Increasing direct care workers’ pay to a living wage would not only raise their total wages by $9.4 billion by 2022, it would also come with a set of benefits for operators, which includes less staff shortages and turnover costs, an industry study reveals.
LeadingAge on Tuesday released findings from its new analysis that examined what would happen if direct care workers received a living wage. A living wage is defined as a wage that would allow workers to pay for basic living expenses out of their own earnings and without relying on public assistance.
The findings showed that if a living wage was adopted, current direct care workers, who don’t make a living wage, would earn a total pay increase of $5 billion by 2022, and workers who do currently earn a living wage would see a total indirect pay increase of about $500 million.
Additionally, it found that adopting a living wage would in turn increase hours for workers and result in an additional $2.24 billion in pay. It would also attract more people to the profession and result in another $1.59 billion in pay.
“All in all, pay would go up by $9.4 billion by 2022 in the industry,” researcher Christian Weller, Ph.D., a UMass professor and senior fellow with the Center for American Progress, said during Tuesday during a panel discussion on the findings. “That’s the starting point.”
Weller explained that the study also found that the benefits from the higher pay would also reduce turnover and associated turnover costs, increase worker productivity and reduce financial insecurity for staff members.
“By reducing turnover that also means retaining people longer. They’re gaining more experience, they’re becoming better at the care that they provide,” he said.
“The other part is by paying people more you are reducing their financial insecurity, bringing them out of poverty. That reduction in financial insecurity reduces stress, allows people to focus more on their jobs and that also boosts productivity,” he added.
Living wage upsides
Industry stakeholders and advocates stated that they loved that the report focused on the benefits of paying a living wage to workers, and not just the costs.
“This report actually shifts from the cost side and [asks] isn’t there upside … isn’t there a potential win-win here in that we get a better experience for the staff and a better experience for the patients?” David Grabowski, Harvard healthcare policy, said during the discussion.
“That’s exactly what we see, and this report really does a great job taking us through all the different benefits with better pay [and] a living wage,” he added. “We’re going to get less staff shortages, less turnover, an improved quality of care and quality of life for long-term care recipients and we’re going to get improved economic growth and productivity. That’s a lot of benefits there.”
Grabowski was part of a 25-member Coronavirus Commission for Safety and Quality in Nursing Homes, which last week released a major report that discussed problems and solutions related to the pandemic in nursing homes. Nursing home staff receiving inadequate wages was a key part of the report.
Stephen Campbell, a data and policy analyst at the New York-based research firm PHI, also emphasized the importance of policymakers understanding how living wages can actually save money.
“Even without considering the cost savings, the costs of raising wages alone is sort of a drop in the bucket in the context of the total costs of delivering long-term care,” Campbell said. “For policymakers in particular, I think it’s really time to reject this strict posterity mindset when it comes to publicly funded long-term care so that we can do what’s right on behalf of these workers and consumers.”
Industry stakeholders and advocates will have to face budgetary challenges and invest in awareness campaigns for the public in order for a living wage to become a reality, others warned.
“There’s enormous challenges that we face as a country but we absolutely have to make these policy changes,” said Haeyoung Yoon, senior policy director at the National Domestic Workers Alliance.
“We have to accompany any and all policy change with changing the hearts and minds of people. We have to change the culture, we have to change how we talk about this work,” she added.