Taking a cue from the Supreme Court

In June, the U.S. Supreme Court sided with the home care industry, determining that the U.S. Department of Labor had acted appropriately in denying Fair Labor Standards Act (FLSA) protection to home care workers—even when employed by large, third-party home care agencies. In Long Island Care at Home, LTD. v. Coke, the Court ruled that Ms. Evelyn Coke, a home care aide from Queens, New York, deserved neither overtime pay nor minimum wage, although she was frequently asked to work up to 70 hours per week.

Although the Justices ruled on a very narrow point of law—that the U.S. Department of Labor acted within its authority—their deliberations revealed an underlying concern that minimum wage and overtime protection would result in an increased cost to home care consumers. Justice Stephen Breyer, who wrote the unanimous 9-0 decision, opined to Coke's attorneys in the April hearings, “If you win this case, it seems to me suddenly there will be millions of people who will be unable to (afford home care) and hence, millions of sick people will move to institutions.”

Although a bit of an overstatement, Justice Breyer does have a point: If home care workers were to receive overtime pay, the costs of home care would go up, and consumers (and government financiers) would have to pay more. I am perfectly comfortable with that argument—as long as it is applied evenhandedly across all public services. Therefore, for example, neither should we pay policemen and fireman overtime—for it clearly drives the cost of services up, and if we didn't have to pay each one of them so damn much, we could put a whole lot more of them out on the streets to serve us.

So, what's the difference between firemen and home health aides? Mostly gender, race, and class. Of the 1.4 million home care workers in the United States, 90% are women, and many of those are disproportionately women of color. Nearly 20% go home each night to families living in poverty; they are three times more likely to receive food stamps than other working families; and in a bitter irony, two out of five home care workers are not even provided health insurance. Clearly, the long-term care system has simply presumed that an endless supply of low-income women will always be available to transfer our mothers from bed to wheelchair, or to feed our fathers, no matter how poorly we pay them, or train them, or support or supervise them.

I suppose that the nursing home industry—which does not do a whole lot better for its direct-care staff, but at least pays minimum wage and overtime—might initially be tempted to applaud the Coke decision: In a competition for these workers, the less attractive the jobs are in the home care industry, the more those workers might be drawn toward (slightly) more attractive nursing home jobs. Beware, however, for public policy is perverse, and more and more dollars are being siphoned away from the nursing home industry based precisely on the argument that home care is a “cheaper” alternative to institutional care.

Rather than being played off against each other in the labor market, I believe all of us—whether we lead home care, nursing home, or assisted living facilities—must understand that we are all in this together. In the decade ahead, the U.S. Bureau of Labor Statistics predicts that the demand for direct-care workers (home health aides, certified nurse aides, personal care attendants) will increase by 35%—nearly one million new workers—growing faster than any other healthcare occupation. And yet what is less understood is that the supply of labor will simply not keep pace: During the same 10-year period, the traditional labor pool from which these workers are drawn—women aged 25-54—will barely hold its own, increasing by less than 2%.

This emerging “care gap” is a tectonic demographic change now shifting beneath the long-term care system—one that policy makers and industry leaders are literally only half aware of. In my work in the states, I constantly meet leaders who understand that demand for services is increasing dramatically, yet have little idea that the post-Baby Boom generation will offer so relatively few workers to meet it.

Our challenge can only be understood in context, and that context is the low-wage labor market. Within that marketplace, the long-term care industry is only one of many competing for workers. With demand for labor growing, and supply relatively flat, workers who in earlier years might have chosen direct-care jobs will find that they increasingly have other, better job alternatives. Be forewarned: The day that Wal-Mart decides to offer health insurance in order to compete for workers will prove to be a particularly difficult day to fill your shifts.

Therefore, in the years ahead, we face a fundamental choice: Either we continue on our current path, and suffer chronically high vacancy and turnover rates—worsening as the years unfold, and becoming dangerously acute in times of full employment, such as those we faced in 1999 and 2000—or we can improve these jobs to help them compete successfully against those offered by other low-wage industries.

The Coke decision only underscores this more fundamental point: The entire long-term care industry must shift its business model away from a “low investment/high turnover” strategy and toward a “high investment/high retention” strategy. Ethically, it is only fair to acknowledge that these workers should receive full FLSA coverage, including overtime at base wage. Of course, it is only smart to acknowledge that providing FLSA protection to home care workers like Ms. Coke—and federal legislation is currently being crafted to do just that—will require significant additional funding from state and federal governments.

Which leads to my final point: It is only wise to acknowledge that policy makers must stop dealing with the funding of long-term care on a stopgap, year-to-year basis. We must overhaul the entire payment process, restructuring reimbursement to reward those providers who demonstrate that they are creating quality jobs—in order, in turn, to ensure quality care.