Amazon’s $15 Minimum Wage Turns Up the Heat on Home Care Providers
Online retail giant Amazon (Nasdaq: AMZN) has turned up the heat on U.S. home care agencies in the battle to attract and retain workers.
Amazon has pledged to increase its minimum wage to $15 for all full-time, part-time, temporary and seasonal employees, regardless of where they work or what their position is, starting next month. The Seattle-based company, which is still in the midst of finding a home for its new $5 billion second headquarters, announced the move Tuesday.
Faced with a caregiver shortage, tight labor markets and wages that have already risen in many markets, home health and private duty providers are struggling with workforce challenges. Even prior to Tuesday’s announcement, Amazon had become a direct competitor, drawing away potential caregivers to its massive fulfillment centers across the country.
“We are seeing it in Maryland, where we operate company-owned offices and franchises,” Mike Magid, COO of Griswold Home Care, told Home Health Care News last February. “They’re offering sign-on bonuses and a good starting hourly rate, promising overtime.”
More than 250,000 Amazon employees and over 100,000 seasonal employees who work during holidays would be affected by the new $15 minimum wage hike, according to the company. Jeff Bezos, Amazon’s founder and CEO, described the increase as a way for his company to lead in nationwide efforts in securing higher compensation for traditionally low-wage workers.
The federal minimum wage is currently set at $7.25. State laws vary, with some states — California, Massachusetts and Washington — setting minimum wages at or above $11.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Bezos said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
One of those critics has been Vermont Senator Bernie Sanders, who recently introduced a bill to tax companies if their workers are on public assistance programs such as food stamps, as is the case with some Amazon fulfillment center employees.
Sanders’ bill was known as the Stop BEZOS Act.
Home care likely to take a hit
The home care industry faces several regulatory and economic pressures, but most agencies cite staffing as their biggest concern, punctuated by crippling turnover rates that hover in the 40% to 60% range. One of the most common reasons worker leave home care agencies, experts say, is compensation.
Although her organization “adamantly supports the raising of minimum wages,” Hayley Gleason, interim executive director of the Massachusetts-based Home Care Aide Council, said Amazon’s new $15 standard may exacerbate those difficulties.
The Home Care Aide Council — formerly the Massachusetts Council for Home Care Aide Services — is a not-for-profit trade association that promotes home care aides and the services they provide.
“With a thriving economy and rising wages, the competition for workers is intense,” Gleason told Home Health Care News. “In an industry that relies heavily on government funding and rates that have remained stagnant, it is exceptionally challenging for home care agencies to remain competitive with other industries.”
As more companies follow Amazon’s lead, agencies will likely continue to lag behind, adding to a workforce shortage that already exists and will only get worse as demand for in-home care skyrockets, she said.
The labor market is projected to add more than 1.2 million home health aide and personal care aide jobs from 2016 to 2026, according to the U.S. Bureau of Labor Statistics. That’s good for a 41% growth rate during that timeframe, far more than any other industry or sector.
Even if agencies aren’t aware of it, Amazon’s presence in certain markets has already possibly impacted their staffing levels. The online retailer’s presence in certain markets has contributed to 10% of area caregivers having interviewed or worked for the company, according to a 2018 report from myCNAjobs.com, a Chicago-based recruitment platform for senior care workers.
As of early this year, Amazon operated more than 200 facilities nationally, regularly holding hiring events recruiting tens of thousands of people in a single day, according to myCNAjobs.
“Home care aides are critical to the provision of care to the millions of elders and individuals with disabilities that want to remain in the community,” Gleason said. “Agencies must be able to provide their workforce with a competitive, living wage to draw new individuals into the field and retain those who hold these important jobs.”
Several home care agencies have taken creative approaches to slash their turnover rates and keep workers. Major franchisorSenior Helpers, for instance, has strategically tried to create “caregiving ladders,” or ways for caregivers to advance their careers through added expertise.
Along those same lines, other agencies — including Interim HealthCare, Right at Home and Cypress HomeCare Solutions — have launched dementia-focused training programs for caregivers. Caregivers who have completed Cypress’ dementia program typically have turnover rates that are lower than non-program peers, according to the Phoenix company.
Amazon turns attention to D.C.
Despite creative solutions, Amazon has another edge over home care agencies in terms of scheduling, as home care workers often deal with unsteady and stressful hours.
Plus, in addition to higher wages, Amazon also offers its global workforce of 575,000 employees a strong benefits package, which includes comprehensive health care, company-paid life insurance, 401k matching and up to 20 weeks of paid parental leave.
The $15 minimum wage increase includes Whole Foods workers and those in other Amazon subsidiaries.
Along with its U.S. wage hike, Amazon’s public policy branch will likewise turn its attention to Capitol Hill and begin advocating for an increase in the federal minimum wage, according to company leadership.
“The current rate of $7.25 was set nearly a decade ago,” Jay Carney, senior vice president of Amazon’s global corporate affairs department. “We intend to advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.”
Amazon’s market capitalization passed $1 trillion in September, and Bezos is now seen as the wealthiest person in the world, followed by Bill Gates and Warren Buffett, according to the Bloomberg Billionaires Index.
The minimum wage increase is set to go into effect on Nov. 1.