By Robyn Stone
Increasing pay for direct care workers would benefit workers, providers, care recipients, governments, and local economies.
Oprah Winfrey claimed her place in television history in 2004 when she opened her show’s 19th season by giving every member of the audience a brand new car.
“You get a car, you get a car, you get a car,” Oprah famously chanted as she pointed to audience members unwrapping the keys to their new vehicles. “Everyone gets a car.”
I felt a little bit like Oprah this week when LeadingAge released findings from a new study that quantifies the economic impact of raising pay for direct care workers. Our models show that, just like Oprah’s audience, everyone wins when direct care workers earn at least a living wage.
Direct care workers include nursing assistants, personal care aides, and home health aides who provide life-sustaining care and daily support to older people and people living with disabilities. These 3.5 million caregivers, who work in residential care settings and private homes, are the backbone of our health and long-term care systems. Yet, they remain so poorly compensated that 1 in 8 lived in poverty and more than half received public benefits in 2018.
Inadequate wages are inextricably linked to inadequate funding for long-term services and supports (LTSS) from payers who view LTSS spending as an unsustainable drain on their budgets. But our economic models suggest that increased spending on direct care wages would actually represent a wise investment for governments, LTSS providers, and consumers. Wage increases would carry a relatively modest price tag and would pay for themselves over time.
It should come as no surprise that a meaningful increase in pay would go a long way toward reducing financial hardships and increasing financial security for direct care workers, who now earn an abysmal $475 a week. But our study found that increasing pay for direct care workers also brings with it many other substantial and surprising benefits. In short, everyone wins.
The direct care field wins. Higher pay would make it much easier for providers of aging services to hire new direct care workers and keep them on the job. Our models show that enhanced recruitment and retention associated with a wage increase would add the equivalent of 330,000 direct care workers to the ranks of those already employed, lower recruitment costs associated with high turnover, and increase productivity by at least $5.5 billion.
Care recipients win. Attracting more direct care workers by paying higher wages would reduce worker shortages and make it possible for care recipients to receive more consistent and reliable care. In addition, workers earning a living wage in one care setting would not be forced to hold down two or more jobs in multiple care settings in order to make ends meet. This common “moonlighting” practice inhibits the ability of workers to develop quality relationships with care recipients. It has also been blamed for contributing to the spread of COVID-19.
Local economies win. Direct care workers would spend their additional earnings in the communities where they live. According to our models, that spending would contribute up to $22 billion to local economies in 2030, and add as many as 85,000 new jobs in sectors other than direct care.
Government budgets win. Wage increases would also help reduce the number of direct care workers who receive public benefits like Medicaid, food stamps, and housing subsidies. We estimate that 16.8% of direct care workers currently receiving public assistance would no longer receive it in 2022, allowing government programs to save up to $1.6 billion per year.
Raising pay to at least a living wage is only one of the many actions needed to improve the lives and livelihoods of direct care workers. But higher pay is a critical first step in enhancing the financial security of workers, increasing quality of care, spurring economic growth, and lowering public assistance costs.
Higher pay also gives providers of aging services their best chance to attract qualified direct care workers, offer them the opportunity to pursue meaningful careers, and enlist their help to meet the increasingly complex care needs of our rapidly aging population.
Read the Report
I hope you will read Making Care Work Pay, our full report on this important research. An executive summary of the report is also available. LTSS Center at UMASS Boston Website.
