Can Employee Ownership End the Home Health Wage Wars?

Only a few weeks ago, home health care workers won a huge victory in a federal appeals court that made them eligible for the same minimum wage and overtime protections that nearly all workers are guaranteed. Since then, industry leaders have called for a review of the decision by the Supreme Court.

Home care workers face many challenges in their field, from low pay and long hours to limited protections and high turnover. Amid these obstacles, home care workers are still in high demand.

A recent report from Fast Company, a business media company with three publications, took a look at how Cooperative Home Care Associates (CHCA) is seeking to help its 2,000 employees through its worker-owner structure, and tries to answer whether a cooperative workplace can benefit the industry. Fast Company found mixed results when analyzing CHCA and its influence on the industry. 

The company began 30 years ago as a worker cooperative in which employees also are owners in the company, giving them more say in major decisions. Situated in the New York borough of the Bronx, CHCA offers the same services as other home health providers, but about half of the workers are also owners in the business.

“In a sense, CHCA is a study in scale for the co-op movement in the United States, especially in traditionally low-wage occupations,” writes Jay Casino, author of the Fast Company article. “Is it possible to remain democratic while employing thousands, rather than dozens, of workers?”

Compared to others in the industry, workers at CHCA get paid a little more than the median $20,000 annual salary home health workers make, but still almost half at the cooperative live below the federal poverty line, according to the report. While the company aims to pay more, it’s limited by industry standards.

“CHCA is faced with outside constraints on how much it can pay its workers,” Casino writes. “Unlike most industries, prices for home care service are effectively set by the government. Through Medicaid, Medicare and other programs, the government pays for 73% of billings in the $61 billion home care services industry.”

As worker-owners, those who take part in the company’s ownership program are entitled to payouts of the profits in the form of dividends. CHCA makes it fairly easy for workers to buy in to the company, starting with just $50. The company provides the employee with an interest-free loan of $950 to purchase CHCA stock, which is paid back at a rate of $3.50 per month. The share of the profits averages around $200 to $300 per year, Fast Company reported.

While the benefits of profit-sharing are not all that much, CHCA has actively been involved in getting higher wages for low-income workers. Its non-profit arm, the Paraprofessional Healthcare Institute, successfully lobbied, with other groups, to raise New York’s minimum wage. A new law in the state also guarantees home health workers $10 per hour.

The higher rate of pay has helped bring many of these workers above the poverty line, according to the article. It has also helped reduce turnover, which has an industry rate of about 40%. At CHCA, turnover is significantly lower, at 15%.

The cooperative structure has not made the company successful in its own right, but it has helped give more of a voice to a group of workers that has largely received few benefits.

“Most agencies don’t care about the workers in this industry,” CHCA’s president Michael Elsas told Fast Company. …”They’re seen as an expendable workforce.”

Written by Amy Baxter