the analysis from UC Berkeley’s Labor Center. Because of their current low earnings, workers in home health services and nursing homes would see the biggest difference — approximately a 40% increase.

Three-fourths of the workforce who would receive a raise under the bill are women, and almost half are Latino, according to the report. 

The fight against industry

Hospitals are leading the opposition to the wage hike, arguing that some facilities are in  precarious financial situations. A handful of hospitals in the state have reduced or plan to reduce services. Last week a Montebello hospital filed for bankruptcy and a hospital in the San Joaquin Valley closed its doors at the beginning of this year. 

Having to boost minimum wage pay, hospital leaders say, would only add to that strain. A wage hike at this time “takes a very serious problem and makes it impossible,” Carmela Coyle, president of the California Hospital Association, recently said in a call with reporters.

Punctuating its point, the hospital association released a report earlier this month that found that 1 in 5 hospitals are in an “unsustainable financial position” and at risk of closing. Hospitals are considered at-risk if their incomes aren’t covering costs, meaning they are losing money, and have increasing debt, said the report, which sampled 114 hospitals. 

Union leaders have pushed back on hospitals’ arguments, noting that most hospitals are part of large health systems that can weather rough patches. 

 A wage hike at this time “takes a very serious problem and makes it impossible.”

Carmela Coyle, president of the California Hospital Association

Health economists have described the current landscape of California hospitals as a mixed bag, with independent and rural hospitals, especially, experiencing severe financial pressures. 

During the peak of the pandemic, hospitals had increased expenses, but also received financial aid from the federal government. That funding phased out in 2022. The state has not yet audited totals for this last fiscal year, but in 2021, altogether California hospitals posted earnings of $11.9 billion, up from the $8.5 billion hospitals recorded in 2019, according to financial data from the Department of Health Care Access and Information. 

A coalition of counties has also voiced its opposition to the bill, noting the bill would apply to workers at county public health and mental health departments, as well as clinics and hospitals operated by counties. 

Implementing such a bill would cost the counties hundreds of millions of dollars annually, said Kalyn Dean, a legislative advocate with the California State Association of Counties. To absorb that cost, she said, counties could be forced to reduce services and cut jobs in other government departments. 

Meanwhile, clinic leaders say that while they support the idea of boosting pay for their workers, they are subject to strict reimbursement rules that do not allow them to take on the additional expense. The vast majority of community health centers’ patients are covered by Medi-Cal, the health insurance program for low-income people. Medi-Cal pays these centers a fixed amount per patient visit. Modifying that amount to afford a wage increase would require both state and federal approval, said Dennis Cuevas-Romero, vice president of government affairs at the California Primary Care Association, which represents health centers.

“Unlike other businesses, we can’t just say, ‘OK, the state requires us to increase the minimum wage, let’s just increase the cost of our services.’ We are prohibited from doing so,” he said. 

Some provider groups are likely to seek an exemption from this bill, but community health centers say they would like to find a way to make this work because a “nightmare” scenario would be for their clinic employees to leave for better-paying jobs at a nearby hospital. 

“Our health centers want to get there,” Cuevas-Romero said. “I think the questions are: Where’s the money coming from? And how do we implement it?”