Amazon Lures Workers from Home Care
As one of the biggest companies in the world, Amazon’s (Nasdaq: AMZN) interest in the health care space has led to speculation about how the retail giant could disrupt the industry. However, Amazon is already having an impact on in-home care providers by stealing away potential caregivers as hires in its massive distribution centers.
Amazon’s expanding workforce now is giving the home care industry a run for its money as providers already face a tight labor market, rising wage pressures and a caregiver shortage.
Amazon labor squeeze
Finding qualified caregivers is frequently cited as the top challenge by home care providers, and future estimates reveal that demand for in-home care services will only continue to rise as 10,000 baby boomers turn 65 every day. The labor market has already forced some providers to raise prices on services, and some caregivers or potential caregivers could simply turn to Amazon for higher wages without having to learn new skills.
In fact, Amazon’s presence in a number of markets has already impacted home care, with 10% of caregivers having interviewed or worked for the company, according to a recent report from myCNAjobs.com. Chicago-based myCNAjobs, which provides a suite of recruitment tools for senior care workers, drew from two studies to conduct the report, including a pay analysis of more than 1 million caregivers across the country from a survey in December 2017
By the end of the third quarter of 2017, Amazon employed 566,000 people, according to the company’s fourth quarter 2017 financial results. As of 2018, Amazon operates 214 facilities across the country, and regularly holds hiring events that recruit 50,000 people in one day, according to myCNAjobs. On average, Amazon’s centers pay workers 30% higher than traditional retail.
With that kind of hiring power, some home care providers are feeling the squeeze from a tight labor market and nursing shortage coupled with the lure of working for Amazon.
“Amazon right now is building these large distribution plants. We are seeing it in Maryland where we operate company-owned offices and franchises,” Mike Magid, COO of Griswold Home Care, told Home Health Care News. “They’re offering sign-on bonuses and a good starting hourly rate, promising overtime. I think what we are seeing, at least anecdotally, is that if you can go to Amazon you don’t need [to be a] high-skilled worker in their distribution plants. Where people would be working in this industry, they don’t need a new skill set [at Amazon].”
Griswold Home Care, based in Pennsylvania, is a non-medical home care company with more than 200 locations in 32 states, including franchise and company-owned operations.
Executive Care, a New Jersey-based in-home care service provider with roughly 20 franchise locations, is another company dealing with Amazon as a workforce competitor. However, CEO Lenny Verkhoglaz believes the meaningfulness of home care services will help retain caregivers.
“We will compete with them in the workforce,” Verkhoglaz said of Amazon. “That is to be expected. We already compete with retail stores, restaurants and warehouses today. I don’t think everyone is a fit to work in windowless, large distribution centers moving boxes around. Many employees will continue to want to work in meaningful and caring positions as caregivers.”
Home care challenges
Conversely, the very nature of home care, which often leaves workers with unsteady hours and occasionally without work, depending on client needs and available cases, could also be compounding the problem. This is also one reason why some home care workers tend to work for more than one agency.
“If [Amazon] keeps their promises, they will start to shift the workforce a bit,” Magid said. “Just because you’re a caregiver, it doesn’t mean guaranteed work—it depends on the clients and caseload and hours. If they can’t get consistent work based on the hours they want to work and need to, [there are] places like Amazon opening up a center and offering sign-on bonuses.”
Indeed, the majority of caregivers—80%—would prefer to work for one company if they can get the hours they want, and doing so is easier in the retail and fast food industry, according to myCNAjobs.com.
Many providers call this issue the 48-hour rule; meaning if they don’t get a caregiver a new case within 48 hours of one ending, the caregiver is likely to go elsewhere for work.
“The disruption comes from when you can’t provide the steady hours they want,” Magid said.
At the same time, providers are dealing with rising minimum wages in some states. While the federal minimum wage stands at $7.25 per hour, many states and cities already have wages near $15 per hour. With Amazon potentially entering these markets as a major employer, companies may be forced to raise their wages to stay competitive—above minimum wage.
Amazon recently announced it had narrowed down the potential cities for its new $5 billion headquarters to a list of 20. Some cities are even bending over backwards to attract Amazon and competing by offering major tax breaks, seeking an economic boom from the activity and boost to the labor market. A new corporate office could draw a different workforce than distribution centers, but it still could create additional competition for home care.
“I would love to see the D.C. region win the bid for their new headquarters even though it will likely bring labor competition in an already tight work force. By the time it happens though, D.C. will likely be at a $15.00 minimum wage,” John Bradshaw, CEO of Georgetown Home Care, told HHCN. “We are paying right around that rate to caregivers now, so we won’t have to raise wages because of the minimum wage increase. However, our industry has always provided higher paying jobs than many other industries with similar skill levels. If other industries are forced to pay the same as us in a tight labor market, that may force us to raise wages higher and, unfortunately raise prices on clients, as well.”
Others are similarly not seeing an issue with Amazon at the moment, thanks, in part, to their pay scale.
“We haven’t experienced it because we pay so much more above minimum wage or the fulfillment [center wage],” Shelly Sun, CEO of Gurnee, Illinois-based BrightStar Care, told HHCN. “It’s an issue I’ve heard on the companion side but not as much on the certified assistant side.”
Despite Amazon’s latest moves, in-home care providers are increasingly seeing more integration—and potential competition—with the company, including opportunities within its new health care insurance aims, hypothesized bid into the pharmacy space, or Amazon’s voice-enabled technology offerings.
Written by Amy Baxter