As the home health care industry awaits whether the Obama administration proposal to mandate minimum wage and overtime pay for workers, the topic is being fiercely debated in Congress.
Workers in the home care industry say that fairer pay would mean less turnover and better care, but some in Congress say it will only drive up the costs of care for those who need it most.
Rep. Tim Walberg (R-MI), chairman of the Subcommittee on Workforce Protections said that the proposed change will add billions of dollars of expenses to providing home health services during a hearing before the
“These changes run contrary to what Congress intended when it first established this important exemption nearly four decades ago,” said Walberg, who chairs a subcommittee on workforce protections. “The administration has a responsibility to provide a clear and compelling reason why that important balance must now be upset and a greater burden must be placed on some of our most vulnerable citizens.”
Rep. Lynn Woolsey (D-CA) advocated that the Department of Labor must implement the changes
“The home care industry on the other hand makes profits of 30 to 40 percent in a $70 billion a year industry. However, the median annual wage for home care workers is under $20,000 a year, which has led to high turnover rates and increased employers’ costs that also affect the quality of care the client receives,” she said on the floor.
Adding that nothing in the proposal requires an increase in the cost of providing home care services and it won’t make affordable care un-attainable.
“The issue threatening affordable, quality home care is not paying minimum wage to home health workers providing care, it is promoting a business model that allows for the generation of $70 billion in annual profit on the backs of its workers, as many as 50 percent of whom rely on some form of public assistance to make ends meet.”
In 2006, the Michigan legislature passed a new law that required employees providing companionship services to be paid minimum wage and overtime. During testimony before the subcommittee, Wynn Esterline, franchise owner of Home Instead Senior Care said the requirement has negatively impacted the business.
“This new Michigan law drastically changed my business, negatively affecting my caregivers and the seniors we serve,” he said. “No one is better off than they were before this change went into effect, not me, not my clients, and certainly not my employees.”
Esterline says that his company is not a home health care provider, but a companionship service. The company receives only 5.2% of its business revenue through government funded programs, the rest being paid by the private market.
“Their ability to pay, and consequently the market for companionship services, is extremely sensitive to its cost,” he said.
As a result of the bill in Michigan, caregivers that work for Home Instead Senior Care have not benefited according to Esterline.
“Their wages have not increased. If anything, their wages have decreased because I have been forced to cut their hours down to 40 or below each week, to do ail I can to keep the services affordable so that the seniors we serve can continue to be our clients,” he said.