If the minimum wage increased, how would long-term care providers and staff be affected?
WASHINGTON, DC – Federal, state, and union proposals have been introduced to increase the minimum wage to up to $15 per hour. Long-term care providers across America employ millions of workers — many of them at the federal minimum wage of $7.25 per hour or slightly higher.
A new study by RTI International examined the potential impact wage increases would have on long-term care providers, such as assisted living and continuing care retirement communities. Three quarters of jobs in those settings fall into four common employment categories: health care and other support aides, personal care aides, buildings and grounds staff, and food service workers.
"Policymakers are increasingly concerned about wage stagnation and income inequality, especially for less-educated workers," said Joshua Wiener, Ph.D., a distinguished fellow at RTI who led the study. "Our study showed that the average financial impact of a $10 or $12 minimum wage would be relatively small for providers — 1 percent and 5 percent in total costs, respectively — but potentially important for the worker who makes only $7.25 an hour. Overall, a $15 minimum wage would increase provider costs by a roughly 13 percent, a substantially larger amount."
Within the four most common long-term care job categories, RTI researchers found that if the minimum wage is increased to $15 per hour, 86 percent of these workers would see their pay increased. An increase to $12 per hour would affect 58 percent of workers, and an increase to $10 per hour would affect 27 percent.
The annual wage and payroll tax increase required per worker differs by state, depending on current salaries. For example, among Personal Care and Service-related Occupations, increasing the federal minimum wage to $12 would require an annual wage and payroll tax increase of roughly $2,799 per worker in California and roughly $5,023 per worker in Texas.
While an increase in the minimum wage would increase provider costs, the study cited other research that suggests that minimum-wage increases could reduce poverty and the use of welfare programs among workers, improve staff recruitment and retention, and increase the quality of care.
Lindsay Schwartz, Ph.D., Board Chair of the Center for Excellence in Assisted Living (CEAL), a collaboration of 11 organizations, noted "There is a constant need to attract and retain staff who can provide quality care, and there's also the challenge of keeping costs affordable for individuals and families who rely on these communities."
This study was conducted in a partnership between RTI International and CEAL. Along with Joshua Wiener, RTI researchers Wendi Elkins and Michael Lepore are coauthors of the report.
Read the complete report, "Impacts of Potential Minimum Wage Increases on Assisted Living and Continuing Care Retirement Communities."