California health care workers won a path to $25 minimum wage. Now they fear a detour

After seven years working as a dialysis technician, Romer Tamayo was still earning less than $25 an hour last October when Gov. Gavin Newsom signed a minimum wage law for health care workers.

The Brentwood father of two was excited by the wage hikes promised in Senate Bill 525.

During his tenure at a Fresenius dialysis center, Tamayo’s pay had never increased by more than a dollar in a single year. He now earns $22.68, up from $18 when he was hired.

Under SB 525, Tamayo would receive two annual dollar pay bumps in a row. The measure spells out what dialysis workers should expect — an hourly minimum of $23 starting in June 2024, $24 beginning June 2025 and $25 in June 2026.

Now, however, those promised wage increases seem more like an illusion to Tamayo than a promise.

In early January, Newsom proposed a 2024-25 state budget aimed at staving off what the Department of Finance estimated could be a $37.9 billion shortfall. In the budget proposal, the governor said he wanted spending guidelines put in place on SB 525 that could suspend the annual wage hikes depending on the state’s revenue outlook.

Newsom said that he had been assured that the union backing the measure, SEIU California, would work with employer groups and key legislators to add the guidelines.

Known as triggers, such budgetary controls are not new.

In 2016, for instance, Gov. Jerry Brown asked for such a mechanism before the Legislature enacted Senate Bill 3 to raise the state minimum wage to $15 over a six-year period, said Ken Jacobs, co-chair of the Center for Labor Research and Education at the University of California, Berkeley.

In the case of SB 3, triggers were enacted that allowed suspension of those minimum wage hikes if forecasters at the California Department of Finance predicted retail sales declines, job losses or a budget deficit of more than 1% of annual revenue.

No such delay ever happened, Jacobs said, but these sort of fiscal controls ensure there’s a relief valve during times of budgetary crisis like the revenue shortfall California is facing now.

Health care minimum wage could cost CA $4 billion in first year

Forecasters at the finance department are estimating that the health care minimum wage could cost the state roughly $4 billion to implement in 2024-25.

As an employer, the state of California would have to raise wages for its own workers covered under SB 525, said Finance spokesman H.D. Palmer. It also would see increased reimbursements for Medi-Cal as providers raised pay for their employees covered by the bill.

The state budget estimates do not, however, take into account findings from researchers in the Labor Center at UC Berkeley, who found that the state would realize cost savings as a result of implementing SB 525, Palmer said.

The Labor Center team pointed out that almost half of the 500,000 or so health care workers who would benefit from the new minimum wage depend upon one or more public safety net programs, including Medi-Cal, the CalFresh food program, the CalWorks welfare program which offers cash aid and other services, and federal tax breaks for low- to moderate-income families.

“Raising the health care minimum wage to $25 an hour would help reduce these working families’ need to rely on safety net programs, thereby reducing state Medi-Cal spending as many affected workers become eligible for federally subsidized insurance through Covered California,” Laurel Lucia and other Labor Center researchers explained in their brief.

After the enactment of SB 525, Tamayo said, he was looking forward to having a little more money to survive because inflation has raised the cost of almost everything. He has two children, one in high school and the other in elementary, he said.

Before emigrating from the Philippines, Tamayo worked as a ship captain the Merchant Marines. His pay allowed him to put four of his siblings through college.

Two of them became registered nurses, working in dialysis clinics in the United States. They recommended he get a job as a dialysis technician when he began talking with his wife, an RN in the Bay Area, about moving to California to help rear their daughter who was then in elementary school.

The cost of child care was high, he said, and the couple figured they could coordinate their work schedules to ensure that at least one of them could mind their daughter at all times.

Low pay leads to worker shortages, researchers and unions say

Tamayo’s job at a dialysis clinic near the couple’s home has allowed him to be available for first his daughter and now his son, he said, and that’s the main reason he hasn’t looked for other work with more potential wage growth.

Health care researchers and unions have said turnover is high and recruitment difficult in many regions of California because there’s a shortage of workers willing to take on low-wage jobs in the field.

The Berkeley researchers said that, if a $25-an hour minimum wage was instituted across the industry, “patients, workers and industry alike would benefit from lower turnover rates, better staffing, and better outcomes, like reduced hospital stays and even lower mortality rates.”

As the powerful Coalition of Kaiser Permanente Unions negotiated a new contract last year, low-wage workers in its ranks repeatedly complained that labor shortages were hurting patient safety.

And, on the same day that Newsom announced he had signed SB 525, Kaiser Permanente and its unions issued a joint statement saying they had settled their contract dispute. The terms included the three-year path to a $25 minimum wage spelled out in the bill now law and wage bumps for veterans already earning that pay.

So, if SB 525 is delayed, will this give Kaiser an edge in recruitment? Will it drive other companies to match this wage?

Kaiser can’t hire everyone, Lopezlira said, so the competition for workers won’t have anywhere near the impact that a minimum wage would have. Studies have shown that hourly wages at other businesses could remain the same or rise up to 24 cents for every dollar that a competitor raises pay, he said.

‘How could people survive with this salary?’

A minimum wage boost, however, typically results in better income across the board not only for entry-level personnel but also for veteran workers already getting that same pay or up to $3 above it, said Berkeley’s Enrique Lopezlira, a labor economist. Employers raise wages for veterans to retain them.

The health care minimum wage currently would apply to at least 500,000 workers who provide direct care within the facilities. This would include janitors, groundskeepers and security staff. The governor also has asked for further clarification of the occupations covered under the law.

Tamayo, 46, said his wages have never reflected the degree of responsibility that he has or the demands of a job where there’s no margin for errors.

“You’re working for 12 hours nonstop,” he said. “You have those brief breaks, but once you’re inside the clinic, you don’t stop working. Even our patients notice that and tell us to slow down.”

People’s lives hang in the balance, Tamayo said, so he has to be sure patients get the prescribed treatment, connect them to dialysis machines, monitor their condition and disconnect them from machines.

Tamayo has at least four patients under his care at any given time, he said, but he may have to watch over as many as eight when one of his co-workers goes on break.

“I was so shocked when I came here,” he recalled of his first week at the clinic. “I was like, wow, how could people survive with this salary? It’s not even a quarter of the money I made when I worked (as a ship’s captain) in the Philippines.”