Feature
Could worker cooperatives be a fix for the home care worker shortage?
Demand for home care workers is soaring, and the industry is struggling to keep up. Analysts project a steep care worker gap, with 4.6 million unfilled jobs by 2032. The industry is in turmoil over a combination of high turnover and low reimbursement rates from Medicare and Medicaid, which account for 73 percent of the industry’s $123.4 billion annual revenue, according to a 2023 analysis from PHI, an elder care services research and advocacy organization
But the shortage is driven by more than just billing.“There just aren’t enough workers entering or staying in the home care field, and that’s driven by poor job quality, low wages, and the lack of respect and recognition for the work they do,” says Katrina Kazda, vice president of home care innovations for the ICA Group, which provides home care cooperatives with technical assistance, coaching, and training.
“Then you’ve got all the structural layers of racism, classism, sexism, that layer into that,” she added, referring to social and economic policies and practices that have the effect of channeling women, immigrants, and people of color into low-paying service jobs.
Worker cooperatives— a business model in which workers share in decisions and profits—are emerging as a promising solution to the problem. Research by the ICA Group has found employee owners earn higher average wages, while coops report higher productivity and higher retention than traditionally structured companies.
Currently there are 22 home care cooperatives in 10 states, according to Kazda. But the pace has been quickening, she says, and more than a dozen startups are underway.
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Adria Powell, executive director of Cooperative Home Care Associates (CHCA) in the Bronx, New York, understands first-hand the difference this model can make. Her mother helped found the cooperative in 1985, when the idea of worker-owners was nearly unheard of.
Powell says CHCA were seen as pioneers back then in part because they provided four times the state required-training for home health aides. And years before its competitors, CHCA created a career path for employees, offered higher wages, established a system for raises based on longevity, and offered benefits including health insurance, paid vacation, and holiday and overtime pay.
The agency now has more than 1,600 members working across New York City. They have an equal voice in how the coop runs because they each own a share, which they purchase for $1,000. They pay the first $50 up front, either as a lump sum or in installments of typically five or ten dollars at a time. CHCA loans them the balance, which members repay interest-free through payroll deductions over five years.
After a year, any member can run for the board of directors. All members have a say in how the coop’s earnings are reinvested and whether it will pay dividends. CHCA’s turnover rate, of 25-28 percent, is well below the industry average of 80 percent. CHCA also pays amore than minimum wage, and its workers are unionized.
“People have voice and agency in the organization,” Powell says.
Coops face organizational challenges, such as managing the ebb and flow of care needs, providing enough hours for all workers while still generating enough revenue to distribute profits to employee-owners. Like most home care organizations, the group struggles with low Medicare and Medicaid reimbursement. Changes in insurance coverage, especially managed care, have resulted in fewer reimbursed daily home care hours. That directly impacts CHCA’s bottom line and the number of hours they can guarantee their workers. To fill the cash flow gap, CHCA also works with private clients, who can pay more, but the private market is highly competitive, and it can be difficult to find enough clients in the organization’s service area. “When we lose folks, it’s because we can’t provide enough work for them to have a sustainable living.”
When Powell’s mother pioneered the coop model some 40 years ago, her biggest obstacle was obtaining enough working capital, plus funds for daily operating expenses, until CHCA could generate enough revenue to cover its costs. Agencies with less investment in workers can be very price-competitive because they tend to have more financial backing, according to Powell.
Challenges to entrepreneurship
Assembling startup funds isn’t the only difficulty. Cooperatives also need “a group of committed workers who are able to put time into the project even before it is providing jobs and wages,” says Kazda. It can be a complicated equation: Agencies also have to balance reimbursement rates, staffing, state and county regulations, and profit margins—including how much goes back into the business and how much is distributed to worker-owners.
Most cooperative home care workers are people of color and immigrant women, who often lack access to capital or business skills and require additional support and training, which are added expenses for the agency. Despite these challenges, the coop model is gaining attention among advocates and caregiver organizing groups who are seeking better working conditions and wages for their constituents.
One organization tackling the challenges of home care coops is the Pilipino Workers Center (PWC) in Los Angeles, California. In 2014, the organization founded Courage Homecare, a cooperative with a dozen worker-owners.
Pay rates, benefits, and retention among workers in the coop rose dramatically compared to traditional home care agencies, according to Aquilina Soriano-Versoza, the PWC executive director. One worker reported making as much money in one month of part-time work with the coop as she would have made working full-time, over five months, at her previous job, Soriano-Versoza says.
About one in five home care workers in California are Filipino, so the coop provides English language training in addition to career, business, and specialty care training. All coop workers receive health benefits like dental and vision care. “We’re building it as something that can be replicated,” says Soriano-Versoza, “and we’ll be sharing what we’re designing with other organizations.”
But it all takes money. To support the coop, PWC received a one-time contract of $1.3 million from California’s workforce development program and nearly $130,000 from a seed fund for immigrant cooperatives. Soriano-Versoza hopes to raise at least $3.5 million more to open six more coops throughout the state, as well as training academies and a central cooperative for back office operations, purchasing, and technical support.
To support the expansion, PWC is partnering with other domestic worker organizations in California as well as the National Domestic Worker Alliance, the Democracy at Work Institute, and the ICA Group.
Soriano-Versoza also wants to see more investment by philanthropy and a new public benefit at the state level to address affordability issues among low-income Californians who need home care services, especially for people who would otherwise have to spend down what assets they have in order to qualify for Medicaid.
A federal government role
Federal legislation introduced in March would establish an interagency United States Council on Worker Cooperatives, led by the Department of Labor. It would develop and coordinate policies to encourage the development of more cooperatives, including a pilot program to offer low-interest loans through the Small Business Administration pilot program. The bill is pending review by several committees.
Judy Feder, a long-term care policy expert at Georgetown University’s McCourt School of Public Policy, suggests the Center for Medicare and Medicaid Services (CMS) or the Health Resources and Services Administration (HRSA) could support coops through existing programs.
Medicaid finances the bulk of paid home and community based services, providing an opening for the CMS Innovation Center to fund a pilot program or demonstration of home care co-ops, she says. And the Health Resources and Services Administration could provide grants or low-cost loans for standardized vocational training or specialty care education to develop the workforce. To solve the worker shortage, we need “a caregiving infrastructure that treats workers and beneficiaries well,” Feder says. “Coops are a very positive movement” in that direction.
Source image: kei_gokei / iStock
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<p>“We have to build a caregiving infrastructure that treats workers and beneficiaries well.”</p>
<p>Written by Liz Seegert</p>
<p>This <a rel="canonical" href="https://harvardpublichealth.org/policy-practice/us-direct-care-worker-demand-outstrips-supply-can-co-ops-help/">article</a> originally appeared in<a href="https://harvardpublichealth.org/">Harvard Public Health magazine</a>. Subscribe to their <a href="https://harvardpublichealth.org/subscribe/">newsletter</a>.</p>
<p class="has-drop-cap">Demand for home care workers is soaring, and the industry is struggling to keep up. Analysts <a href="https://www.phinational.org/policy-research/key-facts-faq/" target="_blank" rel="noreferrer noopener">project</a> a steep care worker gap, with 4.6 million unfilled jobs by 2032. The industry is in turmoil over a combination of <a href="https://www.hcaoa.org/newsletters/home-care-turnover-rate-jumps-to-80hcaoa-is-here-to-help-members" target="_blank" rel="noreferrer noopener">high turnover</a> and low reimbursement rates from Medicare and Medicaid, which account for 73 percent of the industry’s $123.4 billion annual revenue, according to a 2023 analysis from PHI, an elder care services research and advocacy organization</p>
<p>But the shortage is driven by more than just billing.“There just aren’t enough workers entering or staying in the home care field, and that’s driven by poor job quality, low wages, and the lack of respect and recognition for the work they do,” says Katrina Kazda, vice president of home care innovations for the ICA Group, which provides home care cooperatives with technical assistance, coaching, and training. </p>
<p>“Then you've got all the structural layers of racism, classism, sexism, that layer into that,” she added, referring to social and economic policies and practices that have the effect of channeling women, immigrants, and people of color into low-paying service jobs.</p>
<p>Worker cooperatives— a business model in which workers share in decisions and profits—are emerging as a promising solution to the problem. <a href="https://www.cdf.coop/_files/ugd/98a0e1_56542019f9614694ba57f5b37c9164fd.pdf" target="_blank" rel="noreferrer noopener">Research by the ICA Group</a> has found employee owners earn higher average wages, while coops report higher productivity and higher retention than traditionally structured companies.</p>
<p>Currently there are 22 home care cooperatives in 10 states, according to Kazda. But the pace has been quickening, she says, and more than a dozen startups are underway.</p>
<p>Adria Powell, executive director of <a href="https://www.chcany.org/">Cooperative Home Care Ass</a>o<a href="https://www.chcany.org/">ciates</a> (CHCA) in the Bronx, New York, understands first-hand the difference this model can make. Her mother helped found the cooperative in 1985, when the idea of worker-owners was nearly unheard of.</p>
<p>Powell says CHCA were seen as pioneers back then in part because they provided four times the <a href="https://www.1199seiuhomecareed.org/hha/" target="_blank" rel="noreferrer noopener">state required-training</a> for home health aides. And years before its competitors, CHCA created a career path for employees, offered higher wages, established a system for raises based on longevity, and offered benefits including health insurance, paid vacation, and holiday and overtime pay.</p>
<p>The agency now has more than 1,600 members working across New York City. They have an equal voice in how the coop runs because they each own a share, which they purchase for $1,000. They pay the first $50 up front, either as a lump sum or in installments of typically five or ten dollars at a time. CHCA loans them the balance, which members repay interest-free through payroll deductions over five years.</p>
<p>After a year, any member can run for the board of directors. All members have a say in how the coop’s earnings are reinvested and whether it will pay dividends. CHCA’s turnover rate, of 25-28 percent, is <a href="https://www.hcaoa.org/newsletters/caregiver-turnover-rate-is-652-2021-home-care-benchmarking-study">well below the industry average</a> of <a href="https://www.hcaoa.org/newsletters/caregiver-turnover-rate-is-652-2021-home-care-benchmarking-study">80 percent</a>. CHCA also pays amore than minimum wage, and its workers are unionized.</p>
<p>“People have voice and agency in the organization,” Powell says.</p>
<p>Coops face organizational challenges, such as managing the ebb and flow of care needs, providing enough hours for all workers while still generating enough revenue to distribute profits to employee-owners. Like most home care organizations, the group struggles with low Medicare and Medicaid reimbursement. Changes in insurance coverage, especially managed care, have resulted in fewer reimbursed daily home care hours. That directly impacts CHCA’s bottom line and the number of hours they can guarantee their workers. To fill the cash flow gap, CHCA also works with private clients, who can pay more, but the private market is highly competitive, and it can be difficult to find enough clients in the organization's service area. “When we lose folks, it’s because we can’t provide enough work for them to have a sustainable living.”</p>
<p>When Powell’s mother pioneered the coop model some 40 years ago, her biggest obstacle was obtaining enough working capital, plus funds for daily operating expenses, until CHCA could generate enough revenue to cover its costs. Agencies with less investment in workers can be very price-competitive because they tend to have more financial backing, according to Powell.</p>
<h2 class="wp-block-heading" id="h-challenges-to-entrepreneurship">Challenges to entrepreneurship</h2>
<p>Assembling startup funds isn’t the only difficulty. Cooperatives also need “a group of committed workers who are able to put time into the project even before it is providing jobs and wages,” says Kazda. It can be a complicated equation: Agencies also have to balance reimbursement rates, staffing, state and county regulations, and profit margins—including how much goes back into the business and how much is distributed to worker-owners.</p>
<p>Most cooperative home care workers are people of color and immigrant women, who often lack access to capital or business skills and require additional support and training, which are added expenses for the agency. Despite these challenges, the coop model is gaining attention among advocates and caregiver organizing groups who are seeking better working conditions and wages for their constituents.</p>
<p>One organization tackling the challenges of home care coops is the Pilipino Workers Center (PWC) in Los Angeles, California. In 2014, the organization founded Courage Homecare, a cooperative with a dozen worker-owners.</p>
<p>Pay rates, benefits, and retention among workers in the coop rose dramatically compared to traditional home care agencies, according to Aquilina Soriano-Versoza, the PWC executive director. One worker reported making as much money in one month of part-time work with the coop as she would have made working full-time, over five months, at her previous job, Soriano-Versoza says.</p>
<p><a href="https://www.labor.ucla.edu/wp-content/uploads/2020/12/Profile-of-Domestic-Workers-in-California.pdf" target="_blank" rel="noreferrer noopener">About one in five</a> home care workers in California are Filipino, so the coop provides English language training in addition to career, business, and specialty care training. All coop workers receive health benefits like dental and vision care. “We’re building it as something that can be replicated,” says Soriano-Versoza, “and we’ll be sharing what we’re designing with other organizations.” </p>
<p>But it all takes money. To support the coop, PWC received a one-time contract of $1.3 million from California’s workforce development program and nearly $130,000 from a seed fund for immigrant cooperatives. Soriano-Versoza hopes to raise at least $3.5 million more to open six more coops throughout the state, as well as training academies and a central cooperative for back office operations, purchasing, and technical support.</p>
<p>To support the expansion, PWC is partnering with other domestic worker organizations in California as well as the National Domestic Worker Alliance, the Democracy at Work Institute, and the ICA Group.<br>Soriano-Versoza also wants to see more investment by philanthropy and a new public benefit at the state level to address affordability issues among low-income Californians who need home care services, especially for people who would otherwise have to spend down what assets they have in order to qualify for Medicaid. </p>
<h2 class="wp-block-heading" id="h-a-federal-government-role">A federal government role</h2>
<p><a href="https://www.congress.gov/bill/118th-congress/house-bill/7721/text/ih">Federal legislation</a> introduced in March would establish an interagency United States Council on Worker Cooperatives, led by the Department of Labor. It would develop and coordinate policies to encourage the development of more cooperatives, including a pilot program to offer low-interest loans through the Small Business Administration pilot program. The bill is <a href="https://www.congress.gov/bill/118th-congress/house-bill/7721/committees?s=1&r=1&q=%257B%2522search%2522:%2522H.+R.+7721%2522%257D">pending review</a> by several committees.<br>Judy Feder, a long-term care policy expert at Georgetown University's McCourt School of Public Policy, suggests the Center for Medicare and Medicaid Services (CMS) or the Health Resources and Services Administration (HRSA) could support coops through existing programs.</p>
<p class=" t-has-endmark t-has-endmark">Medicaid finances the bulk of paid <a href="https://www.cms.gov/training-education/partner-outreach-resources/american-indian-alaska-native/ltss-ta-center/information/ltss-models/home-and-community-based-services">home and community based services</a>, providing an opening for the <a href="https://www.cms.gov/priorities/innovation/overview">CMS Innovation Center</a> to fund a pilot program or demonstration of home care co-ops, she says. And <a href="https://www.hrsa.gov/about/agency-overview">the</a> Health Resources and Services Administration could provide grants or low-cost loans for standardized vocational training or specialty care education to develop the workforce. To solve the worker shortage, we need “a caregiving infrastructure that treats workers and beneficiaries well,” Feder says. “Coops are a very positive movement” in that direction.</p>
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