Shift in labor market is opportunity for home care co-ops to scale

Home care cooperative worker-owner Rosa Tavarez with her client Floyd Betts. [photo: Dave Sanders/CHCA]Home care cooperative worker-owner Rosa Tavarez with her client Floyd Betts. [photo: Dave Sanders/CHCA]Home care cooperative worker-owner Rosa Tavarez with her client Floyd Betts. [photo: Dave Sanders/CHCA]Representatives from federal agencies, cooperative development organizations and worker co-ops met last week to begin realigning priorities in an industry that still pays its workers what grocery store cashiers earn—except they’re caregivers responsible for human life.

One bright spot on the home care landscape is the worker cooperative model. The ten worker-owned home care co-ops currently operating in the U.S. are already transforming the industry—offering fair compensation for meaningful work and reducing employee turnover from 60 percent to 20 percent annually, said Margaret Bau, a cooperative development specialist with USDA Rural Development in Wisconsin.

At last week’s subgroup meeting of the Interagency Working Group on Cooperative Development, home care co-op advocates made the case that more federal agencies should invest in this proven business model.

“We know cooperatives work. Why not use the cooperative model to find a solution?” Bau asked.

Bette Brand, Administrator of the USDA’s Rural Business-Cooperative Service agreed, noting that cooperative home care is a “timely and unique” way to meet the demands of an aging population.

And the demands are staggering. By 2024, the ICA Group estimates that the home care industry will need to recruit and train 13 million new caregivers, said Executive Director David Hammer. Even the franchise model has seen a recent surge in development; four of the top ten franchises in the U.S. are now home care companies—a decade ago, they weren’t even on the radar.

“We’re seeing an enormous shift in the labor market,” Hammer said. But wages within the industry can’t sustain ever-growing demand for caregivers.

Tracy Dudzinski and Debra Schultz, president and board chair, respectively, of Cooperative Care in Wautoma, Wisconsin, explained the realities. While $16-17 per hour is an average reimbursement rate, Cooperative Care needs $22 just to break even. That translates to just $9-12 per hour for caregivers. To meet the livable wage benchmark set by the ICA Group—$14-16 per hour—reimbursement would need to be $24-26 per hour.

Even for funding sources that tend to reimburse at a higher rate, like Veterans Affairs, unpredictability remains a challenge. Cooperative Care can wait up to a year to be reimbursed for services their caregivers provide, Schultz said. 

“Reimbursement rates are low, which funnels down to a lower wage for caregivers, making recruitment and proving a living wage and benefits an ever-interesting endeavor,” she said.

One option is to expand Cooperative Care’s base of private pay clients to help offset the low reimbursement rate that tends to come with federal dollars. But the private pay model has a downside, too.

“We know that there is nobody else in our rural area providing home care services, so what happens to that other 20 percent of people who are no longer going to be served because we can’t continue to sustain losses? It’s a concern because the fundamental reason we’re doing this work is to benefit the community," Dudzinski said. 

As a worker-owned cooperative, the driving force behind Cooperative Care is being able to provide benefits their members wouldn’t enjoy at an agency. “Part of that is building a benefit structure where there’s no question that you’re going to stay and do this work,” Schultz said. Being able to provide health insurance would be a major draw, but it’s not in the financial cards for Cooperative Care right now.

Still, they hired four new caregivers last month and retained all 40 of their existing employees. Several attendees wondered why caregivers would even choose the job. Some worker co-ops like the Bronx-based Cooperative Home Care Associates have a strong training and career path program that gives them a competitive edge and allows them to access additional public dollars, but Cooperative Care has fewer resources.

“You really have to want to serve others to work in this industry,” Schultz said. “The choice caregivers are making is less about money, benefits and a career and more about providing that service in your community.”

Schultz herself gave up a career in banking to join Cooperative Care. After her mother suffered a stroke, she realized how difficult dependable home care services were to find. After caring for her mother at home while also working full-time, she was determined to help other families navigate similar situations.

“Does it pay as well as my banking job used to? Absolutely not, but it’s where my heart is at this point,” she said.

But caregivers shouldn’t have to sacrifice financial stability to work in home care, said Candace Robinson, director of Capital Impact Partner’s strategic aging initiatives, said it’s time to seriously consider the trajectory of the industry. “When we’re competing with Starbucks and grocery stores and Chipotle, we’ve got to realign what our priorities are for our caregivers and the aging folks in our communities.”

Wages aren’t the only aspect of the industry that needs reform, Hammer said. Under Medicaid, seniors and the disabled are entitled to a nursing home bed, but not to home care—even though nursing home care costs twice as much. So when low-income counties can’t provide adequate home care services, people are unable to age at home in the communities where they’ve spent their lives. “You really are sort of separating families,” Hammer said.

Hammer would like to see the cooperative home care model scale like the franchise model has in recent years, while preserving the former’s client and caregiver focus. “The more we can make investment decisions that benefit the caregiver, the higher quality the care is going to be,” he said.

Cooperatives are uniquely poised to impact the sector, especially as part of a broader trend toward employee ownership, said Alan Knapp, vice president of Advocacy for NCBA CLUSA. “We’re really just starting to get at the key opportunities around worker ownership. We have a lot of Baby Boomers retiring, but don’t really have a national strategy on how to keep jobs local and prevent them from disappearing from the communities that need them most,” Knapp said.

“There’s a lot of momentum behind this conversation, especially around some of those key issues like home care,” he added.

NCBA CLUSA is working with legislators on the Main Street Employee Ownership Act of 2018, which the House of Representatives passed yesterday. Sen. Kristen Gillibrand on Monday introduced a Senate version of the bill, and there’s language on worker cooperatives and employee ownership in the FY18 omnibus bill.



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