In the legislative session’s waning days, California lawmakers and Gov. Gavin Newsom approved deals for two major pay increases for healthcare and fast food employees. But the cost to employers and the impact on the broader economy is only now starting to become clearer.
Now, the Newsom administration is releasing projections that the $25 hourly wage that will eventually cover more than 500,000 employees will cost government agencies $4 billion in 2024-25 (with about half coming from the state’s general fund and the other half paid from the federal government).
In the private sector, hospitals estimated that the original bill, which would have immediately increased wages to $25, would cost healthcare providers $8 billion. The final version — agreed to by unions and the hospitals association — gradually raises pay, with most workers earning $25 in 2027 or 2028.
The recent cost estimate from Newsom’s office isn’t surprising to Republican legislators who opposed the bill. Expressing concerns for reduced services and job opportunities, Republican Assemblymember Vince Fong of Bakersfield said the measure “places astronomical labor costs on health care providers when hospitals across the state deal with financial losses.”
But Sen. María Elena Durazo, the Los Angeles Democrat who wrote the bill, points to data from the UC Berkeley Labor Center that anticipates how the new law could save money by helping workers avoid using public assistance. Better pay also means some relief with staffing issues, healthcare workers argue, which would benefit patients too.
- Gabriela Guevara, Clinica Sierra Vista medical receptionist: “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.”
As for fast food workers, their minimum wage goes up to $20 an hour in April. Businesses and franchise owners say that restaurants have already raised wages during a period of record inflation. Last December, the average hourly wage of California fast food workers was about $19.
Some experts predict that customers will “immediately” bear the brunt of the hike through increased menu prices, and McDonald’s CEO Chris Kempczinski said during an October earnings call that the measure will hurt California franchisees in particular.
But for the more than half a million fast food workers who will get the wage increase — a majority of them minorities and women — $20 still isn’t a living wage, according to a calculator from the Massachusetts Institute of Technology. Projected over the course of a year, $20 an hour is just barely above the poverty line, per the California Public Policy Institute.
While the hike will help with basic bills and rent, given California’s rising cost of living, it won’t cover much more than that.
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Another losing hand on sports gambling?
By far the biggest — and most expensive — fail in California’s November 2022 election: The competing ballot measures to legalize sports betting.
Voters said no dice to both Proposition 26 (to allow sports wagering at tribal casinos) and Proposition 27 (to allow online betting through deals between Native American tribes and the likes of DraftKings and FanDuel).
Prop. 26 was opposed by 67% of voters, while Prop. 27 suffered one of the biggest defeats ever for an initiative, with 82% opposed. That’s despite nearly $500 million in combined spending by the two campaigns, including on dueling ads that apparently just confused voters.
Now, two entrepreneurs want to give it another shot — to open up the nation’s largest untapped market and make a ton of money in the process. But to get on an already crowded November 2024 ballot, they almost certainly need buy-in from the state’s tribes, who already have lucrative casinos.
And as Politico explains, that looks like a losing proposition. Gambling industry veteran Kasey Thompson and blockchain executive Reeve Collins say they want to work with tribal leaders and have a great offer.
- Collins, to Politico: “It’s not just two random guys submitting a proposal. It’s a very well thought-out, well-put-together strategy.”
But they didn’t get the blessing of tribes before filing their measure late last month, though a companion initiative would protect tribes from other online betting competitors. Four tribal leaders or representatives contacted by Politico disavowed the effort. Some question the motives of Thompson and Collins, calling them a “tech bro and a poker bro” and “a couple of rich guys” whose plan would undermine tribal sovereignty.
And time is running short to collect the nearly 875,000 signatures required, an expensive task by itself. Without tribal backing, it appears highly unlikely the effort will succeed.
Or as Victor Rocha, conference chairperson for the national Indian Gaming Association, told CalMatters last year after the measures went down in flames: “Everybody knows this: You don’t come and try to screw the tribes.”
Older students return to community colleges
For many California community college students 50 and older, school is now back in session.
As CalMatters’ community college reporter Adam Echelman explains, though the same demographic left community colleges at the highest rates during the pandemic compared to other age groups, enrollment trends are now shifting. Last year, community colleges saw an 11% increase in students over the age of 50 compared to the previous year.
It’s the highest percentage increase of any age group (for comparison, students ages 20 to 29 continued to lag), and the students Adam spoke with cited different reasons for their enrollment. Hermelinda Figueroa, 80, comes to her two-hour English-language course at the San Diego College of Continuing Education three times a week. Not only does it help her feel less alone, she says, but also in-person classes are easier for her to access.
- Figueroa: “It’s all about person-to-person for me. When I use computers, I feel like I’ve lost an eye. I just don’t get it.”
For Lake Tahoe Community College, offering classes relevant to older adults and retirees, such as courses about health and fitness, was the main driver for its nearly 60% enrollment uptick for students over the age of 50 in the 2022-23 academic year. Classes meant to train working adult learners also help older professionals get the skills they need to either keep up with their current job or help them gain promotions.
While community colleges continue to aggressively campaign prospective students to hopefully reach pre-pandemic numbers, the California Community Colleges Chancellor’s Office reports that overall, the total number of students increased by about 5% in the 2022-23 academic year compared to the year before. Driven in part by older students, this marks the first year of enrollment gains since the start of COVID-19. For more on this, read Adam’s story.
CalMatters columnist Dan Walters: Politicians love to promote new programs, but pay little attention to their management. The Employment Development Department is a sad case in point, as a new CalMatters investigation details.
A bill would bar California governors from appointing U.S. senators, but appointees routinely lose elections, writes Joshua Spivak, a senior research fellow at Berkeley Law’s California Constitution Center.
CalMatters commentary is now California Voices, with its first issue page focusing on homelessness. Give it a look. Editor Yousef Baig will be hosting a virtual event 11 a.m. to noon Tuesday on how to pitch a commentary piece. Register here.
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Big Tech wants AI regulation, but rest of Silicon Valley is skeptical // The Washington Post
Data shows Cruise and Waymo’s sudden robotaxi expansion in SF // San Francisco Chronicle
Bitwise co-founders face federal charges of $100M fraud scheme // Los Angeles Times
Prominent developer indicted in widening corruption scandal // San Francisco Chronicle
A surprising green technology rises in the San Joaquin Valley // San Francisco Chronicle