Imagine it, a home care company that charges more than its competitors and tells clients why—because it pays its caregivers a higher wage than everyone else.
A new company in the home cleaning space, Well-Paid Maids is doing just this. Private duty companies might find inspiration in the model, even if it doesn’t translate perfectly to home care.
Paying for Peace of Mind
Well-Paid Maids is based in Washington, D.C., and pays its workers $16 per hour. The company, which was dubbed “an experiment” by The Washington Post, places a bet that people are willing to pay more for services if they know the money directly benefits workers.
Since officially opening its doors in August, the company, which provides residential professional cleanings, has between 45 and 50 customers, with some repeat customers already, said founder Aaron Seyedian. Assuming things hold, Seyedian is already planning to be on track to expand within a few months, he told Home Health Care News.
The business idea was born after Seyedian felt uneasy about hiring cleaners for his residence and was unable to receive answers about how workers were treated and what they were paid for their labor.
“I think there are a lot of people who care a lot about this,” Seyedian told HHCN. “I feel like from people’s general media consumption, there is this background awareness that residential cleaning is a dirty business, and we’re tapping into an ethical alternative.”
The desire to see higher wages may be widespread.
“Consumers want to do right by the workers who they are employing and supporting,” Paul Sonn, general counsel and program director for the National Employment Law Project (NELP), told HHCN. NELP is a nonprofit organization that promotes policies and conducts research for low-wage workers.
“Often, there is not good information and people don’t know how much workers that are serving are paid, and are surprised and dismayed by how little it is,” Sonn said. “I think there is a lot of potential in having vendors emerge with a higher-wage, sustainable brand to encourage customers to select them for good quality care and a workforce treated fairly.”
While D.C. will see the minimum wage level hit $15 per hour within a few years, Seyedian landed on $16 as the wage he’s paying his employees through MIT’s Living Wage Calculator, he told WaPo. These wages mean his prices are certainly higher than his competitors, but are still “comparable” to them, he said.
The Home Care Perspective
However, raising home care rates to provide a living wage isn’t such a simple answer, according to John Bradshaw, CEO of Georgetown Home Care, a family-owned, non-medical home care and staffing agency in the Washington, D.C., metro area. Even in an affluent place like D.C., higher home care rates could spell trouble for some clients, Bradshaw told HHCN. Plus, paying a living wage means either sharply reducing margins or having tough conversations with clients.
Georgetown Home Care does pay its caregivers above current minimum wage levels, and has done so since it opened up shop five years ago. Bradshaw has even considered including its higher wages in marketing to clients, like Well-Paid Maids, but foresaw pricing challenges.
“It presupposes that most of our clientele has the resources to pay pretty much anything,” he said. “While home care is the most cost effective solution for providing care, it’s an open-ended deal for families. Even wealthy clients have to say they can afford this now, but what if they live 10 years or 15 years, and we do this indefinitely?”
Others agree that clients likely can’t pay more.
“There is no magic bullet that will improve wages for home care workers,” Angelo Terrana, executive director for the Maryland-National Capital Homecare Association (MNCHA), told HHCN. “Many of our most vulnerable patients are also on very tight budgets and can’t afford to pay more than they already are. The economic pressures our patients are under are very real.”
Not to mention, home care is a different service than cleaning.
“It’s different than talking about cleaning services,” he explained. “You can hire a cheaper cleaner, or you can clean yourself. [Home care] is an open-ended deal. …People of means still wonder if they will be able to afford it.”
Yet with rising minimum wage levels set to go into effect, Bradshaw will have to raise prices within the next few years, he said. The company has done so a few times over the last few years, such as when an employee benefits package was added, and very few clients seemed to mind. But there still is likely a limit to what people will pay for home care, as most services in the D.C. area charge between $22 and $27 per hour, Bradshaw said.
“You don’t see anybody at $35 [per hour],” he said.
In an industry marked by high turnover—as much as 60%, according to Caitlin Connolly, NELP’s Home Care Fair Pay Campaign coordinator—paying higher wages could have a significant impact, she said. In addition, increasing wages could help with the massive demand for caregivers, estimated at more than 600,000 new home care workers in the next seven years, according to Connolly.
And reducing turnover can offset some costs of paying higher wages, as the cost of turnover can be roughly $2,500 per employee “on the low end,” Connolly said.
“When you look at the cost savings when it comes to turnover and other costs incurred because wages are so low, the cost [of raising wages] don’t necessarily have to add up to much,” she said.
Written by Amy Baxter