THE BLOG
05/31/2016 04:56 pm ET Updated Jun 01, 2017

The Correlation Between Low Pay and the Caregiver Shortage

I admit to be taken aback by a story posted last week by Home Health Care News about a recent survey ranking the industry's top three threats.

Caregiver shortages overwhelmingly were the industry's top concern, followed by caregiver turnover and rising minimum wages. I'd argue all three concerns are strongly correlated.

Low pay is the primary reason there is a caregiver shortage and incessant caregiver turnover. The work is physically and emotionally demanding and most caregivers can't survive on the low wages that many bricks and mortar agencies must pay in order to be profitable. As a result, many caregivers work multiple jobs and quickly gravitate to the most profitable assignments. According to the Brooking Institution, professional caregivers earn less than $25,000 a year.

I'm publicly in favor of the Service Employees International Union's campaign to raise the minimum wage to $15. Indeed, caregiver wages need to be raised even higher in order to attract sufficient caregivers to tend to America's aging population. Within a little over a decade, more than a third of America's population will be 65 and over.

Sadly, many home care agencies are saddled with fixed costs they can no longer afford. In addition to paying rent, many are franchise operations requiring them to pay significant fees to the franchisor. It's a broken business model given the rising number of online home care companies like CareLinx whose operating overhead is considerably lower and significantly more scalable.

Given the home health care industry considers caregiver shortages, low pay, and turnover as separate issues, it seems readily apparent many traditional operators have their heads in the sand.