Health care wage hike could cause short-term monetary gains, long-term job losses, report says

A $25 minimum wage for all employees at private health care facilities in Long Beach would benefit workers by boosting their salaries but also likely cause job losses and limit future employment opportunities, according to a report commissioned by City Council.

City officials asked the nonprofit Los Angeles County Economic Development Corporation Institute for Applied Economics to write the report as they consider whether to adopt a proposal that would raise the minimum wage for health care workers. 

The city’s Economic Development Commission discussed the idea Monday afternoon, and today, the City Council will consider instituting the wage hike or passing the decision along to voters. The City Council must consider the idea because of a ballot measure that garnered enough signatures to qualify for the Nov. 8 election. That left the City Council with the choice of adopting the measure themselves or letting voters decide.

Monday’s report found that, in the short-term, raising health care wages could eliminate upward of 58 jobs in Long Beach, but for those that keep their jobs it could amount to a net income change of between $7 million and $9.9 million.

However, to pay for those increased labor costs, hospital providers could raise prices for patients, dip into profits, reduce investments in equipment or close locations that are already struggling to stay open, the report said.

The health care industry makes up over 19,000 jobs across nearly 1,200 faculties in Long Beach and created about $54.5 million in federal, state and local taxes in 2021, according to the report.

The minimum wage hike is backed by the Service Employees International Union-United Healthcare Workers West, which circulated the ballot measure petition in 10 cities including Los Angeles, Culver City, Downey and Long Beach. It’s opposed by a coalition of hospitals including Saint Mary Medical Center and MemorialCare, the city’s two largest hospitals.

Despite language in the measure prohibiting layoffs, reduction in hours and other retaliatory responses if the measure is adopted, the report pointed out that the measure’s language does not prohibit those actions being taken in advance of it going into effect.

“There is a strong possibility that employment adjustments will be made before the minimum wage goes into effect,” the report said. “A one-year waiver, similar to the waiver implemented by the City of Los Angeles, is offered to any employer who can show that it will be significantly negatively affected financially due to the higher minimum wage.”

Enforcing the new minimum wage would fall on the city and the report estimated that it could cost Long Beach $1.2 million annually to do that.

When a similar initiative was circulated in Los Angeles, the City Council there opted to approve the measure as an ordinance in June instead of placing it on the ballot for voters to decide. Health care providers opposed to the increase launched a referendum effort in LA to try to undo the council’s vote.

Long Beach is the largest of the remaining cities still considering what to do with the initiative.

The SEIU-UHW has said that increasing the health care minimum wage to $25 per hour would allow workers to provide for their families and help stop the burnout that has led to staffing shortages.

“This is not just about them deserving,” said Suzanne Jimenez, the measure’s proponent and political director for SEIU-UWH. “They don’t just deserve this, they deserve much more.”

Hospital representatives have warned it could affect patient care and lead to planned improvements not moving forward and potential closures.

The report pointed out that despite a common perception that hospitals profited during the COVID-19 pandemic, a study from Johns Hopkins Bloomberg School of Public Health showed that hospital losses per patient grew by 800% in some cases as they delayed elective surgeries and shifted resources to serve COVID patients, many of whom lacked insurance to pay for their care.

Paying for increased labor costs could come out of profits, but facilities that have smaller profit margins and are more reliant on government-provided plans for reimbursement will have less flexibility to raise prices to offset higher wages, the report said.

A separate analysis commissioned by the California Hospital Association estimated that the wage hike would increase labor costs in Long Beach facilities by over $37 million while excluding 65% of employees who already make over $25 per hour.

City Council members requested Monday’s report in mid-June when proponents for the measure turned in more than enough signatures to qualify for the general election ballot. However, the city had trouble finding a willing firm to take on the project given the condensed timeline.

Nick Schultz, executive director of Pacific Gateway Workforce Investment Network, said Monday that the LAEDC was the only firm among nine that the city has previously worked with that agreed to take on the job. The LAEDC previously conducted a similar study for the city in 2015 when it was looking at increasing the minimum wage city-wide.

However, that study was conducted and publicly discussed over the span of many months while this one was done in about 30 days.

Because of the time constraints, the report did not analyze spillover into other industries that could force other businesses to also raise wages to stay competitive for positions like food workers, security guards and janitorial staff. It also did not analyze the long-term effects on access to health care and the quality and price of the care provided.

The commission voted to forward the report to the City Council, which could act tonight, Aug. 2, to adopt the measure as a city ordinance or send it to voters.

The report suggested both a more rigorous study of the potential effects of the measure so policymakers and voters could better understand the issue and suggested a separate five-year study of the minimum wage and how it affects the industry should it be performed.

The council has until Aug. 9 to finalize any ballot measures for the November election and is considering three of its own that would affect future election dates, merge the city’s water and gas department and change the future of police oversight in Long Beach.

Editors note: This story has been updated with a link to an updated version of the report from the LAEDC. 

Long Beach to consider raising minimum wage for health care workers

City Council to consider three charter amendments for Nov. 8 election

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Jason Ruiz has been covering City Hall for the Post for nearly a decade. A Long Beach resident, Ruiz graduated from Cal State Long Beach with a degree in journalism. He and his wife Kristina and, most importantly, their dog Mango, live in Long Beach. He is a particularly avid fan of the Dallas Cowboys and the UCLA Bruins, which is why he sometimes comes to work after the weekend in a grumpy mood.
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