The need for homecare is rising. By 2050, the number of Americans who will need long-term care will reach 27 million, double the number in 2000. This is largely due to the widely known demographic shift afoot in the United States: By 2050, 20% of the U.S population will be older than 65. That is compared to 12% in 2000 and only 8% in 1950. Americans are aging in record numbers and at least half (if not up to 70%) will need long-term care.
The growing need for care will bring with it increased demand for direct care workers. However, there is already a worker shortage in the direct care industry, specifically in homecare. Consumers, homecare operators, and advocates consistently report worker shortages. According to one estimate, by 2030, we may face a 150,000 caregiver shortage and within two decades that shortfall will rise to 350,000.
The current and future worker shortage is fueled in large part by a problem well known to the industry: high turnover. One underexplored solution to this problem may be homecare cooperatives.
The Homecare Industry
Homecare workers are part of the nation’s “direct care workforce.” This workforce includes personal care aides, homecare workers, and nursing assistants that care for seniors and people with disabilities across a range of residential and institutional settings. Homecare workers work 1:1 in the home; most are paid through Medicaid and Medicare, with the remainder paid privately. Of the 4.5 million direct care workers in the United States, 2.3 million are homecare workers.
Homecare is a uniquely vulnerable and marginalized sector. 89% of homecare workers are women and most are people of color. Wages are low, benefits are minimal, and hours are variable. The median hourly wage of a homecare worker is $13.02 and average annual earnings are just $28,000 per year. As a result, one out of every four homecare workers live in poverty.
High Turnover in the Homecare Industry
The homecare industry has long suffered from high turnover rates. While a comprehensive assessment of turnover in the direct care industry is not available, estimates place turnover rates at 40-60% which refers to the percentage of workers who leave their job each year. Homecare is consistently at the top of that range although it has fluctuated in the last several years. The turnover rate for 2019 and 2020 was 65%. (In 2018, the homecare industry reached an unprecedented turnover rate of 82%).
There are several drivers of high turnover including low wages, unpredictable scheduling, and limited career advancement. Many are also leaving the industry due to poor supervision, minimal benefits, and heavy workloads. A recent study on homecare retention found that homecare worker job satisfaction depended largely on the degree of control they felt over their work and the support they received from their agency or employer. Generally, homecare workers are overworked and undervalued, leading many to find more predictable schedules, easier work, and higher pay in other sectors like retail and even fast food.
The Solution: Homecare Cooperatives
To address this challenge, homecare operators are trying to improve employee benefits plans, offer training, and even provide signing bonuses. Advocates of homecare cooperatives, however, urge that the cooperative model is uniquely poised to address the issue of worker retention.
At their most fundamental, worker cooperatives are businesses owned and operated by those who work for them. Advocates of worker cooperatives see them as “people-centered enterprises” that allow workers to collectively realize their common needs. They are value-driven, prioritizing the needs of workers rather than focusing narrowly on profit generation. In a cooperative structure, “worker-owners” buy into cooperative ownership, democratically elect their board, and receive payouts if or when the business turns a profit.
Homecare cooperatives, however, have a small footprint in an otherwise large and fragmented industry. As of 2016, there were at least 12,000 home health agencies across the United States and most (about 80%) operate for-profit. As of 2017, there were fourteen homecare cooperatives in business across nine states that together employ at least 2,400 caregivers.
In an industry with 82% annual turnover, homecare cooperatives have only 38% turnover. Advocates argue that the distinct governance characteristics of cooperatives provide better work environments for caregivers and uniquely position cooperatives to mitigate the precarity in the industry. Offering an ownership stake in the company likely promotes loyalty and investment among worker-owners. Worker-owners also elect their own board, providing an avenue for democratic participation that gives employees a voice in the governance of the business. This too may promote retention. Apart from ownership structure, cooperatives are also principally concerned with the wellbeing of their employees. This orientation may result in more attention paid to caregiver job quality, further promoting retention.
Cooperatives also mitigate retention issues related to career advancement and low wages. Many cooperatives place a high premium on training and professional development, aligned with their “worker-centered” orientation. Over 90% of homecare coops offer more than basic job training. Existing homecare cooperatives also report paying $.52 more per hour than their non-cooperative competitors.
The “Gold Standard:” Cooperative Health Care Associates in South Bronx, NY
The “gold standard” for homecare cooperatives is Cooperative Health Care Associates (CHCA) located in the South Bronx. Not only is CHCA the largest homecare cooperative in the country, it is the largest worker cooperative in the United States — across any sector. CHCA caregivers are entitled to full-time hours, reliable scheduling, and job retention and career advancement supports.
After three months in CHCA, all employees are given the opportunity to purchase ownership equity in the company. To do so, the cooperative issues them a $1,000 stock share and workers contribute portions of their paycheck over time to purchase their ownership share in full. As of 2021, CHCA has over 1,000 worker-owners and 2,600 employees total.
Unlike other homecare cooperatives, CHCA in-home health aides are also unionized. All employees, regardless of ownership status, are entitled to union membership. They are represented by Service Employees International Union Local 1199, which has more than 450,000 members across the East Coast. This novel alliance has allowed CHCA to leverage the scale and power of SEIU to secure critical industry reforms.
CHCA extends its “worker-centered” approach to training and professional development. CHCA partners with the Paraprofessional Health Institute (PHI) National to provide free vocational training with a guarantee of employment upon completion. Each year, this program graduates 600 new homecare workers who join the ranks of CHCA. This focus on vocational training addresses lack of career advancement and lack of support in the workplace, mitigating two common motivators of turnover.
Opportunities and Challenges for Homecare Cooperatives
Some of the benefits of the homecare cooperative model are challenged by issues that confront the entire industry, specifically when it comes to wages. In-home care is expensive. Low Medicaid reimbursement rates push down wages for federally subsidized homecare which can cap wages. The broader issue affordability of in-home care will require policy interventions that extend beyond questions of business models.
While homecare cooperatives may not be a panacea to solve the problems of the homecare industry, their unique structure and worker-centered orientation may be a viable solution to addressing one of the industry’s biggest problems: turnover.