Most business owners are in favor of paying higher wages to their workers if it makes business sense. There are obvious benefits to a well-paid workforce, but some businesses — especially those reliant on government funding — would be put at a disadvantage if the Connecticut minimum wage is increased too quickly.
The current effort to move the Connecticut minimum wage to $15 per hour is well-intentioned but not thoroughly thought through. The elderly in-home care business is one of the industries that might be adversely affected by such an increase. In fact, a jump to the higher minimum wage could result in the loss of care for many elderly clients who rely on in-home assistance.
In-home care is often reimbursed by Medicaid, but in Connecticut the reimbursement rate is $14.68 per hour. This makes a $15 an hour minimum wage for in-home care workers unsustainable for any care provider. To ensure continued services for Medicaid reimbursed clients, the state reimbursement rate would have to substantially exceed the minimum wage. Even an incremental increase of fifty-cents per hour would be unsustainable because of other business costs that must be factored into hourly wages for home care workers.
The unintended consequence of a higher minimum wage would either be fewer services to elderly Connecticut residents, or higher taxes to cover higher reimbursement rates. Neither of these results is desirable.
There is lots of evidence to show in-home care for the elderly produces the best outcomes for clients, families and Connecticut taxpayers. If a client can stay in their own home, close to their family and community, they are likely to enjoy a better quality of life. If they are forced into an institutional setting, because of a scarcity of in-home assistance, the cost of care to Connecticut taxpayers goes up.
In cases where lawmakers recognize unintended consequences related to well-intentioned legislation, there is often an effort to make special exceptions. In this case, carving out an exemption for home care workers would also be a mistake. A policy decision resulting in multiple minimum wage levels for different industries would lead to worker shortages in some areas. If the homecare industry experiences a worker shortage because of state-mandated wage disparities, the result would hurt Connecticut residents who want to remain in their homes with the help of care providers.
In the current economic environment, Connecticut lawmakers must be careful to avoid taking action seen as unfriendly to business. An enterprise looking to relocate to Connecticut from another state may think twice if it sees the legislature changing policies that will have a negative impact on future business costs.
The issue of increasing wages for everyone is not as simple as mandating increases. The legislature needs to carefully consider the ramifications across a variety of industries before taking such a dramatic step regardless of its political appeal. In a variety of areas related to the health and well-being of Connecticut residents a rapid increase in the minimum wage could hurt people served by Medicaid and other government programs.
William Geiger is the Chief Operating Officer of Companions & Homemakers based in Farmington, Connecticut. Companions & Homemakers is included among the sponsors of this website.
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