The demand for direct care workers in long-term care will continue to increase with the rapidly growing aging population, but employers will continue to struggle to recruit and retain enough workers due to low wages that have “barely” increased over the past decade, according to a new paper released by PHI.
Direct care workers include personal care aides, home health aides and nursing assistants working in settings such as assisted living communities, nursing homes and home health agencies. The paper analyzed wage disparities between direct care workers and similar occupations in 2023, as well as trends in the wage gap between those two groups between 2014 and 2023.
According to author Jiyeon Kim, PhD, a PHI research associate, direct care workers earned a median hourly wage of $16.72 in 2023, a figure that has “barely” increased over the past decade despite growing demand for workers. Low wages lead to high poverty rates in this sector and drive many job seekers and existing workers out of direct care and into other industries, Kim wrote.
In the report, Kim presented new evidence on the inadequacy of direct care wages relative to wages in competitive industries, such as retail and fast food. In some states, the wage gap between direct care workers and competitive industries increased in the past decade, making it even more difficult for operators to recruit and retain a stable direct care workforce.
In all 50 states and Washington, DC, median wages for direct care workers were lower than median wages for similar occupations, according to the report. The hourly wage gap ranged from $0.46 in Rhode Island to $5.56 in Texas. In 39 states, the wage gap was at least $2 per hour, and in 19 of those states, it exceeded $3 per hour.
From 2014 to 2023, the wage gap between direct care workers and other similar occupations narrowed in 32 states, reducing by as little as $0.08 in Alabama, to as much as $2 in Oregon. In contrast, the wage gap widened during that time frame in 17 states.
Policy and practice changes needed
The demand for direct care workers will continue to grow, with 861,000 new direct care jobs and 8.9 million total job openings expected within the next decade, according to PHI. This point, Kim wrote, emphasizes the need to prioritize investments in livable and competitive wages for direct care workers.
In an update to its 2023 “The Value of Assisted Living in America” white paper, Argentum reported that the senior living industry will need more than 3 million caregivers and other workers by 2040, with more than 20 million workers needed across all long-term care settings.
At the federal level, PHI advocates for the creation of a national compensation strategy to ensure competitive wages and benefits for direct care workers, a recommendation included in the federally proposed Long-Term Care Workforce Support Act of 2024.
State policymakers, Kim wrote, can reform their Medicaid rate-setting process to address competitive compensation and pair those rate increases with wage pass-throughs or minimum wage floors to ensure that workers benefit. The Ensuring Access to Medicaid Services rule — which in part requires states to direct 80% of Medicaid funds to wages and benefits for home- and community-based services workers — underscores the need to increase direct care wages at the state level, Kim noted.
Employers also can play a role in improving compensation by taking steps to improve scheduling, stabilize workers’ incomes and provide access to employment benefits — all things Kim said would increase the competitiveness of direct care jobs.
“Expanded employment benefits, enhanced entry-level and ongoing training, improved supervision and support, better respect and recognition of this workforce, and new opportunities for career advancement are all critically important,” Kim concluded. “However, there is no doubt that without increasing wages, this job sector will remain at a competitive disadvantage, as workers are forced to make the rational choice to seek higher wages elsewhere.”
