New York home care advocates scored a major win when lawmakers passed a budget that included a $7.7 billion investment in a higher minimum wage for home care workers. But what’s materialized hasn’t matched expectations.

A recent report from PHI reveals that the minimum wage increase isn’t having the intended impact.

New York is a state with a rapidly growing home care workforce. Over the past decade, the amount of people working in the sector has doubled.

Plus, the sector is estimated to add almost 200,000 additional jobs from 2020 to 2030, according to the report.

Despite the need for more workers, job quality challenges have been a major barrier to attracting and retaining home care workers. Low wages is one of the many factors that contribute to this.

“Due to a combination of low wages and part-time and/or unstable schedules, median annual earnings are only about $25,000, and as a result, more than one in three home care workers — 41% — in New York live in or near poverty, and 60% rely on public assistance programs to meet their basic needs,” PHI wrote in the report.

In 2021, the Fair Pay for Home Care Act was introduced by New York State Senator Rachel

May and several co-sponsors, but failed to pass. The legislation would have required that home care aides get paid a wage that is 150% of minimum wage.

The legislation would have also increased the reimbursement rates for providers.

Still, New York lawmakers included a $3.00 minimum home care wage hike in the state’s fiscal year 2023 budget. The increases were meant to take place over the course of two years — a $2.00 increase in Oct. 2022 and another $1.00 increase in Oct. 2023.

On Oct. 1 2022, the initial increase was implemented, but second wage increase was delayed until Jan. 1, 2024. 

“More concerning for workers was another policy change that occurred in tandem with the delayed second wage increase, namely the contemporaneous reduction in the supplemental compensation required by the 2012 Wage Parity law,” PHI wrote. “According to this change, which became effective on Jan. 1, 2024, employers of home care workers who provide Medicaid reimbursed services in New York City are now required to pay only $2.54 in supplemental compensation above the minimum wage, versus the previous $4.09 supplement.”

For some home care workers, the decreases in the supplemental compensation canceled out the minimum wage raise.

“New York took an important step forward in setting a higher minimum wage for home care workers – but in implementing this new policy, fell short of achieving the positive impact on home care workers and the industry that is truly needed,” Kezia Scales, vice president of research and evaluation at PHI, told Home Health Care News in an email.

The lack of robust reimbursement rate increases also hindered providers ability to offer adequate benefits.

“Without reimbursement for these full costs associated with the minimum wage increase, home care agencies may resort to reducing other employment benefits and supports, such as health insurance or paid time off,” PHI wrote.

As a response, the report outlined six recommendations for the state moving forward.

Ultimately, PHI believes that New York state needs to make investing in the home care workforce a priority.

Scales also believes that home care providers can play an important role in improving working conditions for caregivers.

“Home care providers can be key allies in advocating for higher minimum wage policies and related rate analyses and reimbursement rate increases – to help make sure that there is enough commitment and funding in the system to pay workers a livable and competitive wage,” she said. “There are also complementary steps that home care providers can take to support economic stability for home care workers in their own agencies – like aiming for more stable and full-time schedules, introducing additional employment benefits, providing support with navigating benefits access and benefit cliffs, and so much more.”