Illinois has joined a number of states set to raise their minimum wage dramatically in the years to come. Gov. J.B. Pritzker (D-Ill.) on Tuesday signed a law raising minimum wage to $15 an hour by 2025.
The move has drawn praise from caregiver advocates and criticism from industry leaders — who worry home health reimbursements will inevitably lag.
For caregivers, the minimum wage increase is a win and yet another victory in the national Fight for $15 battle. With one in four caregivers living below the federal poverty line, advocates believe higher wages will bring stability to low-wage workers and the industries they serve.
“A $15 minimum wage means reduced worker turnover and more dependable caregivers and service workers who aren’t working two or three jobs to survive,” Greg Kelley — president of SEIU Healthcare Illinois, a union of health care, child care, home care and nursing home workers — told Home Health Care News in a statement. “A higher minimum wage also attracts other qualified workers to our professions.”
However, as wages increase across all industries — particularly retail — others worry about wage compaction. For example, as less demanding jobs — such as working for retail leaders such as Amazon — begin to pay higher rates, the caregiver pool could shrink, some hypothesize.
The 81% increase will begin on Jan. 1, 2020, when Illinois will increase its minimum wage from $8.25 to $9.25 an hour. In July, minimum wage will increase to $10. Each year after that, minimum wage will increase by $1 until 2025, when it reaches $15 per hour.
By raising minimum wage to $15, Pritzker is making good on campaign promises and following a wave of states who have also moved to increase pay for low-income workers.
In 2019 alone, 18 states started the year with higher minimum wages than the year before.
Meanwhile, beyond what the pay increase means for caregivers, many worry that the rise will hurt home health agencies if Medicaid reimbursement rates don’t rise with inflation. That’s a concern of those at the Illinois Home Care & Hospice Council (IHCHC).
“The increase [in Illinois] will undoubtedly have an impact on home care agencies in our state,” Liz Vogt, director of regulatory and government affairs at IHCHC, told HHCN in an email. “To help mitigate this impact and ensure that agencies can continue to recruit and retain staff to provide high-quality care, we have introduced legislation to increase Medicaid reimbursements. We are working with our partners in the Illinois General Assembly to pass this important legislation.”
Medicare- and Medicaid-certified home health agencies depend on reimbursements to provide services. But in states like Illinois, reimbursement increases have not been outlined to rise with wages.
The Illinois Association of Community Care Program Homecare Providers (IACCPHP) highlighted the issue last month. IACCPHP is an association representing agencies contracted with the Illinois Department on Aging (IDoA) to provide in-home assistance to the elderly through the Community Care Program.
“We are hopeful Governor Pritzker and the new General Assembly will address the inequity of these wage disparities and provide rate increases to cover these currently unfunded mandates,” Robert Thieman, executive director of IACCPHP, said in a press release. “If they do not, the well-being of seniors, who prefer to remain in their own homes for as long as possible, will be gravely threatened and state finances will suffer a severe blow by having to pay the much higher costs of hospital and nursing home care.”