Informal employment and the earnings of home‐based home care workers in the United States

• DOI: http://doi.org/10.1111/irj.12299
• Published date: 01 July 2020
• Author: Jeounghee Kim
• Date: 01 July 2020

Informal employment and the earnings of

home-based home care workers in the

United States

Jeounghee Kim MSW, PhD Associate Professor

ABSTRACT

Informal employment continues to exist in parallel with formal employment among

the US home-based home care workers and undermines the workers’economic secu-

rity. This study examines the extent to which the earnings of the US home-based

home care workers are affected by informal employment arrangements and state la-

bour policies designed to benefit low-wage home care workers. Using a sample of

1,318 home-based home care workers from the 2017 and 2018 Annual Social and

Economic Supplement of the Current Population Survey, this study found that (i) in-

formally employed home-based home care workers had a 9% reduction in annual

earnings and that (ii) their earnings were not improved by generous state minimum

wages and Domestic Workers’Bill of Rights while the earnings of agency employees

were. The findings highlight the importance of strong enforcement of labour stan-

dards for informally employed home care workers in the United States.

1 INTRODUCTION

Although data on informal employment are not readily available in a developed coun-

try, informal employment continues to exist in parallel with formal employment in the

home-based home care industry in the United States. Some home care workers directly

employed by private households or misclassified as independent contractors can be

treated as unpaid caregivers or domestic workers paid under the table. These

so-called ‘informal’employment arrangements leave the workers in a precarious situ-

ation unprotected by labour policies designed to protect employees. Informal employ-

ment in the home care workforce is particularly problematic because the workforce is

growing rapidly in the United States: it more than doubled in size from nearly 840,000

in 2007 to over two million in 2017 and is projected to reach up to 3.4 million by 2030

(US Department of Health and Human Services, 2018). This growth in the workforce

is explained by rising numbers of retirees and individuals with chronic health condi-

tions who prefer to stay at home. The government funding that created the home care

industry also promotes home and community-based long-term care system (Parapro-

fessional Healthcare Institute, 2018). Although informal employment arrangement is

relatively common for home-based home care workers in the United States, no studies

❒Jeounghee Kim, School of Social Work, Rutgers, The State University of NJ, New Brunswick, NJ USA.

Correspondence should be addressed to Jeounghee Kim, Associate Professor, School of Social Work,

Rutgers, the State University of NJ, New Brunswick, NJ, USA.

Email: jeoukim@ssw.rutgers.edu

Industrial Relations Journal 51:4, 283–300

ISSN 0019-8692

© 2020 Brian Towers (BRITOW) and John Wiley & Sons Ltd

have examined its effect on the workers’earnings. Empirical analyses of informal

employment arrangements are rare in the United States given the difficulty involved

in accessing the vulnerable workers and the assumption that informal employment

is not prevalent. This study, in this sense, adds an important piece of evidence to the

literature relevant to the home care industry and informal employment in the

United States.

Home care workers in the United States refer to personal care workers and home

health aides (or nursing assistants) who assist individuals with disabilities at their

homes and residences. The workers provide assistance with daily living activities such

as personal care, housekeeping and cooking. Home health aides also provide routine

individualised healthcare under the supervision of a licenced health professional to

monitor and report clients’health status to their families and healthcare providers.

Home-based home care workers work at clients’homes caring for one client at a time

and are hired through home care agencies or directly by individual clients or private

households as Figure 1 shows (note that for this study, home care workers exclude

those who work at long-term care facilities) (US Department of Labor, 2016). These

workers are predominantly female, racial/ethnic minorities and immigrants and have

limited education and occupational qualifications (Paraprofessional Healthcare

Institute, 2018).

Despite the growing needs for home care workers, worker recruitment and retention

remain challenging in the United States. This is mostly because the workforce endures

a range of labour market injustice including persistent low wages, lack of benefits, poor

working conditions, emotional and physical drains and limited career advancement.

Many do not have guaranteed full-time hours of work, and when they work, they earn,

on average, around $10–11 per hour with inconsistent hours (Paraprofessional

Healthcare Institute, 2018). Indeed, nearly 50% of home care workers or a quarter

of all direct care workers were reported to receive public assistance such as Medicaid,

food assistance and housing and heating assistance because of their low earnings (Na-

tional Employment Law Project, 2017; Paraprofessional Healthcare Institute, 2018).

Most (65%) direct care services in the United States are funded by the federal and

state governments primarily through Medicaid and Medicare; both Medicare and

Medicaid pay for home healthcare, and personal care can be covered only by

Figure 1: Employment arrangements for home-based home care workers in the United States.

[Colour figure can be viewed at wileyonlinelibrary.com]

284 Jeounghee Kim

© 2020 Brian Towers (BRITOW) and John Wiley & Sons Ltd