How Higher Home Care Wages Might Boost the Whole Economy

As a major push for higher minimum wages has swept the country, a new report underscores that boosting wages to $15 per hour specifically for home care workers might help strengthen the economy.

In Washington state, 34,686 state home care workers are paid through the Medicaid program and represented by the Service Employees International Union 775; increasing their minimum wage to $15 per hour would affect 81% of the state’s individual provider workforce, according to a report from The Washington State Budget & Policy Center, an organization that seeks to shape state budget decisions and discussions.

Raising the minimum wage to $15 per hour for these workers would “help workers better cover their basic needs, provide at least $180 million in annual stimulus to the state economy and create more than 800 private sector jobs in the first year of implementation,” according to the report, “How Raising Incomes for Low-Wage Workers Boosts the Economy: A Study of Washington State’s Home Care Workforce.”

Currently, hourly wages for Washington-employed home care workers don’t cover all their basic needs, according to the report. The average hourly worker in the state—78% of which are women—earns $12.82, for an average annual income of $10,540. A bump to $15 per hour would provide an additional $63 million in earnings for home care workers.

If a state law increased minimum wage to that $15 mark for Medicaid-employed workers, private pay workers would see their wages matched, according to a Washington law.

Source: Raising Incomes for Low-Wage Workers Boosts the Economy: A Study of Washington State’s Home Care Workforce

Source: Raising Incomes for Low-Wage Workers Boosts the Economy: A Study of Washington State’s Home Care Workforce

Increased wages would spur more economic activity, with a “significant increase in the purchasing power” of the affected workers, according to the report authors. The $90 million in increased wages between public and private home care workers could result in at least $180 million in total annual economic stimulus, the report says. Additionally, it could result in more than 800 private employment job opportunities.

While workers may benefit, patients and businesses could suffer as a result of higher wage pressures. One home health care company, which does not rely on Medicaid-reimbursed services, had to raise its prices so much as a result of higher wage costs, it lost an estimated 30% to 40% of its business. That business owner sought to create a new business line to make up the lost business by branching into senior living.

Written by Amy Baxter

Photo Credit: “Seattle,” by Ian Sane, CC BY 2.0