News Column

Health Care Hiring Up, Wages Down

September 2, 2014

Adam Belz, Star Tribune

Home health worker (file photo)
Home health worker (file photo)

Sept. 01--The new low-wage job in Minnesota is in health care.

That traditionally high-paying sector has carried the state's job recovery in recent years, but most of the new workers aren't higher-paid doctors and nurses. The majority of health jobs created in Minnesota since the end of 2008 are in lower-paying roles like home health care or nursing home aides.

The typical pay for these positions: $20,000 a year or less.

"People tend to overlook health care and think it's all fast food and retail, but it's not," said Paul Osterman, a labor market economist at the Massachusetts Institute of Technology.

While the nation has recovered the jobs it lost in the downturn, the mix of jobs has changed. Industries that shed employment in the Great Recession pay an average $14,000 per year more than the industries that have gained jobs since, and people say they feel it.

Forty percent of Americans believe the economy will never restore the level of jobs with good pay that existed before the recession, according to a Rutgers University survey released Thursday. Another 48 percent believe the restoration will take "many years."

From 2008 to 2013, Minnesota lost 28,000 jobs in manufacturing, an industry where average wages are $1,145 per week. Meanwhile the state gained more than 24,000 jobs that pay an average of less than $500 per week. Overwhelmingly, these jobs are in health care, require limited skills and training, and pay a wage that cannot support a family.

"No, I don't make enough money," said Sumer Spika, 35, of St. Paul. She works full time caring for a disabled girl.

Spika has three kids of her own, a fourth on the way. Her husband is disabled with multiple sclerosis.

The family relies on the government for health insurance and food stamps, even though Spika gets paid more than most personal care workers -- $12 an hour.

"That is definitely the higher end," she said. "I don't know anybody that does home care that doesn't rely on the county or the government for some kind of help."

Demographic boom

There's a reason for the growth in lower-paying health jobs: The aging population is driving demand for workers who will bathe patients, give them medicine and help them eat and get around.

"You've got this huge group of people moving into these years where they need more care," said Pete Ferderer, an economist at Macalester College. "The demographics driving nursing care and social assistance, that's going to be with us for a while."

Minnesota has among the highest concentrations of home health aides and personal care aides in the nation.

Nationally, those two professions are projected to be two of the top three fastest-growing occupations, adding an estimated 1 million new positions by 2022, according to the Bureau of Labor Statistics.

Also, more older people are getting joint replacements and other medical treatments that require temporary in-home care, said Stephen Parente, a health economist at the Carlson School of Management.

"The rise of people getting joint replacements ... it's much higher now, mostly because the technology's there," Parente said.

Not just doctors and nurses

Health care is also creating thousands of middle class jobs. Since 2008, Minnesota has gained 12,562 positions in ambulatory health care services, which includes doctors' and dentists' offices, medical labs and outpatient clinics. Those jobs pay, on average, $1,270 per week, or about $66,000 per year. Hospitals have added 4,889 jobs and pay an average of about $58,000 per year.

The health care job market is bifurcated; more than half of the 37,000 new health care jobs in the state do not support a middle-class lifestyle.

Nursing homes have added 5,700 positions since 2008, 39 percent growth. Firms that offer in-home care for the elderly and disabled have added 6,300 jobs, 24 percent growth. Taken together, 20,000 more people make their living as caregivers than did in 2008, according to the federal government's Quarterly Census of Employment and Wages. The child care industry has added 1,000 positions over that period.

"Low-wage jobs are health care jobs, low-wage jobs are publicly funded jobs," said Hollis Turnham, Midwest director for the Paraprofessional Healthcare Institute.

Average wages in retail are also low, at $498 per week, but at the end of 2013, stores in Minnesota still employed 8,000 fewer people than when Lehman Brothers went bankrupt six years ago next month.

Government drives pay scale

Despite ballooning demand, personal care workers start at $9 or $10 per hour. Wages are low because the jobs require little training, and also because government reimbursement rates are low. "In the health care sector, a lot of these jobs, at least indirectly, are paid for with public money," said Osterman, the economist.

Home care companies and nursing homes are under pressure to operate more efficiently, so they shift as much work as possible to low-wage workers, Osterman said.

A wholesale restructuring of the Medicare and Medicaid payment systems -- to somehow divert more income to low-wage but crucial caregivers -- could change the economics of the industry, Osterman said. But that would be a major policy shift. In Minnesota, only 4.3 percent of all federal dollars for medical care goes toward home health care, while 35 percent goes to hospitals and 25.4 percent goes to doctors and outpatient clinics.

More than 190,000 Minnesotans work in low-wage health care jobs. That workforce is growing and is disproportionately made up of immigrants, women and people of color.

"The folks that are increasingly entering this workforce are effectively the working poor, and they're effectively the working nonwhite," Parente said.

Here to stay

Many low-skill jobs in the United States have been outsourced or automated, but that's not likely to happen to personal caregivers.

"Nobody is looking forward to their virtual bath," Turnham said. "I don't see how we can outsource these jobs, I don't see how we can high-tech these jobs."

Turnham bristles at the notion that caregiving is a low-skill job. The work demands a host of soft skills -- communication, charm, resourcefulness, problem-solving, the ability to notice patterns and know when to call the nurse.

"Those are not low skills," Turnham said. "They are undervalued skills."

Last week, home health workers in Minnesota voted to unionize, a step they hope will give them the bargaining power for higher wages.

"I've seen people try to go to the Legislature, try to fight for better wages, and they're just not heard," said Spika, the personal care worker in St. Paul. "I strongly believe that having the help of the union, having all of these people come together and be one unified voice, will help us be able to be heard."

Caregivers will likely end up with higher wages if they are able to unionize, Parente said, but the path to higher wages runs largely through the federal government.

Medicare reimbursement rates are set nationally, and an increase in Medicaid rates would force state lawmakers either to spend less on other things, or raise taxes. Personal care is already expensive on the private market, Parente said.

If the SEIU can negotiate with caregiver agencies for higher worker pay, "those private firms are going to have to pass the cost on to the consumer," Parente said, "and the consumer may not be able to pay."

Adam Belz -- 612-673-4405 Twitter: @adambelz

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Original headline: Health care adds jobs, at low pay


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