California Democrats agree to delay minimum wage hike for health care workers, who will eventually get $25 per hour


Democrats in California have decided to delay a planned minimum wage increase for about 426,000 healthcare workers to help balance the state's budget. This decision, made in agreement with Governor Gavin Newsom and legislative leaders, is part of a broader strategy to address a $46.8 billion budget shortfall—the second consecutive year with such a significant deficit. Originally, healthcare workers were set to receive a raise on July 1 that would gradually increase their hourly wage to $25 over the next decade. However, under the new plan, and subject to legislative approval next week, this raise could be postponed to October 15, contingent on California’s revenues being at least 3% higher than anticipated between July and September. If this revenue target is not met, the raise will be deferred until January 1 at the latest.

This delay preserves a key victory for one of the state's largest labor unions, the Service Employees International Union-United Healthcare Workers West, although its president, Dave Regan, expressed disappointment over the postponement. Nevertheless, he acknowledged the efforts of legislative leaders and the Governor in addressing the healthcare workforce crisis despite the historic budget deficit.

In California, the minimum wage stands at $16 per hour, one of the highest nationwide. However, for fast food workers, it is $20 per hour, an increase that began in April and impacted wages statewide. By contrast, raising wages for healthcare workers presents a more complex challenge due to its budgetary implications. The Newsom administration had previously estimated that the wage increase would cost the state around $2 billion. If delayed until January, the cost will be about $600 million for the general fund, with the figure rising annually until the wage reaches $25 per hour.

California's recent revenue rebound offers some confidence that the initial wage raise will occur in the fall, according to Regan. The total budget agreement amounts to $297.9 billion in spending for the next fiscal year starting July 1, incorporating $16 billion in cuts. These cuts include $110 million from a program assisting middle-class students and $1.1 billion from various affordable housing programs. However, the plan avoids proposed cuts to payments for caregivers of low-income disabled immigrants on Medicaid and instead includes a $400 million loan to Pacific Gas & Electric to extend the life of the state's last nuclear power plant.

Additionally, Newsom agreed to a less substantial increase in payments to doctors treating Medicaid patients than previously planned. Doctors have since qualified a measure for the November ballot to compel the state to increase these payments. The budget also encompasses an almost 8% cut across all state agencies, an extra $350 million cut for state prisons, and a temporary tax hike for businesses with taxable incomes above $1 million, effective until 2026.

Governor Newsom stated that the agreement paves the way for the state's long-term fiscal stability by addressing the current shortfall and enhancing budget resilience. Although Republican lawmakers, who lack sufficient seats to influence legislation, were excluded from the negotiations, Senate President Pro Tempore Mike McGuire and Democratic Assembly Speaker Robert Rivas emphasized their efforts to minimize the deficit while protecting essential public services. A legislative vote on the budget is expected next week.  

Post a Comment

Previous Post Next Post