Two Million Home Care Workers Will Get Raises, After Obama Reclassifies Their Jobs
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Two-million low-wage workers—those taking care of the elderly, people with disabilities and others living at home—will see an increase in their poverty-level wages, under a new federal regulation requiring that they be paid minimum wage and overtime.
“This decision is like a breath of fresh air,” said Laura Lyn Clark, a Virginia home care worker earning $8.87/hour who has a 56-hour workweek. “Overtime protection is going to make paying for my daughter’s college a little easier… And a vacation, which is like a dream come true.”
“I’m so excited,” said Carolyn Gay, a certified nurse assistant and Florida Professional Association of Care Givers board member. “Most of our clients will meet these conditions.”
On Tuesday, the Department of Labor announced a new rule that closed a decades-old loophole in the Fair Labor Standards Act that put home caregivers in the same category as babysitters and exempted them from minimum wage laws. The rule takes effect on January 1, 2015, but it is nonetheless seen as a major victory for low-wage workers.
“The majority of home care workers are women and the primary breadwinners for their families,” said Delia DeLaVara, vice president of the National Council of La Raza. “Minimum wage and overtime protections mean that home care workers—our sisters, mothers, grandmothers, those who care for seniors and those with disabilities—that they can better care for themselves and their families.”
“There’s still work to do to ensure that these rules are implemented and enforced fairly,” said Ai-Jen Poo, director of the National Domestic Workers Alliance and co-director of Caring Across Generations, a coalition seeking affordable home care. “This change is truly just the beginning of what’s needed.”
Nearly two years ago, President Obama met with home care workers and said he would ask the Labor Department to close the loophole that suppressed industry wages. That proposal had been opposed by employers and was criticized by House Republicans on Tuesday, who said it was unaffordable and would push seniors from theit homes into institutions.
“This regulation could increase the cost of care by $2 billion over the next decade,” House Education and the Workforce Committee Chairman John Kline (R-MN) and Subcommittee on Workforce Protections Chairman Tim Walberg (R-MI) said in a joint statement. “Faced with higher costs, some individuals will have no choice but to leave their homes and enter institutional living. This misguided regulation will make matters worse for countless families struggling in the Obama economy.”
But home care worker advocates, such as Steve Edelstein, National Policy Director for the Paraprofessional Healthcare Institute (PHI), who has been working for years to close the low-wage loophole, rejected those claims. And the U.S. Department of Labor estimated that it would increase state-federal Medicaid costs by less than .03 percent annually, Kaiser Health News reported.
“Our analysis, based on industry figures, tells us that this is an $84 billion industry,” he said. “There should be resources within this system to do the little bit that we are asking here, which is pay minimum wages over time and extend overtime protection to the folks who carry the load and are actually providing the critical services that people need.”
America’s Fastest Growing Low-Wage Industry
The direct-care industry employs more than 3.4 million people—one-third are nurses; the rest are home health aides and personal care assistants—and will grow to 5 million jobs by 2020, PHI projects. Of this workforce, 90 percent are women. The average age is mid-40s. Half are non-white. And half have a “high school diploma or less,” PHI said.
The industry is a mix of self-employed caregivers and those working for agencies, which employes three-quarters of the field and often are franchises, according to PHI. The trade publication, Franchise Business Review, surveyed more than 1,300 senior care franchise businesses in 2012 and described how the field was expanding and was among the most profitable franchises, “with gross margins of 30-to-40 percent.”