Health care wage increases could result in short-term cash gains and long-term job losses, the report says • Long Beach Post News
City officials asked the nonprofit organization Los Angeles County Economic Development Cooperation Institute for Applied Economics to write the report while they consider whether to accept 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 implementing the wage increase or passing the decision on to voters. The city council must consider the idea based on a voting measure that garnered enough signatures to qualify for the Nov. 8 election. This left the city council with the choice of adopting the measure itself or letting the voters decide.
Monday’s report found that raising healthcare wages could eliminate more than 58 Long Beach jobs in the short term, but for those who keep their jobs, it could result in a net income change of between $7 million and $9.9 million .
However, to pay for these increased labor costs, hospital providers could raise prices for patients, reap profits, reduce investment in equipment or close sites that are already struggling to stay open, the report said.
The healthcare industry provides over 19,000 jobs across nearly 1,200 Long Beach faculties and generated about $54.5 million in federal, state, and local taxes in 2021, according to the report.
The minimum wage increase is supported by the Service Employees International Union-United Healthcare Workers West, which distributed the ballot measure petition in 10 cities, including Los Angeles, Culver City, Downey and Long Beach. It is opposed by a coalition of hospitals including Saint Mary Medical Center and MemorialCare, the city’s two largest hospitals.
Despite the wording in the measure prohibiting layoffs, reductions in working hours and other retaliatory measures if the measure is passed, the report noted that the wording of the measure does not prohibit these measures from being taken before they come into force.
“There is a strong likelihood that employment adjustments will be made before the minimum wage goes into effect,” the report said. “A one-year waiver, similar to the City of Los Angeles’ waiver, will be offered to any employer who can demonstrate that they will be significantly impacted financially by the higher minimum wage.”
Enforcement of the new minimum wage would fall to the city, and the report estimated it could cost Long Beach $1.2 million annually to do so.
When a similar initiative circulated in Los Angeles, the city council there chose to approve the measure as an ordinance in June rather than put it on the ballot for voters to decide. Healthcare providers opposed to the increase started a referendum in LA to try to reverse the council’s vote.
Long Beach is the largest of the remaining cities still deciding what to do with the initiative.
The SEIU-UHW has said that raising the minimum wage in healthcare to $25 an hour would allow workers to provide for their families and would help halt the burnout that has led to staff shortages.
“It’s not just that they deserve it,” said Suzanne Jimenez, the measure’s advocate and policy director for SEIU-UWH. “Not only do they deserve that, they deserve a lot more.”
Hospital officials have warned it could affect patient care and result in planned improvements not progressing and potentially being closed.
The report pointed out that despite the general perception that hospitals benefited during the COVID-19 pandemic, a study by the Johns Hopkins Bloomberg School of Public Health showed hospital losses per patient increased by 800% in some cases as they elective surgeries were delayed and resources shifted to care for COVID patients, many of whom had no insurance to pay for their care.
Payment for increased labor costs could come from profits, but facilities with smaller profit margins that rely more on government-provided reimbursement plans will have less flexibility to raise prices to offset higher wages, the report said.
A separate analysis commissioned by the California Hospital Association, estimated the wage increase would increase labor costs at Long Beach facilities by over $37 million while excluding 65% of employees already earning over $25 an hour .
City council members requested Monday’s report in mid-June as supporters of the measure submitted more than enough signatures to qualify for the general election. However, given the tightened schedule, the city had difficulty finding a willing company to take on the project.
Nick Schultz, executive director of the Pacific Gateway Workforce Investment Network, said Monday that the LAEDC is the only one of nine companies the city has previously worked with that has agreed to take on the job. The LAEDC conducted a similar study for the city back in 2015 when it came to raising the citywide minimum wage.
However, this study was conducted and publicly discussed over a period of many months while this study was conducted in about 30 days.
Due to the time constraints, the report did not analyze impacts on other industries, which could force other companies to also increase wages to remain competitive for positions such as food workers, security guards and janitors. Also, the long-term effects on access to healthcare and the quality and price of care provided were not analyzed.
The commission voted to forward the report to the city council, which could act this evening, August 2, to pass the measure as a city ordinance or send it to voters.
The report proposed both a more rigorous study of the measure’s potential impact so policymakers and voters could better understand the issue, and a separate five-year study of the minimum wage and its impact on the industry, should that be undertaken.
The council has until Aug. 9 to complete all voting activities for the November election and is considering three actions of its own that will affect future election dates, merge the city’s water and gas division, and transform the future of Long Beach police oversight would.
Long Beach is considering raising the minimum wage for healthcare workers
City Council is considering three bylaw changes for November 8 election