New CUNY Report Shows That Lifting Wages for Home Care Workers Would Reduce Major Workforce Shortage and Create Broad Economic Benefits

NEW YORK, March 22, 2021 – Researchers at The City University of New York today released a new report showing that public investment in higher pay for New York State's home care workers would both mitigate the severe home care labor shortage and create significant economic benefits for the state as it emerges from the COVID-19 recession. 
Over 220,000 home care workers statewide enable older adults and people with disabilities to receive care in their own homes instead of in nursing homes or institutions. This frontline workforce is one of the state’s largest and fastest growing, as the aging of the baby boomer generation has caused demand for home care to soar. Over the next decade, home health and personal care aide occupations are projected to add as many jobs to the state economy as will the next 40 largest occupations combined.
But inadequate pay and benefits make it difficult to recruit and retain workers. Statewide, the median hourly income in home care is only $13.80, and median annual income is $22,000. Over 54% receive public assistance. These poor conditions fuel a major workforce shortage, leaving older adults and people with disabilities without the care they need — forcing some to turn to nursing homes, a pattern that proved deadly this past year.

“We’ve seen the home care shortage coming for years. But by failing to transform the quality of home care jobs, we now find ourselves in the midst of an unprecedented demographic shift without the workforce capacity to support the aging population,” said Ruth Milkman, report co-author and distinguished professor at The Graduate Center, CUNY and chair of the Labor Studies program at the CUNY School of Labor and Urban Studies. “The pandemic has only made matters worse.”

Advocates have called for higher pay for home care workers on moral grounds and as a tool to reduce racial and gender inequality — over 90% of New York home care workers are women, 67% are immigrants, and 75% are Black, Latinx, or Asian. The report concludes that raising wages would mitigate the workforce shortage and advance racial and gender equity — while also generating large-scale economic benefits for the state. “For far too long, the shortage has constrained access to home care services and has forced individuals into skilled nursing facilities,” said Rebecca Preve, executive director of the Association on Aging in New York. “The report captures the overwhelming benefit that comes with allowing individuals to age in place, including saving millions of dollars in health care expenditures.”
Report Findings: Higher Wages Would Generate $7.6 Billion in Economic Benefits, Fill Thousands of Home Care Jobs, and Create Thousands of Jobs in Other Sectors

  • The study projects the costs and benefits of raising wages for home care workers to $22 hourly in New York City, $19.25 hourly in Long Island and Westchester, and $16.50 hourly in the rest of the state.

  • Wage increases would require significant public funding, but those costs would be surpassed by the resulting savings, tax revenues, and economic activity. For instance, with higher pay, fewer workers would require public assistance. Workers would also spend the bulk of their new earnings, injecting billions of dollars into the economy.

  • These economic benefits total $7.6 billion, with a net gain of at least $3.7 billion. Some of these benefits would accrue to the federal government. The benefits for New York State would total $5.4 billion; the net gain for New York State, and the portion specific to state government, would depend on how wage increases are designed and funded.

  • Crucially, higher pay for home care workers would help fill nearly 20,000 home care job openings, ensuring more individuals receive the care services they need. It would also create nearly 18,000 jobs in other industries by boosting local economic activity. These one-year effects could extend into future years but depend on factors such as the future relationship between wages in home care and those in other fields.

  • These impacts would be critical both upstate and downstate. In many upstate counties, the home care shortage is especially acute because there are more older adults and fewer working-age adults — and because the minimum wage in fast food will soon be $2.50 higher than in other industries, drawing workers away from fields like home care. New York City, Long Island, and Westchester, however, account for over 80% of the home care workforce, so wage increases would affect many more workers in those regions.

Recommendations: New York State Should Invest in Higher Pay for Home Care Workers

  • The report recommends that the state allocate funding in the upcoming budget to significantly lift home care wages. The Fair Pay for Home Care Act (S.5374, A.6329) offers one immediate opportunity to do so. That bill, sponsored by Senator Rachel May and Assembly Member Richard Gottfried, would raise home care wages to at least 150% of the minimum wage in each state region, or $22.50 per hour.

  • The Senate One-House Budget Resolution includes funding for modest wage increases for the lowest-paid home care workers. If approved in the final budget, this investment would mark a significant step forward, but it would need to be expanded to produce the scale of benefits outlined in the report.

  • Further investments to improve home care jobs, such as providing high-quality retirement plans, should also be explored given the challenge of recruiting and retaining workers.

“Because current wages are so inadequate, long-term care workers leave their occupation at a higher rate than workers in every other major occupation except restaurant workers, fast food workers, and cashiers. New York can change that, but only if we significantly raise wages,” said Isaac Jabola-Carolus, report co-author and a Ph.D. candidate at The Graduate Center, CUNY.

As national-level studies have shown, the economic benefits of such investment can spur recovery in sectors devastated by the pandemic. Such investment would also generate more job growth — for both women and men — than would similar investment in the construction sector. Raising pay for home care workers offers a strategy for a ‘care-led recovery’ from the COVID-19 recession.

“Our findings add to the mounting evidence that boosting public funding for home care is good for workers, care recipients, and the economy overall.” said Stephanie Luce, report co-author and professor of labor studies at the CUNY School of Labor and Urban Studies and a sociology professor at The Graduate Center, CUNY.

The report, titled “The Case for Public Investment in Higher Pay for New York State Home Care Workers: Estimated Costs and Savings,” was co-authored by Isaac Jabola-Carolus, Stephanie Luce, and Ruth Milkman of The Graduate Center, CUNY and the CUNY School of Labor and Urban Studies. It was conducted in partnership with the Association on Aging in New York.
About The Graduate Center of The City University of New York
The Graduate Center, CUNY is a leader in public graduate education devoted to enhancing the public good through pioneering research, serious learning, and reasoned debate. The Graduate Center offers ambitious students more than 40 doctoral and master’s programs of the highest caliber, taught by top faculty from throughout CUNY — the nation’s largest public urban university. Through its nearly 40 centers, institutes, initiatives, and the Advanced Science Research Center, The Graduate Center influences public policy and discourse and shapes innovation. The Graduate Center’s extensive public programs make it a home for culture and conversation.
About the CUNY School of Labor and Urban Studies
The CUNY School of Labor and Urban Studies (SLU) offers undergraduate and graduate degree programs in Labor Studies and Urban Studies that are designed to meet the needs of working adults as well as traditional-age college students who seek to learn more about the challenges confronting poor and working-class populations in the workplace and in the community. It also collaborates with other units of CUNY to offer a range of college-credit programs designed to give workers the academic and technical skills they need for professional advancement. Its faculty includes distinguished scholars in the social sciences as well as expert practitioners in government, labor, and public service. In addition to its academic programs, SLU sponsors research; organizes forums and conferences; and publishes a national journal, New Labor Forum: A journal of ideas, analysis, and debate.
About the Association on Aging in New York
The Association on Aging in New York (AgingNY) supports and advocates for New York's 59 mostly county-based Area Agencies on Aging (AAAs) and works collaboratively with a network of organizations that exist to promote independence, preserve dignity, and provide support for residents of New York State as they age.

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Submitted on: MAR 22, 2021

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