Financially Strapped Health Care Workers Wait for Promised Wage Increase

Cristina Cortez earns just $20.70 an hour running dialysis procedures for older patients suffering from kidney failure in Gilroy, California, a predominantly Latino community just south of San Jose. Because of her husband’s serious work injury in 2017 and their need to economize, her family of five moved an hour away to Merced County in the Central Valley, where rent is considerably lower. But Cortez, who works 12-hour shifts, said gas prices are high, and her days are long. “We’re living paycheck to paycheck,” Cortez said. “It’s a struggle.”

That’s why Cortez was excited when Gov. Gavin Newsom signed a bill in the fall that set her and 400,000 other health care workers across California on a path to earning $25 per hour over the next few years. The minimum wage law, known as Senate Bill 525, was supposed to have begun phasing in on June 1. But the wage law was delayed because of a massive state budget deficit that resulted in painful cuts. Now, Cortez, a certified hemodialysis technician, may have to wait until Jan. 1 at the latest for the wage hike, the California Department of Health Care Services said. That might not seem far away, but finances are already strained for Cortez and thousands of other low-wage health care workers across the state. Many have left the profession in part because of low pay, stressing the state’s health care system.
 

California faces a $46.8 billion budget deficit this year, which has led lawmakers to cut programs and delay spending.

 
The delay “really, really impacts me,” said Cortez, 44, who has been applying for part-time jobs at big box retailers in the hopes that the extra money will allow her to move back to her hometown of Gilroy and shed her costly commute, even if it means renting a smaller home. The wage increase will “make a big difference,” she said.

The delay comes as costs of necessities rise. It also means uncertainty. The budget deal hammered out in late June stipulated that the wage increase will kick in as early as mid-October and as late as Jan. 1. For Cortez, every month that goes by represents a loss of extra income that she expected to receive. She anticipated the wage hike to increase her monthly pay by almost $400, she said.

Observers said the delay is rare. “Increases in the state minimum wage have never been paused,” and the delay is “very unusual,” said Ken Jacobs, co-chair of the University of California, Berkeley, Center for Labor Research and Education.

Big-ticket budget items often have mechanisms that provide for delays to be triggered under certain economic conditions, said Scott Graves, budget director of the California Budget & Policy Center, a nonprofit think tank. The new law didn’t include such triggers when the governor signed the bill; they were added later. 

Newsom’s office did not respond to a request by Capital & Main for comment about why the triggers were added.

California faces a $46.8 billion budget deficit this year, which led lawmakers to cut programs and delay spending. The health care worker wage increase was a significant item in the year’s budget, although the estimated cost of the law varied depending on who analyzed it. H.D. Palmer, deputy director for external affairs in the state Department of Finance, forecast that the wage hike would cost $1.4 billion over six months. The UC Berkeley Labor Center, meanwhile, estimated that the cost would be in the “low hundreds of millions of dollars” in the law’s first year. Neither party explained the discrepancy between the estimates.
 

Cristina Cortez longs to occasionally eat out or go to the movies with her husband and three children.

 
Under the agreement, workers will receive a wage increase on Oct. 15 only if California’s revenues between July and September exceed projections by at least 3%. Alternatively, a wage hike can be triggered by Jan. 1 if the state’s health care agency takes some initial steps to raise a fee on hospitals. Advocates have been confused about the start date for the anticipated wage increase outlined in the latest budget agreement. But Leah Myers, spokesperson for the California Department of Health Care Services, told Capital & Main that the wage law should take effect between Oct. 15, 2024, and Jan. 1, 2025.

Cortez said the new law will initiate a raise promised by Milpitas, California-based Satellite Healthcare, a nonprofit provider of kidney dialysis and related services and Cortez’s employer of almost five years. Cortez, a 24-year health care veteran, expected her wage to increase by $2.30 to $23 per hour when the law goes into effect, she said.

California’s minimum wage is currently $16 per hour. The state’s fast-food workers saw their minimum wages increase to $20 per hour in April. Wage increases for health care workers have been more difficult to implement because part of the funding comes from Medi-Cal, the state’s Medicaid program. 

In the first year after the law goes into effect, the average wage increase for covered health care workers is estimated to be $6,400, “which is a significant amount, especially for workers who are struggling to make ends meet in this high cost-of-living state,” said Laurel Lucia, director of the Health Care Program at the UC Berkeley Labor Center. 

Since the pandemic, stress levels have been higher for health care workers, and wages have been a key factor causing many to leave the profession, Lucia said.

Minimum wage increases “reduce turnover and improve patient outcomes” at nursing homes and other health facilities, said Krista Ruffini, assistant professor of public policy at Georgetown University’s McCourt School of Public Policy. She wrote a 2022 study on the topic.
 

“[Unionized workers] typically receive more wage increases because they are guaranteed in their contract bargaining agreements.”

~ Renée Saldaña, spokesperson, SEIU-UHW

 
When Ruffini analyzed minimum wage increases in Illinois nursing homes, she found fewer patient deaths and health inspection violations once they went into effect. (Nursing home workers in California who are not part of large hospital facilities are not covered by the new wage law.)

California’s new law was written so the path to $25 per hour varies depending on employer size.

More than 110,000 health care workers are members of Service Employees International Union-United Healthcare Workers West, a union that has been an advocate for the wage hike, according to Renée Saldaña, a union spokesperson. Most SEIU members who are covered by the new wage law are already on a path to receive $25 per hour under their union contract, she said. Unionized workers “typically receive more wage increases because they are guaranteed in their contract bargaining agreements,” Saldaña said. 

But Cortez’s employer stands as an exception. In January, Satellite Healthcare informed employees that only workers at its nonunion clinics would receive immediate wage increases, while unionized employees had to wait until the new law takes effect, she said. In response, SEIU-UHW filed an unfair labor practice complaint against Cortez’s employer, alleging that the company’s approach violated federal labor law. The complaint is pending. Satellite Healthcare did not respond to a request for comment. (Disclosure: SEIU is a financial supporter of Capital & Main.)

It’s been a difficult few years for Cortez. Both her mother and father died from illnesses. She and her husband, Nicholas Campos, who earns $22 per hour as a welder, leave for work at 3:30 a.m. and are exhausted by the time they get home at 7 p.m. Twice a week, the family eats instant ramen noodles for dinner, she said. Cortez has diabetes, which she is managing through exercise and diet. 

She longs to occasionally eat out or go to the movies with her husband and three children. “I’m hardly home because I’m always working,” she said. She’d like to be able to purchase new school clothes and shoes for her 16-year-old son. “I can’t afford to buy him school clothes,” she said.

Nevertheless, Cortez said she finds her job to be professionally fulfilling. “It’s rewarding for me every single day” to care for patients, Cortez said. Many patients “have lost their spouses, and they’re alone,” she added. “Making them smile and giving them a laugh, it’s warming in my heart.”