Caring for the elderly in America now includes a minimum wage and overtime

The U.S. Court of Appeals for the D.C. Circuit late last month reinstated a U.S. Department of Labor regulation that gives minimum wage and overtime protection to home care workers. The ruling upholds the Obama Administration’s decision to scrap the “caregiver exemption” from the Fair Labor Standards Act. The exemption excluded many of those in the home care profession from the most basic labor protections enjoyed by most other workers in the United States.

The ruling will affect almost two million home care workers who help the elderly and disabled manage chronic illnesses and do the tasks that allow them to stay in their homes. While the home care industry is the second fastest growing source of employment in the country—with an expected 1.3 million new jobs by 2020 ­– the workers are some of the most poorly compensated in the nation, with a median wage of $20,820 per year. Even in the midst of an improving economy and rising wages, home care workers have only seen their wages decline since 2009.

What’s more, those working in the home care sector over the past 80 years have done without the most basic protections under the Fair Labor Standard Act. When the FLSA was passed in 1938, it established a minimum wage, overtime pay, and child labor standards for full-time and part-time workers in the private sector. But the law originally excluded domestic and farm workers—occupations dominated by African Americans—as a concession to Southern lawmakers who thought that labor protections should only extend to white employees. By 1974, however, the law was amended to grant domestic workers, such as cooks, waiters, nurses, housekeepers, and gardeners, the right to overtime pay and a minimum wage. All domestic workers, that is, except for “casual babysitters” and a new category of workers defined as “elder companions.”

The exemption is just one example of how care work is devalued relative to other employment sectors. In 1974, nonemployed women were largely responsible for the round-the-clock care of family members, rendering its value invisible in the larger economy. Thus, lawmakers at the time (and the country as a whole) did not think to define care work as “real” in any economic sense. Yet as more and more women entered the labor market in force and could no longer take on full-time caregiving duties for their elderly parents or relatives, these paid “companions” became necessary to the wellbeing of the elderly who did not want to or could not enter into a nursing facility.

The home care industry argues that these new requirements will compromise their ability to provide affordable home healthcare for the elderly. This is a legitimate concern. While some of these companies enjoy hefty profits, many others rely heavily on joint federal-state Medicaid reimbursements (the way in which Medicaid funding is structured for home care is varied depending on the state). These more Medicaid-dependent companies may want to pay their workers more, but cannot without a subsequent increase in Medicaid funding. The court’s ruling could well compromise the ability of some home care companies to provide affordable services or employ workers full-time.

Despite these apprehensions, the court ruled against the industry. The decision was partially based on the fact that 21 states have already enacted minimum wage statutes for home care workers, and another 15 states mandate both minimum wage and overtime protections that are within the scope of the U.S. Department of Labor’s new rule. The court’s opinion also cited a lack of reliable data that home care workers in these states were adversely affected, pointing to evidence that the quality of care for the elderly at home did not decline. More information will be needed to evaluate the effects of the court ruling, but there does not seem to be a huge difference in states that mandate overtime for home care workers and those that do not.

This ruling has important economic consequences. Care work underlies what economists call “human infrastructure,” and has effects far beyond any single individual or company. Without these care workers, more people would have to give up jobs and take on considerable financial hardship in order to stay home with an ailing parent. This not only deprives many families of much needed earnings and future retirement savings, but also shrinks the labor supply and hurts the economy’s ability reach its full potential.

The court’s decision has great symbolic importance as well. The care work that is paid and accounted for in U.S. labor market statistics is clearly still undervalued both financially and culturally. But, with the new ruling, home care workers not only gain basic labor market protections, but also gain long-overdue recognition that their work is productive and essential for the U.S. families and the wider economy.