A law signed in 2023 by California Gov. Gavin Newsom aimed to boost the minimum wage for health care workers but it now faces potential postponement. The legislation, which was supposed to take effect on June 1, seeks to raise the minimum wage to $25 per hour for nearly all workers in health care facilities, including janitors.
Costly measures and budget constraints
The law, one of the most expensive the state has seen in years, is estimated to cost $4 billion in its first year alone, according to Newsom’s administration. However, this price tag comes at a time when California is already grappling with a significant budget deficit of approximately $45 billion.
The deficit is projected to grow to $56 billion over the next two fiscal years. State lawmakers are now reconsidering the implementation timeline due to these financial challenges.
Unions rally for fair pay
Unions have championed the legislation as a critical fix for a health care system that is hemorrhaging critical staff due to low pay.
News of the potential delay prompted a swift response from the Service Employees International Union-United Healthcare Workers West, which launched a campaign to hold Newsom accountable to the law he signed last October.
Health care workers have voiced their concerns, emphasizing that low pay contributes to staff shortages and compromises patient care.
Phased implementation and legislative hesitation
Right now, the minimum wage is $16 per hour in California. As it stands, the minimum wage for this sector would increase next month to $18-$23 per hour, depending on job title and location.
However, by 2028, nearly all workers in health care facilities would be required to be paid at least $25 per hour. The tentative plan faces scrutiny from the California Legislature, which is now considering pushing back the pay boost until at least July 1, the start of the new fiscal year.
Newsom announced this hesitation in January while reviewing the next fiscal year’s budget.
The Department of Finance estimates that half of the cost burden of this wage increase would fall on the state’s general fund, with the other half covered by federal funds. The department opposes the bill.
“Finance is opposed to this bill because it creates significant General Fund impacts and cost pressures,” a bill analysis report said. This bill will also create significant economic impacts in the healthcare industry, which may increase costs for consumers and the state.”
Despite the financial challenges, the bill’s author submitted paperwork to delay implementation by one month, and the state Legislature is expected to vote on the amendment during the week of May 26.