CANDACE HOWES, PROFESSOR OF ECONOMICS, CONNECTICUT COLLEGE

FLSA 75TH ANNIVERSARY, DOL, WASHINGTON, D.C. NOV 15, 2013

HOMECARE, FEDERAL/STATE/LOCAL MANDATES AND LOW WAGE WORK

HOMECARE’S ROLE IN RAISING THE WAGE FLOOR

• Home care jobs singularly important because of size

• Rate of growth far exceeds that recognized by policy-makers

• Challenges• Structure of industry makes it difficult to mandate floor

on wages and benefits• Medicaid politics• Invisibility of job

• SF and California provide model• Creating quality home care jobs is critical to

raising wage floor and building a quality and affordable long term care system

THE LONG TERM CARE INDUSTRYMILLEDGEVILLE (GA) STATE LUNATIC, IDIOT AND EPILEPTIC ASYLUM ESTABLISHED IN 1837,

STILL IN OPERATION

LONG TERM CARE INDUSTRY

• Commodification of household work• Demographic trends• Funding: Industry largely defined by Medicaid and

to lesser extent Medicare• Consumer preference and fiscal constraints re-

shape industry

TRENDS IN LTC INDUSTRY

• Rebalancing & rapid growth – Home care/home health fastest growing industry in U.S.; PCA and HHA fastest growing occupations• To consumer-directed from agency-based model• Advantages :• Consumer/provider preference • Option for family providers• Significantly lowers costs

• Disadvantages:• Can pay low wages, poor/no/little training, largely

unregulated

The Care Gap

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HUMBOLDT COUNTY - CUHW RALLY

THE HOME CARE WORK FORCE

LONG TERM CARE WORKERS BY OCCUPATION (%), 2010

10

Source: Howes, Leana & Smith from 2010 CPS, 2012

20.5

26.2

22.0

31.3

Hospital Aides

Nursing Home Aides

Home Health Aides

Personal Care Aides

CHARACTERISTICS OF LOW WAGE, HOME HEALTH, PCA WORKFORCE 2010

Low Wage Home Health PCANumber (in thousands) 42,634 669 945Turnover rate n/a 40 - 60 50.0Percent female 55.0 92.3 88.0Median family income $33,000 $28,673 $30,800In poverty 21.4 23.1 22.0Median hourly wage $7.75 $10.00 $9.50Average weekly hours 35.4 33.4 33.9YR-FT employment 46.0 45.1 42.4Two or more jobs 9.4 11.7 14.1Public Health insurance 18.8 28.5 33.3Private Health insurance 52.2 43.9 45.1No health insurance 35.1 33.1 31.2Source: Howes, Smith and Leana – analysis of 2010 CPS

DEMOGRAPHIC CHARACTERISTICSLow-Wage

Home Health

PCA

Average age 37.7 42.6 43.9High school or less 55.5 58.9 55.2Race/ethnicity, White-non-Hispanic 59.6 42.0 49.2Race/ethnicity, Black, non-Hispanic 12.9 31.1 23.2Race/ethnicity, Hispanic 21.4 21.3 18.1Foreign-born 19.9 27.1 22.7Children under 18 years 36.5 39.3 37.9Single mothers 17.3 23.7 22.3Source: Howes, Smith and Leana – analysis of 2010 CPS

HOME CARE JOB: THINGS WE…

Know• Fastest growing jobs in

U.S.• One of lowest paying,

poorest benefits• Workers motivated by

intrinsic and extrinsic rewards

• Some evidence of workers prefer homecare over institutional jobs

• Some evidence want flexible, more than PT jobs

Don’t know and should• How many there really are• What constitutes a good job• Agency or CD• PT/FT or flexible• Wages, benefits, training,

career ladders• Whether job quality• …spills over from one

sector to another• …affects quality of care• …affects costs

CHALLENGES TO REFORM

• Industry resistance:• Emerging industry resists FLSA • right-to-work organizations challenge “fair share” fees -

Harris v. Quinn• Medicaid politics• Invisible occupations

FLSA and Harris v. Quinn

WHY STATES ARE SCARED OF MEDICAID

(AND WANT TO CUT WAGES)

17

18

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INVISIBILITY: MISCONCEPTIONS ABOUT HOMECARE

• Homecare is not really work • Most people are family providers • Most work part-time; have other “real” jobs• Crowding out: If you pay people to provide

care, they will do it for the wrong reasons, get the wrong care-givers• Providers won’t quit if we don’t give them a raise• Providers won’t quit when unemployment is

high

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CALIFORNIA AS MODEL FOR BETTER JOBS, BETTER CARE

CALIFORNIA IN-HOME SUPPORTIVE SERVICES (IHSS)

• “Balanced”: 75 percent Medicaid LTC recipients in HCBS; nationwide - 50 percent

• Largest consumer-directed program in U.S.: 450,000 recipients/400,000 providers – over half hire family provider

• Compensation now set at county level; range from $8 in Humboldt to $12.35 in San Mateo – federal/state/county contribution; public authority bargains with unions

• Rapid growth – 3% annual caseload growth 1994 – 1998; 8 percent -1998 – 2008; not explained by demographics

SIGNIFICANCE IN SAN FRANCISCO LOW WAGE WORKFORCE

• San Francisco workforce – 476 thousand• IHSS workers – 20,000 – 4 percent• Low wage workers (bottom 15 percent) – 71,000• IHSS workers – 28 percent of low wage workers• IHSS workers > 50 percent of low wage female

workers• Quality of jobs for low wage workers ….

SAN FRANCISCO IHSS, 1995 - 2009

IMPACT OF TURNOVER 1997 - 2002

• Previous study on SF Turnover:• Turnover, wages & benefits in SF 1997 – 2002 (Howes

2005) • Results:• Wage increases and health insurance lower turnover • from 22 to 15 percent for all workers; • From 61 to 24 percent for new workers

IMPACT OF TURNOVER 2002 - 2009

• Update to 2009:• Turnover, relative wages, unemployment rates in SF

2001 – 2009 (Howes in Reich and Jacobs, forthcoming)• Results:• Turnover continues to decline • Controlling for other variables, from 24 to 20 percent as

rel wage increases from 0.8 to 1.4

CONCLUSIONS

• SF/CA built long term care system that met needs of consumers, reduced overall costs of LTC, limited power of for-profit LTC industry• Raising wages, providing health insurance

improved job quality, reduced turnover• SF provided lead – diffused to other counties,

other states• Because home care jobs huge proportion of low

wage jobs in areas with large indigent population; good homecare jobs can raise low wage base