Hospital workers and management at Kaiser Permanente, one of the nation's largest healthcare systems, reached a labor agreement Saturday, two days before nearly 32,000 employees were set to strike over a proposed pay system for future hires.
The strike would have been one of the largest in the American healthcare industry — and in California more broadly — in recent years, affecting more than 350 facilities in Southern California and other locations in Northern California, Oregon, Washington and Hawaii.
The core of the disagreement between labor and management came down to two issues: raises and a proposed two-tier pay system, in which employees hired after 2023 would be paid according to a lower wage scale than current employees doing the same jobs.
Kaiser Permanente management had stuck with that proposal for months, which called for paying new hires 26% to 39% less than current employees, arguing that the measure was necessary to lower labor costs and prevent higher costs to Kaiser members down the line.
Union representatives argue that the two-tiered pay system would foment dissatisfaction and division in the workforce and amount to a pay cut for the next generation of healthcare workers, making it more difficult for Kaiser to attract and retain good employees.
In the face of a looming strike that would have significantly disrupted Kaiser operations — more than half of its nonphysician workforce in Southern California was set to join the work stoppage — the healthcare system backed down.
The tentative agreement reached between the Alliance of Health Care Unions and Kaiser Permanente scraps the two-tier proposal, according to a statement. If approved, the agreement will cover a four-year contract for nearly 50,000 workers.
“This agreement will mean patients will continue to receive the best care, and Alliance members will have the best jobs,” Hal Ruddick, executive director of the Alliance of Health Care Unions, said in a statement. “This contract protects our patients, provides safe staffing and guarantees fair wages and benefits for every Alliance member.”
The settlement also includes an agreement on raises, but union representatives would not share details of the final raise amounts. Christian Meisner, senior vice president and chief human resources officer at Kaiser Permanente, said in a statement that it "underscores our unwavering commitment to our employees by maintaining industry-leading wages and benefits.”
The tense negotiations came at a time when the healthcare industry is facing staffing shortages as workers burn out after nearly two grueling pandemic years and an aging U.S. population creates higher demand. Finding enough nurses was a major challenge, 80% of private-sector healthcare executives reported in response to a McKinsey survey in August; 64% said clinical support staff was also an issue. Nearly one-third of respondents said they were raising wages and hiring bonuses to try to bring in more staff.