Schmudget Blog

Raising Incomes for Home Care Workers Would Boost Economy

Posted by Melinda Young-Flynn at Sep 26, 2016 04:20 PM |

By David Hlebain, interim policy analyst


Raising incomes for low-wage home care workers would help strengthen our state economy, according to our new report, How Raising Incomes for Low-Wage Workers Boosts the Economy: A Study of Washington State’s Home Care Workforce. The report shows that if policymakers raise the base hourly wage of home care workers to $15, workers would be better able to meet the costs of basic needs for themselves and their families, leading to increased economic activity in the state. 

Home care report cover image 2016Home care workers play an essential role in the lives of tens of thousands of Washington’s seniors and people with disabilities – providing assistance with activities of daily living such as dressing, eating, and getting to and from medical appointments. In Washington, state-paid home care workers are compensated through the Medicaid program and either contract directly with the state as individual providers or provide services through private agencies.  

With an average hourly wage of $12.82 and a field of work that tends to be part-time because of fluctuating client needs, a typical individual provider home care worker makes $10,540 a year — below the federal poverty line for an individual, and less than half the poverty line for a family of four. This is far from sufficient for a person, let alone a family, to cover the cost of basic needs such as food, housing, and transportation. 

Raising the base wage for home care workers to $15 per hour would provide an annual increase of $2,200 to the more than 81 percent of workers who currently make less than that per hour. (1) This would go a long way toward helping these workers better make ends meet. 

Further, using REMI, a geographically-specific economic analysis tool, to model a wage increase for individual provider and agency-based workers, our analysis showed that: 

  • The additional spending that would result from these workers’ wage increases would generate $180 million in total economic stimulus annually in communities throughout Washington state – through both the projected spending by home care workers and the resulting money that businesses, individuals, and communities would acquire as a result of these workers’ increased spending. 
  • This economic stimulus would increase private-sector employment. As a result of this ripple effect of spending, private sector employment in Washington state would be projected to grow by more than 800 jobs annually through 2020.
  • Every $1 the state invests into a $15 base wage for home care workers making less than that will lead to a $4 economic stimulus. Given half the cost of home care wages are covered by the federal government through Medicaid, this form of economic stimulus is a smart investment of state resources. 

During the 2017 legislative session, legislators can help strengthen our state economy and the well-being of home care workers and their families by approving the proposed wage increases of individual provider home care workers (and a corresponding increase for agency-based home care workers as provided in the agency parity law), which were recently negotiated as part of a collective bargaining agreement. Further, this increase is not just good for the well-being of home care workers; it's also good for the economy. With this in mind, policymakers must continue to take steps to ensure that all hardworking Washingtonians make enough money to not just make ends meet, but to be able to get ahead. 

1. This calculation is based on actual wage data for the state’s more than 34,000 individual provider home care workers. Given contract parity mandates that wage increases for individual providers must also be applied to agency-based workers, this calculation is also applied as an estimate to the state’s more than 15,000 agency-based workers. 

 

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