iOS app Android app More

Lila Shapiro
GET UPDATES FROM Lila:

Minimum Wage Battle Moves In On Home Health Care

Posted: 02/17/12 01:40 PM ET  |  Updated: 02/17/12 03:43 PM ET

In the latest fight against minimum wage laws, home health care companies are lobbying to make sure new measures doesn't raise the wages of its workforce after the Obama administration proposed regulations late last year that would guarantee those workers protection under federal wage and hour laws.

Typically, the fight against minimum wage laws has emanated from groups like the National Restaurant Association and the National Federation of Independent Businesses, who have fought the laws for years, arguing that a minimum wage would hurt businesses and kill jobs.

But home health care workers have been exempt from minimum wage and overtime protection since 1974. Worker's rights groups have fought against this over the last decade as the for-profit home care industry has blossomed, and it is one of the few industries expected to grow exponentially for the next several years.

Last year, one of the industry's leading for-profit companies, Home Instead Senior Care, spent at least $362,0000 fighting the Labor Department's proposal, even as it yielded an 18.8 ratio of investment to revenue, USA Today reported. The industry has increased in profitability -- and employment -- since 2006, even as so many other industries shed employees and businesses declared bankruptcy. According to MSNBC, privately-owned home health care companies saw a revenue increase of 12.8 percent over the last two years and net profit margins of about 8 percent, while their public counterparts saw revenues rise by 2.5 percent over the same time period, and saw net profit margins of 4 percent.

There are currently around 1.7 million home care workers, according to the National Employment Law Project, a low-wage workers advocacy group. In 2009, those who worked 40 hours per week in the industry earned a little over $20,000 a year -- below the federal poverty line for a family of four.

According to USA Today, a spokesman for Home Instead said the Labor Department's proposal would cut employees' hours and hurt caregivers.

But employment experts say the effects to the industry would be minimal, and that complying with minimum wage and overtime laws would go a long way in ensuring that workers make a decent living in one of the few American industries anticipating rapid growth in coming years, especially as the baby boomer population continues to age.

"The impact won't be huge in terms of the industry costs," said Catherine K. Ruckelshaus, the legal co-director at the National Employment Law Project and co-author of a recent report on the subject. "But it will tighten up the rules for those workers who are slipping through the cracks."

The current federal minimum wage is $7.25 an hour. Medicare and Medicaid accounted for about 75 percent of home health care revenue as of 2008, according to the Labor Department.

"This is a huge growth industry," Ruckelshaus said. "We need to have good jobs in our growth sectors, and minimum wage and overtime pay is not too much to ask."

Correction: A previous version of this article incorrectly stated that the Obama administration introduced legislation to guarantee home health workers were paid minimum wage. It was a regulatory deal proposed by the White House and Department of Labor.
FOLLOW BUSINESS