October 23, 2023

By Grace Totman, Co-Head of Capstone’s Healthcare Practice  

Last week, California passed a $25 minimum wage for all healthcare workers in the state- from hospital custodial staff to dialysis technicians. The shocking reform seemed highly unlikely when it was first introduced earlier this year but made headlines after relatively smooth passage in the legislature. Though it came as a shock to many, it shouldn’t have. Capstone was constructive on passage from the beginning, due in part to California’s notoriety when it comes to aggressive policymaking, but more so to the involvement of labor unions.

With its robust Democratic alignment and substantial union presence California has long been a labor union stronghold, particularly for healthcare. Just last week, the Kaiser Permanente healthcare strike, the largest in US history, ended with Kaiser making significant concessions to providers. For years, union-backed ballot initiatives have targeted the dialysis and hospital industries. The primary instigator is the Service Employees International Union United Healthcare Workers West (SEIU-UHW), the nation’s oldest and largest healthcare lobby. Even in California, however, union membership has dwindled in recent years, contributing to the national all-time low of just 10.1% nationally in 2022. Despite these membership declines, union power has grown, fueled by the pandemic. 

The pandemic reinvigorated unions, triggering an outpouring of empathy for healthcare workers and their mounting grievances.

The pandemic reinvigorated unions, triggering an outpouring of empathy for healthcare workers and their mounting grievances. Nurses and doctors grappling with grueling shifts and separation from loved ones became louder with their complaints. When caseloads began to ease, these complaints turned into action as unions and their members found the time to organize, further emboldened by President Biden’s pro-union stance. 2021’s “striketober” brought one of the largest waves of multi-industry strikes in history. In 2022, the same year in which unions hit their lowest ever membership, they reached their highest public approval rating since 1965.

The SEIU wasted no time in using this momentum. They began enacting county-level $25 minimum wages for healthcare workers across California. Most notable was Los Angeles, which is home to nearly 10% of the state’s population. Faced with the threat of county-level minimum wages, healthcare providers ultimately decided to come to the table and negotiate with unions on the state-wide package. The SEIU flexed its power, and providers backed off.

The once-struggling union has found a winning playbook and is likely to use it again. Within California, this means continued industry-targeted wage efforts, such as the new fast-food worker minimum wage enacted last month. Outside of California, states like Washington and Oregon- which are similar in terms of political lean and ballot initiative processes- are likely the next battleground for union efforts.

Healthcare providers, in particular, must confront a new reality: the pandemic was a tipping point for union influence. Labor challenges highlighted during the pandemic aren’t new, they’re just now gaining attention.

Healthcare providers, in particular, must confront a new reality: the pandemic was a tipping point for union influence. Labor challenges highlighted during the pandemic aren’t new, they’re just now gaining attention. The nursing shortage is at an all-time high, and minimum wage reform outside of healthcare has made low-level healthcare jobs unattractive. Few individuals are willing to change bedpans when they can earn the same flipping burgers at fast-food chains. Labor issues have replaced the longstanding top concern for healthcare providers, reimbursement. Capstone believes that this trend is enduring and expects a continued increase in labor strikes and shortages within healthcare and beyond. As always, we remain committed to closely monitoring these developments and providing our clients with timely updates.

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