Home health care industry fights overtime proposal
By Marisa Taylor, February 16, 2012
Imagine an industry that came through the Great Recession relatively unscathed financially. Now imagine that industry fighting proposed legislation that would afford its workers the same federal rights to minimum wage and overtime pay the rest of us enjoy.
No imagination needed, because that’s what’s happening in the industry for the workers who take care of us when we are too old or too sick to care for ourselves. Workers who care for homebound Grandma and Grandpa only earn about $21,000 a year on average, according to the Bureau of Labor Statistics. But the industry that provides some 1.8 million home health care aides to the country’s disabled and chronically ill population is fighting new legislation that would guarantee those workers the same federal labor rights afforded to all other workers by the Fair Labor Standards Act.
The Obama administration proposed legislation in December that would guarantee minimum wage and overtime coverage to home health care aides in the United States. Secretary of Labor Hilda Solis pointed out that nearly 40 percent of them rely on public benefits like Medicaid and food stamps, and many lack health insurance coverage. Home health care aides are paid an average of $10 an hour, but many are not guaranteed overtime pay when they work for more than 40 hours a week, and they're also not paid for travel time between client visits. (The federal minimum wage is $7.25 an hour.)
As first reported by USA Today, the home health care industry is fighting the proposal tooth and nail, claiming that a pledge of minimum wage and overtime pay would hurt caregivers because it would limit their hours and could send their charges to nursing homes and other institutions. Home Instead Senior Care, one of the largest providers of home health care aides, spent $362,000 fighting the White House proposal last year, according to USA Today.
Home Instead Senior Care said it isn't opposed to paying minimum wage for home health care workers.
"The issue is keeping overnight care affordable for seniors and their families," Home Instead chief executive Roger Baumgart said in an e-mail to msnbc.com. "If agencies are required to pay overtime wages for overnight stays, it will significantly increase the cost of providing care to seniors." He wrote that the added expense would cause Medicare and Medicaid spending to rise.
The White House proposal would overturn an exception to the federal Fair Labor Standards Act that was granted in 1974 to allow friends and family to offer in-home care without running afoul of federal wage and hour regulations. The Labor Department has said that home health care companies have used the exception as an excuse to lower salaries for nursing assistants and other aides.
"The exemption was never really intended to apply to businesses like home care agencies, and it wasn’t supposed to apply to workers who were doing these jobs as a vocation," said Steve Edelstein, national policy director of the Paraprofessional Healthcare Institute. "We just have to recognize that it’s a real job and pay for the services accordingly."
The majority of home health care aides don't even work a full 40 hours a week, said Edelstein, citing a recent PHI report that found that most of them work from 31 to 34 hours. That tends to defuse fears about costly overtime pay, he said.
In addition, he noted that the Bureau of Labor Statistics estimates the aging U.S. population will require more than 800,000 more home health care workers in the next decade.
The home health care industry has weathered the economic downturn of the past several years in good shape.
Privately owned home health care companies enjoyed a revenue increase of 12.8 percent over the past two years and net profit margins of about 8 percent, according to financial information company Sageworks. Publicly held health care services companies saw revenues rise by 2.5 percent over two years and net profit margins of 4 percent.
In other words, the industry as a whole isn't doing too badly. "If you look at home health care, it certainly did better than most industries that we see in our data," said Michael Lubansky, a senior financial analyst at Sageworks.
"Most other industries saw sales percent declines [beteween 2006 and 2011], but if you were to just look at this data for home health care, you wouldn’t be able to tell there was a recession."
Medicare and Medicaid accounted for about 75 percent of home health care revenue as of 2008, according to the Bureau of Labor Statistics. State budget cuts could make it difficult for Medicaid to cover higher salaries for home health care workers, according to USA Today.
In 2007, a case involving home health care aide Evelyn Coke, a single mother of five, was brought to the Supreme Court when she alleged that she was earning just $7 an hour without overtime benefits. Ms. Coke, who said she sometimes worked three consecutive 24-hour shifts, lost the case.
For the full story featuring Sageworks’ data and analysis visit MSNBC - Home health care industry fights overtime proposal.