As eulogies of the American manufacturing worker abound in political and economic commentary, few have taken note of one of the fastest-growing industries in the country: home health care. With roughly 10,000 baby boomers reaching retirement age each day, the elderly population is expected to double within the next 20 years. This rise in the aging population has driven a sharp uptick in demand for in-home health aides. According to the Bureau of Labor Statistics, the home care industry will add roughly 1.2 million jobs between the years of 2018 and 2028, a 36 percent increase. In comparison, the average projected increase for all other occupations over this same period is just five percent.
Yet the country’s urgent need for workers to fill these home care jobs hasn’t corresponded with wage growth. In an already tight labor market, one might expect wages for home care workers to rise in accordance with the demand for their services. Instead, wages have remained mostly static, currently averaging under $12 per hour. The lack of appropriate compensation in such a high-demand industry reflects the reality that home care workers, who are mostly women and people of color, are woefully undervalued. This has ramifications for the entire country; given the financial precarity of the industry, not enough people are taking home care jobs. As a result, the US is expected to face a shortage of around 450,000 home care workers by 2024.
The stagnation of home care workers’ wages can be largely attributed to rigid Medicare and Medicaid structuring that imposes federal limits on how much these workers can earn. Because in-home care qualifies as a health service, it is often funded through Medicare and Medicaid reimbursements. One large Texas-based home care provider, for example, accrued 65 percent of its revenue from Medicare and Medicaid waiver programs. These reimbursements underwrite home care workers’ wages, but since the payments are often fixed over a period of time, Medicare and Medicaid can effectively cap workers’ income. Moreover, when states do raise their minimum wages, Medicare and Medicaid don’t always follow suit by increasing their reimbursement rates, which can make it difficult for home care providers to pay their employees. Such disparities between minimum wage and reimbursement rates can even threaten to put home care providers out of business entirely if providers cannot make up the difference through private funding.
To counter this reimbursement deficit, states ought to begin by tying their reimbursement rates to inflation. There is precedent for this kind of provision: In June, the Rhode Island State Assembly included a provision implementing a recurring inflation-based increase in its Medicaid budget. Per this new statute, the state will increase its Medicaid reimbursement rate relative to yearly inflation as determined by the Department of Labor. As the U.S. continues to see tepid growth in reimbursement rates, measures such as the provision in Rhode Island could stabilize federal funding rates and ensure they don’t lag behind wages, protecting home care workers in the process.
While funding discrepancies pose a significant threat to caregivers’ wages, the underlying structural issue, which has long precluded economic progress for home care workers, is their exclusion from federal labor laws. In the 1930s, proponents of the New Deal devised a new legal framework for labor protection that dramatically expanded workers’ rights in the U.S. However, these legal changes did not protect all working Americans equally. For instance, Southern Democrats successfully lobbied Congress to keep all domestic workers, the vast majority of whom were non-white, out of the National Labor Relations Act of 1935. This landmark law guaranteed the right of private sector workers to form unions. Since home care workers are classified as domestic workers, their right to unionize has yet to be enshrined in federal law.
The nature of the profession raises its own barriers to bargaining: Collective action is inherently more difficult in home health care than in other industries because domestic work is more solitary. Consequently, caregivers are largely incapable of negotiating higher wages or advocating for other employee benefits in a cohesive and coordinated manner. For instance, only 12 percent of domestic workers receive health care benefits, well below the nationwide coverage rate of 82 percent. Even the minority of home healthcare workers who do enjoy union memberships have had their benefits put at risk, most recently by the Trump administration’s reversal of an Obama-era Medicaid rule that allowed reimbursements to fund union dues. In May, a handful of states sued the Trump administration over the repeal, but they are unlikely to succeed in light of the Supreme Court’s 2018 Janus ruling, which weakened the ability of public sector unions to collect dues.
Fortunately, several legislators have taken steps to include home care workers under the umbrella of federal labor regulations. In July, Senator Kamala Harris and Representative Pramila Jayapal introduced the National Domestic Workers Bill of Rights, which would not only formally grant caregivers the right to unionize but also establish a wage and standards board to facilitate wage negotiations for all domestic workers. Under this provision, home care workers would have access to a forum for recommending wage hikes and rules for labor standards.
This provision would benefit all Americans, not just those who work in home care, as expanding labor protections to caregivers would also relieve pressure on the healthcare industry at large. Hospital admissions for baby boomers are expected to double by 2030, placing substantial financial stress on the nationwide health care system. About a quarter of Medicare’s budget is allocated to those in their last year of life, driven largely by hospital admittances. However, elderly patients report greater satisfaction with in-home palliative care over inpatient care, and those who receive in-home care are less likely to be admitted to a hospital. A robust home care industry could relieve the immense burden the U.S. healthcare system will soon face.
For years now, the aging population of America has been a prevalent topic in political media, but discussions of the issue focus on costs without providing remedies. As America begins to seek solutions, its first step should be providing home care workers with the wages and labor protections that they deserve. This would not only achieve equity for an undervalued sector of the economy but would also mitigate health care costs that affect all Americans.
Photo: Image via Kevin Dooley (Flickr)