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Crucial Caregivers, Meager Pay

Sharon Lerner

Some of the hardest-working people in America aren’t covered by overtime or minimum wage protections. It’s crazy, but true: U.S. labor law was updated in 1974 to specifically exclude babysitters and companions. Since then, the lucrative and fast-growing home care industry has taken up residence in that loophole. The home care sector, currently valued at between $70 and $84 billion, is creating great wealth for agency owners.

Yet, while investors and executives “are in a prime position for rapid expansion,” according to “It’s a Booming Industry,” a guide for potential home care franchisers, the roughly 2.5 million home health aides, companions for the elderly and disabled and live-in childcare workers who are wiping the butts, cradling the heads, holding the hands are struggling to survive. The overwhelming majority of these workers (92 percent) are women. And despite being employed, they often struggle financially. Home care workers’ median annual earnings are $15,611. One in five lives below the poverty line and about half rely on public benefits like food stamps and Medicaid.

The Obama administration recently proposed changes to the regulations that affect these domestic workers, among them narrowing the exemption from labor law so that all agency-employed workers would be covered by overtime and minimum wage protections (currently, 15 states already have minimum wage and overtime protection for at least some domestic workers laws, while five states and D.C. have just minimum wage). The regulations would also include a new record-keeping requirement and a few other changes to help put this underpaid workforce on a path toward decent treatment. But even though the administration seems likely to finalize its proposal after the comment period ends next Tuesday, opposition continues full-force.

Agency owners and their Republican supporters in Congress are seriously arguing in public that domestic workers should continue to be denied basic employment protections. It’s never put in so many words, of course. A letter from Arkansas Republican representative Tim Griffin (one of more than 6000 public comments available on the Department of Labor’s website), says that he has heard from constituents that “this rule would negatively effect [sic] on elderly and disabled individuals,” who would lose services as a result of the change. (A hearing on the issue requested by Congressional Republicans had to be postponed because of the death of Donald Payne, who was a member of the workforce protections sub-committee.)

Home care agency owner Douglas Kisgen similarly professes concern for both the elderly and home care workers in his comments, though his worry comes across more like a thinly veiled threat. Kisgen warns that the proposed changes “could dramatically affect seniors and their families in a negative way,” since, if agencies are required to pay overtime, “we would simply adjust our caregivers’ schedule in order to avoid paying overtime.” As for the costs brought about by the new rules, Kisgen is equally clear that “most companies like ours will pass on any increase in costs that they do incur to clients via new rates.”

The increased cost argument is weak mostly because the actual costs are likely to be relatively small. Less than 10 percent of home care workers now work overtime (in fact, far more work part time and would like to increase their hours) and no more than 50,000 are being paid less than minimum wage. According to the National Employment Law Project, the total amount of money necessary to cover those costs would be between $143 and $182 million, a sum that’s dwarfed by industry profits.

But the real snag in their argument is that, whatever the cost of providing workers with a living wage, this extremely profitable industry could absorb it itself. Comment after comment from agency owners fighting these proposed rules is written as if they’ll have no choice but to pass all costs onto clients and workers. But if Kisgen, Griffin and all the others who oppose to the new regulations on the grounds that agency owners will be forced to charge more or shuffle workers around care so much about your workers and the clients they serve, they should be willing to pay a little more.