Home health care services is a small, yet rapidly growing industry group within the heath care sector. However these positions – home health aides, personal aides and nursing assistants – typically experience a high turnover rate, independent of wages, as employees gain experience and move up to more advanced careers.

Wages in this industry group – considered low compared to jobs in other healthcare subsectors – are largely determined by externally set Medicaid and Medicare reimbursement rates, making it difficult for home health care employers to remain competitive in the face of declining unemployment rates.

The average pay for home health care service positions is $18,500 a year, 68 percent less than the average hospital employee. This industry group also experiences a higher turnover rate than any other health care industry sub-sector. A strong wage-turnover relationship can be implied in this case, but factors outside of natural forces of supply and demand drive this relationship.

Higher Turnover in Home Health Care

Industry turnover rates reported for the state in the first quarter of 2015 shows a turnover rate for home health care services of 15 percent — 10 percent higher than hospitals and 6 percent above the average turnover rate for health care and social assistance. In Bannock County, known for its dominant health care industry sector, turnover rates in home health care placed as high as 19 percent. Long-term trends both county-wide and statewide indicate significantly higher turnover rates in home health care is typical for this industry.

Lower wages can largely explain the higher rates of turnover in home health care services when compared with other health care subsectors (Figure 1). Estimated average annual earnings are lower in the industry segments with a higher turnover. At $18,500, the annual average earnings of the home health care worker in Idaho is $39,000 less than the average annual earnings of a hospital employee. This is reflective of the different mix of occupations in the various industry subsectors, with a much greater proportion of doctors and skilled technicians in the hospital subsector and a greater tendency for part-time work in the home health care services.

Home Health Care Occupations and Wages

Nurses, nursing assistants, personal care and home health aides make up a 77 percent of  the home health care workforce. By contrast, these jobs make up less than 10 percent of total employment in the category of offices of health practitioners. A breakdown of the staffing patterns of the five major health care groupings is shown in the Table 1.

Personal care aides and home health aides are among the lowest paid workers in the health care sector (Table 2). These aides are also among the lowest skill positions, requiring little to no formal education. In home health care, these low-skill aides constitute more than 50 percent of the workforce and is one reason why the average earnings in the industry group is so low.

However, even the higher-skilled nursing and nursing assistant positions in home health care generally tend to pay less. Job responsibilities differ and wages are typically commensurate with facility size, but a registered nurse would make about $4 per hour less (more than $8,500 less per year) if they decided to work in a nursing facility as opposed to working in a hospital. For a nursing assistant, this decision would amount to an 18 percent pay reduction, or $4,929.60 less every year.

Low wages have become more of an issue in the current economic climate where unemployment rates are low and employers are grappling with hiring and retaining employees. With a median hourly wage of less than $10 per hour, in a competitive environment it becomes increasingly difficult to find workers willing to fill these aide positions. Moreover, if an argument is to be made that high turnover rates in home health care is due to aides moving up the professional ladder, the seeming inability of the industry to pay competitive wages for higher skilled labor would cause these workers to move into other industry subsectors that offer higher wages.

An added component of the low wage dilemma is that wages in much of home health care — and the entire health care industry sector — are tied to preset reimbursements from Medicaid and Medicare, further constraining the ability of the industry group to provide a competitive wage or expect to hire skilled talent.  Reports from the Idaho Department of Health and Welfare show that while cap limits for skilled nursing have increased, limits for home health aides in the state of Idaho remain significantly below pre-recession highs. In addition, hourly reimbursement rates for personal care and attendant care services remain low at less than $16 per hour.

Growth Trend of Home Health Care Jobs

The good news is personal care aides and home health aides are among the fastest-growing health care occupations statewide and in Bannock County (Figure 2). However, when we compare the growth rates to national growth trends, these aides do not appear to be growing any faster than they are anywhere else.

Although there is a higher concentration of lower skilled aides in Bannock County than in the nation, their growth rate is only slightly above the national growth rate. Statewide, aide occupations are losing ground when compared with national growth rates. By contrast, nurses and nursing assistants show growth trends that significantly outpace national growth trends.

The implication is that higher skilled nursing and nursing assistant are on a path toward replacing the lower skilled aides across the health care sector. While an increasingly educated workforce is a positive phenomenon, the trends might also be indicative of troubling times for home health care services that rely predominantly on these low skilled workers. With wages on the rise in other sectors and their ability to compete constrained by reimbursement rates, the home health care service industry group is left with few options as they continue to lose the bulk of their workforce to other industries and occupations that offer better wages.

Esther.Eke@labor.idaho.gov, regional economist
Idaho Department of Labor
(208) 236-6710 ext. 4331