California’s State Budget Crisis Might Delay $25 Minimum Wage Increase for Healthcare Workers

However, negotiations over the upcoming state budget and comments about delays by Newsom have left healthcare workers wondering if that pay raise will actually come.

This comes after the news that California services are facing $30 billion in cuts, with some being ongoing and others being one-time. Education and climate change initiatives are set to be most affected by this; however, Newsom has assured Californians that social services will remain “mostly untouched.”

The law, Senate Bill 525, sets a requirement that will increase the wage up to $25 for workers at most healthcare facilities in the state by 2028. The first date that the first step of increases would begin to take effect was determined to be June 1 of this year.

However, the issue that many businesses are having is that they cannot afford to keep on all of their workers due to the wage increases, which has led to some people losing their jobs.

When other Californians saw these increases, they also started to demand an increase in their wages so that they could be able to support their families.

These workers would see an earning increase of $6,400 in the first year, which UC Berkeley determined would account for a 19% increase in earnings on average.

Specified clinics, nursing facilities, and other covered healthcare facility employers must raise wages to at least $21 per hour by the Jun 1, 2024 date.

However, the providers who will have to pay for the wage increase are physician groups with 25 or more physicians and healthcare facilities that meet the criteria regardless of size. These are urgent care clinics, community, and other licensed clinics, ambulatory surgical centers, and hospitals.

This is to align more closely with the expected wage increases over time that are set to occur due to economic pressures faced by Californians and all other states across the US.

It also means that the price of products is increasing to help businesses afford the increase in wages. This can also mean an increase in healthcare costs to help the healthcare industry afford to pay their workers.

According to the UC Berkeley Labor Center, if the minimum wage increase is not delayed, it would increase state spending by $2.7 billion, though the state would only be responsible for paying a fraction of that cost.

According to the report, almost half of the families who use a healthcare worker affected by the increase are enrolled in public safety net programs, meaning the state would save money based on a reduced reliance on these programs. Medi-Cal savings from the wage increase would also “partially or fully” offset state costs related to Medi-Cal payments.

Newsom and others were caught off guard by a massive government spending deficit that the LAO estimated in December was at least $68 billion.

“This budget will not be signed without that deal that we committed to being addressed,” Newsom said.

“Our workers were concerned and remain concerned. What we saw in conversations earlier this year was folks really focusing only on money and only on dollars and cents, and not on what those dollars and cents are used for,” said Selzer.

Some professions covered under this increase are certified nursing assistants, technicians, patient aides, food service workers, housekeeping, medical coders and billers, schedulers, laundry workers, and contract workers.

Those healthcare workers not included are outside salespeople, public sector employees who do not perform healthcare duties, delivery or waste collectors who are not covered by the healthcare facility, and medical transport service workers who aren’t covered by the healthcare facility.

This is because they are unable to afford the increases, so they need to make some cuts in some areas. These workers might also receive a reduction in benefits and cuts to premium pay and vacation time.

This means that they have now been left with trying to cut costs in other areas of their organizations, with the only thing they can think of is to try and reduce labor costs.

“We’ve heard June 1, we’ve heard July 1. It remains to be seen what actually happens here,” Selzer said.

“At $18/hour, it’s no wonder my clinic is understaffed. It’s exhausting work that requires years of training. Why apply for this job when retail pays just as much?” said a captioned picture in an X post pushing to protect the $25/hr minimum wage.

To prevent the deadline from coming and going, lawmakers would have to quickly pass legislation and Newsom would have to sign a bill within two weeks to successfully create a delay in the law’s implementation.

The delay to July will align the law with the state fiscal year. It also allows legislators and Newsom to continue their discussions to tie in the healthcare minimum wage increase with the California budget conditions.

Some have yet to see the pay increase but have been notified by their employers of when they will receive one. This gives a tiny bit of hope to the other healthcare workers who have yet to receive either of these, but only time will tell when this actually happens.