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Growing Demand for Homecare in California

The rapid growth of the homecare industry is being driven by the aging of the baby boom generation and by the shift from high-cost care in nursing homes to the more affordable alternative of homecare. As a result, homecare jobs have grown more quickly than other occupations and many more workers will be needed to meet the growing future demand.

• In California, the number of individuals older than 65 is expected to increase from 5.2 million in 2015 to 9 million by 2030 – a faster growth rate than the overall population.
• In 2014, there were 558,000 personal care aides and home health aides in the state. Of these workers, 410,000 were In-Home Supportive Services (IHSS) providers (workers who provide publicly-funded services).
• Not all consumers who need homecare services currently receive them. If the state simply maintains its current level of coverage, the California Employment Development Department projects that an additional 200,000 homecare workers will be needed by 2024.
• If the homecare industry were expanded to cover all individuals who have a self-care limitation, we estimate that California would need at least 600,000 and as many as 3.2 million additional workers by 2030.

The Crisis of Low Wages and High Poverty for Workers

Homecare plays a critical role in our society, allowing the elderly and people with disabilities to maintain their independence and maximize their quality of life. Homecare workers assist consumers with activities of daily living, such as bathing, dressing, toileting, meal preparation, house cleaning, managing medication, monitoring health conditions, and transport to medical appointments. Homecare is also physically and emotionally challenging work that is disproportionately done by women and workers of color. And yet, job quality in the industry is very low.

• Median wages for homecare workers were $10.05 an hour in 2015, compared to $18.88 an hour for all workers. Nearly three quarters of homecare workers are low wage, compared to about a third of all workers. Median annual earnings for homecare workers are less than half of the median for all workers ($14,000 compared to $35,000). Homecare workers are twice as likely to live in a low-income household as all workers (46.5 percent compared to 21.8 percent).
• Since many homecare workers care for a spouse, parent, sibling, or other family member, the low wages they earn have the unintended consequence of impoverishing consumers as well.
• Homecare jobs provide few benefits. Only 40.7 percent of homecare workers in California have an employer-provided health plan compared to 69.4 percent of all workers. Homecare workers are also more than three times as likely to get health insurance through a public program (40.7 compared to 14.2 percent of all workers).
• Because their earnings are so low, about half of homecare workers nationally have to rely on some kind of public support program, such as the Earned Income Tax Credit (EITC) or the Supplemental Nutrition Assistance Program (SNAP).

The Cost of Low Wages to Consumers and the Public

California’s investment in homecare has saved the state money in the past, by having care provided in clients’ homes when possible, rather than in more expensive nursing homes. However, if the homecare system is unable to attract enough workers to meet growing demand, high turnover and a shortage of workers will place a significant burden on consumers and the public.

Turnover: The California Legislative Analyst’s Office estimates that annual turnover of IHSS workers is about 33 percent. That means that as many as 180,000 consumers must search for, hire, and train a new homecare provider each year. The cost of turnover per long-term care worker is estimated to be at least $2,500.

Worker shortages: While data limitations prevent definitive measurement, several indirect indicators suggest a shortage of homecare workers in California:

• Consumers and homecare agencies report that it is becoming more difficult to recruit and retain homecare workers.
• Homecare wages in California have not been raised at the same pace as other low-wage jobs or the minimum wage in recent years. Between 2013 and 2016, the median wage of personal care aides decreased by 2.3 percent, while the 10th percentile of wages in all occupations (a measure of the wages of other low-wage occupations) increased by 0.7 percent. During that same time period, the growth in IHSS wages was significantly slower than growth in the minimum wage in major cities and counties in the state. This gives homecare workers an incentive to move to other similar-paying jobs that aren’t as difficult or demanding, and makes it difficult to attract workers from other industries to fill homecare positions.

Effects on consumers and the public: When consumers are unable to find a homecare worker, they may not get the full care that they need. Researchers have documented that lack of sufficient care leads to negative health effects such as missing meals, dehydration, falls, burns, wetting or soiling clothes, and making a mistake in taking medication. Moreover, if the homecare system is unable to attract enough workers to meet growing demand, consumers will have to turn to more costly forms of long-term care such as nursing homes. In California, the annual cost of nursing homecare ($97,000) is nearly double the annual cost of homecare ($57,000).

Conclusion

California can address the state’s homecare crisis by raising the wages of publicly-funded workers, who provide the majority of care in the industry. Taking this step will prevent imminent industry shortages, ensuring that consumers continue to get the quality care that they deserve and preventing increases in the public cost of long-term care. Raising the wages of homecare workers would also have a significant impact on the lives of workers and their families, and would recognize the value and dignity of caregivers in our state.

Sarah Thomason is a research and policy associate at the Labor Center, focusing on low-wage work. Before joining the Labor Center, she conducted research for National People’s Action, El Colegio de México, and the Insight Center for Community Economic Development. Sarah received a Master of Public Policy degree from UC Berkeley in 2013. Prior to graduate school, Sarah worked as an organizer on economic justice campaigns in Chicago, Yonkers, and New York City.

Annette Bernhardt is director of the Low-Wage Work Program at the UC Berkeley Labor Center, as well as a senior researcher at the UC Berkeley Institute for Research on Labor and Employment. She recently was visiting professor in the UC Berkeley sociology department, as well as a fellow at the Roosevelt Institute. Previously she was policy co-director of the National Employment Law Project, where she coordinated policy analysis and research support for campaigns around living wage jobs, enforcement of workers' rights, and accountable development. A leading scholar of low-wage work, Dr. Bernhardt has helped develop and analyze innovative policy responses to economic restructuring in the United States.