North Carolina is rapidly aging – the population over 65 is projected to more than double by 2050. The aging of the state’s baby boomers will correspond with an increase in community members with functional and cognitive limitations, indicating a growing need for direct care that allows community members to continue to live with dignity.

Direct care occupations, including home care jobs, are some of the fastest growing occupations, as North Carolina rapidly ages. Yet these jobs offer some of the lowest wages in the state. Median wages in the caregiving occupations pay less than $10 an hour, compared to the state’s $15 an hour median wage. That means that half of all home healthcare workers aren’t earning enough to rise above the federal poverty line despite working full-time. And despite the high occupational injury rates, almost half of home care workers remain uninsured and the majority of workers have no earned paid sick days to take time to recover from injuries or illness.

Low wages increase worker turnover, increase long-run costs for providers, and interrupt the continuity of care for consumers. Additionally, making too little to pay for the basics such as food, housing, and health care can lead to increased dependence on public assistance programs.

Medicaid, administered by the state and jointly financed by the state and federal government, is the primary funding source for long-term services and supports (LTSS) for people with disabilities and seniors. Reimbursement by Medicaid programs, in large part, creates the framework in which employers set wages for direct care workers.

North Carolina’s reimbursement rates have been frozen or reduced since 2009 and the most recent reduction places North Carolina rates more than $4 per hour lower than the national average rate paid to provider agencies.

To address these challenges North Carolina must raise the wage floor for paid caregivers in the context of the state’s Medicaid program and look to best practices in states like Montana and Maine that tie wage-improvement strategies to reimbursement rates.

These include:

  • An automatic update mechanism, such as a link to an annual inflation-adjustment
  • A way to ensure enforcement through mandatory reporting and data collection
  • A built-in mechanism for evaluating reimbursement rates, or the wage floor, over time to ensure that the rate remains competitive.