Healthcare worker standing in hallway holding a digital tablet

Raising the pay of workers in residential care settings to the living wage in their respective states would lead to several economic benefits for workers, employers and the economy overall, according to an analysis released Tuesday by the LeadingAge LTSS Center @UMass Boston.

The report used publicly available data and standard economic simulation techniques to examine the effects of providing direct care workers with at least a living wage. Researchers found that doing so would reduce staff shortages and turnover, improve productivity and quality of care, infuse billions of dollars into local economies, and give workers greater financial security and independence.

In particular, raising pay to a living wage in 2022 would give 75.3% of direct care workers a higher wage than they would otherwise receive. A living wage also would help relieve staffing shortages, both by encouraging those in the direct care field to work longer hours and by attracting new entrants to the direct care field. The combined effect would be equivalent to adding 330,000 direct care workers to the ranks of those already employed, or a roughly 9.1% boost to employment in 2022.

The report, Making Care Work Pay, further showed that higher pay for direct care workers would fuel a modest reduction in turnover of between 0.7% and 1.7%. Even these modest effects could lead to substantial savings, however, possibly covering more than 10% of the total wage increase. More importantly, total productivity would increase by at least $5.5 billion. 

“Valuing direct care work through a variety of interventions, including paying these workers a living wage, would result in a stronger foundation for the U.S. healthcare system, better care, and greater economic security for those who carry out this important work,” the researchers noted.