Reducing Direct Care Turnover: Do Wage Subsidies Matter?
- Presenter:
Chair: Michael Grossman; Discussant: Stephen Mennemeyer Tue June 6, 2006 10:45-12:15 Room 121
Rationale: The aging of the baby boom cohort is likely to put a significant strain on the market for long term care services provided by direct care workers like nursing and home health aides. In fact, many states are already experiencing shortages and high turnover rates that are affecting the quality of patient care. In contrast to a relatively large literature devoted to the labor market for RNs, there is little in the way of systematic analysis of the labor market for direct care workers.
Objectives: The objectives of this paper are twofold. The first objective is to provide a descriptive analysis of the dynamics of direct care workforce behavior, including estimates of employment durations for direct care workers and comparison occupation groups. The second objective is to assess the effects of two types of wage subsidies on the length of time that direct care workers stay in a given job (or stay in the direct care workforce). One of wage subsidy policies that we consider, the Earned Income Tax Credit, represents an income rather than occupation-targeted subsidy. The other wage subsidy that we consider, “wage pass-through” provisions in state Medicaid programs, is a policy directed exclusively at direct care workers.
Methodology: We use data covering the years 1996 to 2000 from the 1996 Survey of Income and Program Participation to measure employment spells for the workers in the sample. This dataset provides information on 786 workers in direct care occupations and allows us to observe approximately 80 percent of direct care employment spells at the monthly level without censoring. We will use these spell measures to estimate discrete-time hazard models of the effects of both income-targeted and occupation-targeted subsidies on employment durations. The fact that the SIPP identifies state of residence for all but 5 states allows us to identify the effects of policy using state-level variation. By 2000 (the last year in our panel), 13 states had state-level EITCs, and many of these states had changed the real values of their credits during the preceding four years. The majority of the 26 states that currently have wage or benefit pass-throughs in their Medicaid programs either implemented or expanded programs during the late 1990s.
Results: Descriptively, we find that spells of employment for direct care workers are slightly lower than those for other workers. The median spell for direct care workers (all workers) is 17 months (19 months) and the mean spell is 40 months (51 months). Spells for direct care workers are longer than those for child care workers (median = 10 months; mean = 22 months) but much shorter than those for a group of better-educated health care workers, including R.N.s and therapists (median = 32 months; mean = 58 months). The second part of the analysis, focusing on the impact of wage subsidies, is currently in progress.
