Seven Takeaways From The Carsey Institute’s Report On Raising Wages For Home Care Workers

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President Obama is pushing for a Labor Department rules change that would require home care agencies to pay aides minimum wage and overtime.

By far, our most popular post to date is a map we created using federal data on which states offer minimum wage and overtime guarantees to home health workers, and which don’t.  Right now, under the Fair Labor Standards Act (FLSA), certain classes of workers, ranging from babysitters to home care workers–personal care aides and home health aides–don’t have to be paid minimum wage.*  So states are left to decide if they want to cover home care workers under their own wage laws.

Many are choosing not to.

Now, President Obama is pushing the Labor Department to rewrite federal regulations so home care workers could be guaranteed both benefits.

And whether it’s politicians, families struggling to pay for in-home care, or the agencies that employ these workers, the rules change has been highly controversial.

In her report “Lack of Protections for Home Care Workers: Overtime Pay and Minimum Wage,”  Carsey Institute researcher Kristin Smith breaks down the differences in pay and hours of home health workers versus hospital and nursing home aides, who do similar work and are “typically” guaranteed minimum wage and overtime.  (As a group, home health, personal care, nursing home and hospital aides are called “direct care workers.”)

Smith’s report is short, but numbers-dense.  So with that in mind, here are the seven key takeaways:

          1. Home care workers have lower median wages than comparable workers in hospitals and nursing homes: While half of all American workers made more than $16.83 an hour in 2010, the median hourly wage for all direct care workers–hospital, nursing home, and in-home aides–dipped sharply, to $10.22.  And the wages of home care workers help drag down that figure.  The median hourly wage for hospital aides is the best in the direct care category, at $12, followed by nursing home aides at about a dollar less.  Meanwhile, the median wage for both types of home care worker is less than $10 an hour.  But Smith notes that “median wages mask the fact that some workers are paid lower than the minimum wage.”  That’s because half of the people counted make more than that amount…and half make less.  So it’s instructive to look at the “lowest quartile” for wages.  When Smith looked at the range of pay for the lowest-paid segment of each population, she found that direct care workers in the lowest quartile just skirted the edge of the $7.25 federal minimum wage, at $7.63.  Once again, hospital and nursing home aides were above that range.  But the lowest quartile among home health aides made less than $7.21 an hour, while one-in-four personal care aides made less than $6.59 an hour.
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            Guaranteeing minimum wage for home care workers will increase health care costs

            Requiring minimum wage will raise the cost of home health care: According to a White House media release, about 89 percent of these workers are employed by staffing agencies.  (And the agencies are the businesses targeted by the proposed rule change.)  Smith writes that the Labor Department estimates, “the average annualized cost of the rule change will total about $4.7 million per year over ten years.”  But the costs can be controlled a bit on the overtime front (See #4).

          3. A greater portion of personal care aides are forced into working part-time than their peers: Since the economy tanked, the popular term for people who work fewer hours than they’d like is “underemployed.”  That’s one of the key reasons Smith noted workers could be “involuntarily” part-time in 2010.  She found that about one out of four American workers would work full-time if they could.  The overall direct care worker category and the home health aide numbers were very close to this mark.  For personal care aides, however, that number shot up to 37 percent.  Meanwhile, the demand for more hours among hospital and nursing home aides was much lower.
          4. It might not be as expensive to pay home care aides overtime as one might think: This is where those high “involuntarily part-time” figures above come in.  Clearly, there’s a demand among home care workers for more hours.  And Smith notes that since these workers don’t get paid overtime, agencies can give into the temptation to simply have the same employee work a long shift.  The easy way to keep overtime costs down, Smith says, is to cut down the hours of aides who are working overtime now, and give those hours to the employees who want more work.  And, she writes, some states already guarantee overtime to this class of worker, and can provide some helpful experience.  “For example, in New York City, Cooperative Home Care Associates,–an agency that pays workers a premium overtime rate–limited overtime to less than 10 percent of all hours through the use of a tracking system.”
          5. Minimum wage and overtime will help “stabilize” a rapidly growing and high-demand segment of the workforce: Citing projections from the Bureau of Labor Statistics, Smith

            Joe Raedle / Getty Images

            Home care aides often make substantially less than their peers in hospitals and nursing homes

            notes that the home health workforce could grow from 1.7 million people to 2.6 million by 2018.  That makes it one of the fastest growing employment sectors in the American economy.  Already, Smith writes “Home care workers make up more than half of the paid direct care workforce.”  And that demand is only going to increase as baby boomers age and decide to go the home care route.  But the problem is, the field pays artificially low wages, and workers can put in some very long hours.  So besides high turnover, the field’s got a bad reputation, which makes recruiting replacements tough.  Offering minimum wage and overtime could both help reduce turnover and make it easier to replenish this segment of the workforce.

          6. takomabibelot / Flickr

            Smith says raising wages and instituting overtime would increase the quality of care over the long haul.

            Minimum wage and overtime will help decrease poverty in general and child poverty in particular:  As the White House media release noted, 92 percent of these workers are women and many of them are the family breadwinner, “and close to 40 [percent of all these workers] rely on public benefits such as Medicaid and food stamps.”  In other words, single moms are over-represented in this kind of job.  And a number of them are counting on government aid to bridge the gap between what they’re paid and the cost of keeping up a family.  Smith also found that home health aides had a 20 percent poverty rate, while personal care aides had a 28 percent poverty rate.  Meanwhile their occupational peers, hospital and nursing home aides, both have poverty rates around half that, at 12 percent.  So while raising all these workers to the federal minimum wage of $7.25 an hour won’t stamp-out poverty in this group, it will help.

          7. Paying at least minimum wage will increase the quality of care:  This point is related to stabilizing the home care workforce.  Toward the end of her report, Smith writes, “The data in this brief suggest that narrowing the companionship exemption would benefit workers by raising their wages, improving the equality of care for clients, and reducing turnover.”  Smith previously noted that by paying these workers more, turnover will decrease, and the recruitment pool will increase.  So how does this tie to better care?  Experienced people who enjoy the work will be more likely to stick with the field, and home care agencies will have an easier time drawing qualified people who want to do the work.  In other words, people who might be interested in home health care if it at least paid minimum wage and overtime would be more likely to apply.


 *For purposes of definition, Smith writes of home care workers, “These aides assist clients in their homes with personal and household duties such as bathing, dressing, shopping, cleaning, and meal preparation, as well as routine healthcare such as changing bandages and dressing wounds.  Some also help clients by performing simple medical tasks such as administering medication and checking temperatures.  Hospital aides, nursing home aides, and home care aides engage in similar work for their clients, even though they work in different institutional settings.”


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