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A Low-Wage Paradox for Assisted Living & LTC Caregivers

By | 2017-10-31T16:29:51+00:00 July 17th, 2017|

According to the latest jobs report from the U.S. Bureau of Labor Statistics, in June, the healthcare sector added 37,000 jobs. As the country’s population grows older, the need for more employees in the healthcare services field, including what’s referred to as “direct care” workers–like home health aides, personal care aides, and nursing assistants who work in assisted living and long-term care facilities–also will continue to crescendo.

While the work typically requires little formal training, direct care jobs do bring with them long hours, physical and emotional demands, sometimes cringeworthy tasks–it is not a job for the faint-of-heart. So, it is somewhat baffling, on the surface at least, that these professional caregivers are among the lowest-paid workers in the country; some must work a second job just to make ends meet. Many earn wages low enough to qualify for Medicaid. How can this be?

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A workforce in transition

Back in the 1960s and ‘70s when the Baby Boomers were entering the workforce in droves, approximately one-third of Americans were employed in the manufacturing and production industries. Of these workers, a huge majority had no college degree, but manufacturing offered good pay, regardless of a worker’s level of formal education.

Today, those high-paying factory jobs are disappearing as work is automated or shipped overseas. In fact, barely 15 percent of Americans are now employed in the manufacturing and production sector­–that’s fewer than half of the number from 1970.

But just as those traditionally blue-collar factory jobs dwindle, the number of healthcare jobs in this country is exploding as an aging population of Boomers requires care for chronic illnesses and age-related disabilities. According to the June jobs report, almost 10 percent of Americans now work in the healthcare industry in jobs that range from doctors to secretaries, and everything in between.

While the pace of healthcare-related job growth is only expected to accelerate, one of the fastest-growing segments in every area of the country is direct care workers…those personal care aides and nursing assistants who are typically on the bottom of the healthcare pay scale. These aren’t jobs that can be outsourced or automated like manufacturing, yet according to a report from the Institute of Medicine’s Committee on the Future Health Care Workforce for Older Americans, 90 percent of these workers make less than $30,000 a year (and often earn closer to $20,000). In many areas of the country, that’s barely a living wage.

The poor helping the poor

In a twist of irony, many people in direct care job aren’t paid enough to afford health insurance, despite the fact that the job is physically challenging, and it’s common to get hurt on the job–the injury numbers are just behind police and corrections officers. As a result, almost half of direct care workers are on Medicaid for their health coverage. And here’s the irony: Medicaid is also the largest payer of home and nursing care services. The result? Essentially, low-income workers are taking care of low-income seniors.

Make no mistake about it: These direct care workers aren’t just glorified babysitters; often, they are dedicated and compassionate professionals who enable seniors to stay in their own home for longer; they are cooks, counselors, medical caregivers, companions, and much more to the people they serve. They also are the backbone of the assisted living and long-term care industries. Yet their wages don’t reflect the integral role they play in caring for our aging population.

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The simple cause of a complex problem

So, when you consider the impending shortage of direct care workers and the increase in need for this type of care as the Boomers age, it is baffling, on the surface at least, that these jobs would not pay better. It seems like basic supply and demand. But there’s a kicker that must be factored in: Medicare and Medicaid.

According to that Institute of Medicine committee report, approximately 70 percent of the dollars spent on long-term care in this country are paid by these two programs. As a result, these programs (i.e., the government) are also largely able to dictate the wages paid within the industry. This prevents the market from undergoing a typical supply-demand wage adjustment unless the government decides to allocate additional funding to these programs–a move that seems unlikely given the current healthcare debate in Washington. (If anything, Medicaid spending may be cut.)

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A senior care tipping point

This may be the perfect storm for seniors in our country. Around 10,000 Baby Boomers reach retirement age each day–our population is graying. While the desire of many of these seniors is to stay in their own home for as long as possible, this will become increasingly challenging as home care workers–who are often the crucial key that facilitates staying in the home–are harder and harder to find. There will also be an impact on the senior living industry if crucial jobs in assisted living and long-term care communities are left vacant.

Ideas like organizing labor and credentialing programs may offer some hope for improving direct care wages and job conditions, but unless Medicare/Medicaid reimbursement rates are increased, these low-paying jobs likely will remain undesirable and in many cases, unfilled.

About the Author:

Brad Breeding is president and co-founder of myLifeSite, a North Carolina company that develops web-based resources designed to help families make better-informed decisions when considering a continuing care retirement community (CCRC) or lifecare community.