Providers could reduce the services they offer, pare back charity care, and cut or delay capital investments, Spetz said. In the long term, she expects some combination of spending cuts and revenue increases.

Both the state law and local ordinance cover far more than doctors and nurses, with a definition of health worker that includes janitors, housekeepers, groundskeepers, security guards, food service workers, laundry workers, and clerical staff.

The most recent estimate by the Health Care Program at the University of California-Berkeley Labor Center is that as many as 426,000 health workers would make an average of $6,400 extra in the law’s first year, a 19% average pay bump mainly benefiting lower-income workers of color and women. State finance officials project that well over 500,000 workers will benefit.

Researchers didn’t include layoffs and other potential staffing and benefit reductions when they projected the state law’s costs and benefits, said Laurel Lucia, the program’s director. But she pointed to initial projections by hospitals, doctors, and business and taxpayer groups that the wage hike would cost $8 billion annually, thereby imperiling services and resulting in higher premiums and higher costs for state and local governments.

“It seems like a contradiction to say this law’s going to cost billions of dollars while at the same time saying it’s going to reduce workers’ total compensation,” said Lucia, who projects a far lower price tag.

She added that state finance officials had anticipated that Medi-Cal reimbursements would reflect the increased labor costs, while Medicare would eventually at least partially compensate for the higher labor costs.

Michael Reich, chair of the Center on Wage and Employment Dynamics at UC Berkeley’s Institute for Research on Labor and Employment, and affiliated economist Justin Wiltshire recently argued that California’s new $20 minimum wage law for fast-food workers won’t result in mass layoffs and price increases, as some have predicted.

Health care is much different than fast food, Reich acknowledged, but he argued for much the same positive result.

“A higher minimum wage will make it easier and cheaper for hospitals to recruit and retain these workers. The cost savings, and the productivity benefits of more experienced workers, could offset much of the labor cost increase,” Reich said.

The hospital association filed its lawsuit against Inglewood’s ordinance in July, while it was still opposing early versions of the statewide minimum wage legislation. Among many other provisions, the statewide law put on hold an initiative to cap hospital executives’ salaries in Los Angeles.

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