Essential healthcare workers need a big raise

Action could start with a new COVID-19 relief bill

Surging COVID-19 hospitalizations and deaths are taking their toll on an already battered healthcare workforce. Millions of nurses, aides and orderlies are reporting levels of burnout, shock and weariness more typically found among foot soldiers trapped in a long and futile military campaign.

The next pandemic relief bill – assuming Congress gets around to the nation’s most pressing problem before the CARES Act expires on December 31 – must address healthcare workers’ immediate needs. Legislators should recognize and reward the service they’ve already provided and bolster their morale for the coming battle, made all the more difficult by the deliberate undermining of public health by the outgoing president and his political followers.

Even now, numerous Republican governors are vowing the resist President-elect Joe Biden’s call for masking, social distancing and limited indoor gathering. Their perfect record on ignoring science remains intact. Public health researchers and government officials have repeatedly said that near universal compliance with such measures could bring the current resurgence of the epidemic under control in less than two months. An FDA-approved vaccine for the general public is at least a half year away.

Given the likelihood of continuing non-compliance with public health guidelines in many areas of the country, ensuring the solvency and sanity of the people who will be caring for the hundreds of thousands of Americans who will be hospitalized with COVID-19 over the coming winter has to become the highest priority. It’s estimated the U.S. death toll will reach nearly a half million by inauguration day.

A first step would be authorizing hazard pay for frontline workers, especially those whose jobs provide barely enough money to make ends meet. The average pay of nursing assistants, aides and orderlies is less than $14 an hour, a salary that qualifies many for food stamps, rent assistance and subsidized health insurance.

The first Coronavirus Aid, Relief, and Economic Security (CARES) act contained paycheck protection grants. States and localities had the option of earmarking some of the money for hazard pay programs for frontline workers in any job that provides the goods and services necessary to daily life, including the provision of healthcare.

Yet very few states or cities implemented such programs. Where they exist, many businesses failed to apply for grants on behalf of their workers. Legislators in Vermont, one of the few states with a program, recently blasted major employers like CVS, Home Depot, Target and General Dollar for failing to use the program, which will soon expire.

Some local officials are openly hostile to supporting hazard pay for healthcare workers. Bureau County in downstate Illinois recently denied a request by the county health department. “You can call it hazard pay, but I call it a bonus,” a Republican member of the county board said.

Realizing more needs to be done, Democrats in the House of Representatives last April passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which earmarked $200 billion for hazard pay. It guaranteed an annual wage of $25,000 for frontline workers earning less than $200,000 a year and a $15,000 sign-on bonus for first responders and health and home care workers doing essential work. But when Republicans led by Senate Majority Leader Mitch McConnell rejected those provisions during pre-election negotiations, House Speaker Nancy Pelosi dropped the idea.

The private sector has done little to fill the gap. During the initial surge, a few major employers began giving bonuses to workers who performed tasks that put them face-to-face with the public. But over the summer months, major employers like Amazon, Walmart and Kroger stopped offering hazard pay. None have resumed their programs despite COVID-19 infections reaching their all-time highs in many areas of the country.

The healthcare industry’s voluntary response has also been spotty. Early on, the media focused public attention on frontline workers’ lack of personal protective equipment, unsafe conditions and understaffing in nursing homes and make-shift emergency wards. But the low pay of the lesser-skilled but critical healthcare workforce received little notice.

Some healthcare organizations are discovering the issue can no longer be ignored. This month, two major hospital systems based in Michigan, Henry Ford Health and Trinity Health, raised their minimum wage to $15 an hour. The state’s top hospital association official said the raise was necessary to attract workers as systems grapple with a staffing crisis. A handful of other systems are making similar moves, according to Modern Healthcare.

Henry Ford’s raise will affect nearly 10% of its 33,000 workers, many of whom earned just $11 an hour. “There is a strong association between financial health and security and overall health, a reality that has been driven home over the last eight months for our team members who are on the front lines of the fight against COVID-19,” CEO Wright Lassiter said in a statement.

Offering hazard pay and raising the minimum wage only begins the process of redressing wage inequality in the healthcare industry, which mirrors the problem in the broader society. The median annual salary in healthcare was $68,190 in 2019, which is fully 71% higher than the $39,810 median salary for all occupations in the economy.

Yet inequality within the industry is worse than most other industries. The least paid occupations in healthcare, which are also the largest in number, are among the lowest paid jobs in America. Physician pay is among the highest. Moreover, with the sole exception of physician assistants, pay for workers in support roles has increased at slower rate over the past decade than their physician colleagues or top managers, thus worsening inequality within the industry.

The lower the pay, the smaller the wage increase

Pay for top managers in healthcare mirrors the wide and growing divide in pay between physicians and support staff. The Lown Institute recently published its first annual report ranking hospitals on a range of social criteria. It included a measure of CEO-to-worker pay. Among 3,338 hospitals Lown ranked, the local CEO earned around 7 times the median salary. But at some of the larger institutions in the country, including Inova in Virginia, Mt. Sinai in Miami and the Cleveland Clinic, that ratio was well above 50-to-1.

When pressed on their unwillingness to upgrade pay for low-skill occupations that are critical to day-to-day operations, healthcare executives usually point to low reimbursement rates. But if highly skilled clinician pay and top manager pay is growing at a substantially faster rate than other workers at the institution, and, it should be pointed out, faster than the overall inflation rate, that explanation makes no sense.

Moreover, all the averages in the BLS and Modern Healthcare surveys are not adjusted for inflation. In terms of raw purchasing power, most low-wage workers in healthcare have seen zero wage increase over the last decade. Registered and licensed practical nurses, sadly, saw an absolute decline in their income. Meanwhile, most doctors have seen substantial real wage gains.

This growing wage gap within healthcare is having its most pernicious effects on women and minority workers, who dominate the supportive professions. According to a paper published last year in the American Journal of Public Health, more than a third of women workers in healthcare earn less than $15 an hour. Nearly half of minority workers in healthcare earn that little. The study estimated raising the minimum wage to $15 an hour would reduce poverty rates among female healthcare workers by 27%, even though that poverty rate would still be a shockingly high 50%.

Economists Anna Stansbury and former Treasury Secretary Lawrence H. Summers recently offered an explanation for stagnating real take-home pay for workers on the lowest rungs of the labor hierarchy. In a new paper on the National Bureau of Economic Research website, they noted, “The decline in worker power is one of the most important structural changes to have taken place in the U.S. economy in recent decades. The policy environment has become less supportive of worker power by reducing the incidence of unionism and the credibility of the threat effect of unionism.” And, they added, “the real value of the minimum wage has fallen.”

While their focus was on the overall economy, they also noted these changes have taken place in service industries like healthcare as well as in manufacturing industries that are more likely to be affected by international trade and automation. The real culprit behind this growing disequilibrium in bargaining power, they assert, is the growing monopolization of nearly every industry, and the increased power that gives employers in dictating wages.

From the individual worker’s perspective, it’s very difficult to find better-paying work elsewhere when the local labor market is dominated by just a few firms. In most communities, healthcare is not just one of the largest employers, it is usually highly concentrated with just one or two major institutions.

The presents a conundrum for policymakers. Raising the minimum wage, one of the few levers they have for pushing wages upward, will not redress the structural imbalances that are widening inequality in healthcare. Passing laws or creating new regulations that make it easier for workers to organize and bargain collectively for a living wage – the only way for low-wage workers to counterbalance major healthcare systems’ monopoly control of local labor markets – will take years before it has some effect on inadequate wages and their unequal distribution inside firms.

The people who run healthcare institutions should take to heart the observation of Nobel Laureate economist Joseph Stiglitz. Nearly a decade ago, he warned that persistently low wages means the economy’s “most valuable asset – its people – is not being fully used. Many at the bottom, of even in the middle, are not living up to their potential.”

The road to a more productive, higher quality healthcare system requires redressing the internal imbalances that year after year have short-changed workers in crucial support occupations. Congress can begin by authorizing hazard pay and a higher minimum wage. Healthcare leaders can move the process along by finding money within their budgets for even larger increases. And they need to do it now, since it’s our best hope of keeping enough of these battle-tested veterans on the job as we move through the next wave of the 2020-21 COVID-19 pandemic.