Bonuses for California health care workers clear a state budget vote. What’s next?
Roughly 600,000 frontline health care workers in California are virtually assured to receive a small bonus for their service in the COVID-19 pandemic since legislators released a budget deal Monday showing they’d set aside funds for the payments.
Gov. Gavin Newsom proposed that taxpayers pay the bonuses as part of his 2022-23 budget, highlighting the idea as both an inflationary relief package and a worker retention measure. He must sign the budget package before the retention bonuses become official.
In the budget proposal, Newsom wrote : “Retaining essential workers in these settings is a priority of the administration and these payments are designed to help retain this critical workforce.”
A number of health care unions and trade groups thanked the governor for the roughly $933 million in incentive pay, including Dave Regan, president of SEIU-United Healthcare Workers West.
“For years, SEIU-UHW members have raised concerns about California’s health care staffing shortage,” Regan said. “The staffing crisis has only worsened as workers have left the industry in droves during the pandemic because of increased health risks, emotional and mental stress, and overwork. The proposed inflation relief package, which includes pay for health care workers, marks an important step that would recognize their sacrifices on the front lines of the pandemic and help retain skilled and experienced caregivers.”
$1,000 for California health care workers
The California Department of Health Care Services would oversee distribution of the funds and communicate the process for payment to workers via hospitals and nursing facilities.
Workers will have to be currently employed by one of California’s hospitals or skilled nursing facilities to get the bonuses, department spokesman Anthony Cava told The Bee. The incentive pay would be excluded from state taxes.
“Program requirements will be developed and communicated, but it is envisioned the state will make base payments of $1,000 for full-time workers and $750 for part-time workers, and will match specified facility payments of up to $500 for full-time workers and up to $750 for part-time workers,” Cava said. “If program participation exceeds available funding, payments will be reduced on a pro-rata basis.”
Bonuses and inflation
Economists described the bonuses as a salve for the aches and pains that rising prices are causes California consumers at the gas pump and in grocery stores, but in interviews with The Bee, they also said the measures could actually lead to a slight increase in inflation.
State residents are going to pour this money into a consumer market that already has excruciatingly high demand for many goods and services that are in short supply. The relief funds will add to demand for goods and services, something that is already a major source of inflation, said economist Sung Won Sohn of SS Economics in Los Angeles.
“From Gov. Newsom’s point of view, fiscal policy is not his responsibility,” Sohn said. “He is trying to alleviate the pain inflicted on Californians by inflation, especially for low and moderate income groups.”
Somjita Mitra, the chief economist appointed by Newsom to the California Department of Finance, said her team expects the relief package will have a minimal impact on inflation. On an aggregate basis, she said, the $18.1 billion package is 0.6% of the $3.1 trillion in personal income projected in 2022.
“As of February 2022, 16% of California renters were not caught up with their rent, and about half of those self-identified as being very or somewhat likely to leave their homes due to eviction,” Mitra said. “In addition, about half of Americans carried $1,000 or more of credit card debt as of late 2021. As a result, some of the relief may be spent on existing debt or be saved and will not lead to a commensurate increase in demand while still providing critical support and relief for Californians.”
This story was originally published June 14, 2022 at 12:42 PM with the headline "Bonuses for California health care workers clear a state budget vote. What’s next?."
