246 - Care Providers



The Long-Term Care Imperative is proposing a nursing facility rate increase based on the direct effect as well as the ripple effect of raising the minimum wage to $9.50. The proposal provides rate increases to nursing facilities based on their current wages, and it includes the funding necessary for them to position their organizations to retain employees in the new labor market created by the minimum wage increase. According to our estimates, the proposal will cost approximately $4.6 million state share per year.Raising the Minnesota minimum wage will directly impact many employees of Minnesota nursing facilities. According to the Minnesota Department of Employment and Economic Development (DEED), 7.9% of Minnesota nursing facility employee earn less than $9.50 per hour*. In addition, numerous other employees will be impacted because they are earning wages close to the current minimum wage. As the chart below shows, there is significant regional variation in current nursing home employee wages. Positions impacted the most**: Food Service/Dietary Aide, Housekeeping and Laundry Aide, Nursing Assistant, Registered Recreational Therapy/Activities Assistant, Cook, Blended Worker, Maintenance Assistant, and Receptionist.Why is this important?Unlike other businesses, Minnesota's nursing facilities are unable to raise their prices in response to increased labor costs due to rate equalization. Under rate equalization, nursing homes in Minnesota must charge private-paying residents basically the same rates that Medicaid pays for similar services. Medicaid nursing home residents comprise 57% of the typical nursing home’s clients. Medicaid and Medicare comprise nearly 66% of nursing home resident days and are paid for by the State of Minnesota and the federal government. With Minnesota’s unique policy of limiting rates charged to private residents to basically the same rates that Medicaid pays, nearly all of the payment rates for Minnesota nursing homes are controlled by government.According to the 2014 Long-Term Care Imperative Legislative Survey, Minnesota nursing facilities are experiencing difficulty in filling and retaining staff positions. In the past 12 months, 13.5% of Minnesota's nursing facilities have suspended admissions due to insufficient staffing. In addition, as the charts on page 3 show, turnover and vacancies in key positions are significant challenges for nursing homes that will be made worse if the costs of a minimum wage increase are not addressed.Background on the ProposalEconomic literature contains numerous studies regarding the direct effects of raising the minimum wage as well as indirect effects from the "ripple effect." The Long-Term Care Imperative proposal to increase rates uses two sources of data to estimate the direct effect and the "ripple effect."From the 2012 Minnesota Annual Statistical and Cost Report of Nursing Facilities, the reported number of compensated hours for direct care employees and total number of part-time and full-time employees by position was used to estimate that there were 65,041,684 total compensated hours in 2012.The 65,041,684 compensated hours were allocated uniformly across the number nursing facility employees by wage increment provided by the Minnesota Department of Employment and Economic Development. Next, the estimated direct and "ripple" effect of a increase in the minimum wage to $9.50 an hour with the following assumptions:The average ripple effect “multiplier” used is 2.8. This means that the total cost increase from a minimum wage increase to $9.50—including both the direct and ripple-effect raises—is 2.8 times the estimated direct effect. ***The ripple effect is concentrated around the new minimum wage threshold, but extends to $13.00 at a decreasing rate.****The following tables provide a summary of the financial details of our proposal:Table 1: Increase in Wage by IncrementDirect Increase to $9.50Ripple Effect IncreaseDirect Increase with Ripple EffectTotal Percent Increase with Ripple EffectLess than $7.25$2.25$0.00$2.2534.62% Greater or equal $7.25 - smaller or equal $7.50$2.13$0.00$2.1328.81%Greater than $7.50 - smaller or equal $8.00$1.75$0.00$1.7522.58%Greater than $8.00 - smaller or equal $8.50$1.25$0.13$1.3816.67%Greater than $8.50 - smaller or equal $9.00$0.75$0.25$1.0011.43%Greater than $9.00 - smaller or equal $9.50$0.25$0.38$0.636.76%Greater than $9.50 - smaller or equal $10.00$0.00$0.50$0.505.26%Greater than $10.00 - smaller or equal $10.50$0.00$0.50$0.504.88%Greater than $10.50 - smaller or equal $11.00$0.00$0.40$0.403.72%Greater than $11.00 - smaller or equal $11.50$0.00$0.30$0.302.67%Greater than $11.50 - smaller or equal $12.00$0.00$0.20$0.201.70%Greater than $12.00 - smaller or equal $12.50$0.00$0.10$0.100.82%Greater than $12.50 - smaller or equal $13.00$0.00$0.10$0.100.80%Greater than $13.00----Table 2: Hourly wages Nursing Facility Jobs by Hourly Wage Rate, 2012 Average Quarter with Uniform Application of Total Compensated HoursDEED Jobs*DEED Job Distribution by WageEstimated Compensated Hours by Wage IncrementLess than $7.255250.98%638,015Greater or equal $7.25 - smaller or equal $7.501470.27%178,510Greater than $7.50 - smaller or equal $8.003040.57%369,793Greater than $8.00 - smaller or equal $8.505541.04%674,204Greater than $8.50 - smaller or equal $9.001,0501.96%1,276,943Greater than $9.00 - smaller or equal $9.501,6613.11%2,020,179Greater than $9.50 - smaller or equal $10.002,2604.23%2,748,514Greater than $10.00 - smaller or equal $10.502,9825.58%3,627,078Greater than $10.50 - smaller or equal $11.003,3776.32%4,108,174Greater than $11.00 - smaller or equal $11.503,4356.42%4,178,119Greater than $11.50 - smaller or equal $12.003,2136.01%3,908,376Greater than $12.00 - smaller or equal $12.502,8805.39%3,502,698Greater than $12.50 - smaller or equal $13.002,5934.85%3,153,888Greater than $13.0028,49153.28%34,657,190Table 3: Factors and EstimatesItemMinimum Wage$9.50Ripple Effect Factor $0.50Estimated Number of Compensated Hours from 9-30-12 Cost Report65,041,684New Labor Costs by Hour *****$13,460,429Medicare and FICA (7.650%)$1,029,723Total New Labor Costs$14,490,152Estimated Annual State Share$4,636,849 *Source: Minnesota Department of Employment and Economic Development. Quarterly Census of Employment and Wages, Unemployment Insurance (UI) Program**Source: The 2013 Long-Term Care Compensation Surveys and Reports. Care Providers of Minnesota, Aging Services of Minnesota (ASM) and the Healthcare Human Resources Association of Minnesota, Inc. (HHRAM)***Source: Mandated Wage Floors and the Wage Structure: New Estimates of the Ripple Effects of Minimum Wage Laws, Jeannette Wicks-Lim, Political Economy Research Institute, University of Massachusetts-Amherst, May 2006.****Source: The “Ripple Effect” of a Minimum Wage Increase on American Workers Benjamin H. Harris and Melissa S. Kearney, January 2014, Brookings Institute.*****Note: the "ripple" factor of 2.8 times the estimated direct effect of $4,767,515 equals $13,349,042. Using a ripple effect increase as demonstrated in Table One, the direct and "ripple" costs of the proposal equals $13,460,429. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download