$15 Minimum Wage Will Have Big Impact on Senior Care

April 11, 2019

by Rob Roper

Everyone understands that raising the minimum wage from today’s rate of $10.78 to $15 an hour will have an inflationary effect on the overall costs of goods and services. However, some sectors of the economy will be impacted more than others. Legal fees, for example, probably wouldn’t change much as a result of the new policy, but the home and healthcare of senior citizens could change a lot.

This week the family owner/operator of several senior citizen facilities testified before the House General Committee about what the wage increase would do to their businesses and their customers:

“If S.23 is enacted, the annual budget impact on our facilities will be:

  • In 2020: $212,641 in the first year (plus payroll taxes and workers’ comp)
  • In 2021: $246,525 for a cumulative impact of $459,167 (plus payroll taxes and workers’ comp)
  • In 2022: $297,769 for a cumulative impact of $756,936 (plus payroll taxes and workers’ comp)
  • In 2023: $363,319 for a cumulative impact of $1,120,255 (plus payroll taxes and workers’ comp)
  • In 2024: $390,080 for a cumulative impact of $1,510,334 (plus payroll taxes and workers’ comp)

Given that these care facilities are subject to state staffing requirements that dictate the number of licensed employees we have per bed, cutting hours or employees to meet the budget is not an option. An additional problem is that Medicare and Medicaid provide a majority of the revenue into the businesses, and these payments are “fixed” and not set to increase at a rate that would cover the wage increase.

So, where’s this money going to come from? The folks who are dependent upon nursing home care — often people living on fixed incomes themselves — or their families. If the legislature decides to cover these costs through increased Medicaid payments, the taxpayer will be on the hook. The other alternative is that these facilities and others like the close, leaving seniors out in the cold.

Rob Roper is president of the Ethan Allen Institute. 

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