Home health care aides, personal care aides, and nursing assistants comprise a “direct care” workforce of about 4.8 million people in the U.S.. Driven by a rapidly growing aging population, direct care workers constitute the fastest growing job sector in the U.S., projected to add more than 1 million jobs between 2021 and 2031, according to PHI, a nonprofit organization that works to improve services for older people and those with disabilities.
Case Study: The ‘Direct Care’ Workforce
Direct care workers are among the lowest paid in the U.S., with median hourly wages of about $15.43 per hour and median annual earnings of about $23,688, according to PHI. As a result, 39 percent of direct care workers live in or near poverty and 46 percent rely on public assistance programs to make ends meet. Direct care work is difficult and stressful, with worker turnover as high as 60 percent annually; caregiver shortages, caregiver recruiting, and caregiver retention are major problems for the industry.
Digital technologies will be critically important to direct care workers in the years ahead. Some experts say they could improve working conditions and pay for care workers. Others worry they could make care work even more difficult and precarious than it is today. Investors concerned about the human rights impact as well as the economic impact of the care crisis will need to carefully navigate the issues.
“AI and other enabling technologies can make care jobs better and more attractive” by automating specific tasks rather than replacing entire jobs, write Elana Berkowitz and Courtney Leimkuhler, managing partners of Springbank, a venture capital firm. They cite research by BCG consulting which projects that the U.S. will lose about $290 billion a year in GDP in 2030 and beyond if it fails to correct the lack of available care workers and the departure of productive employees from the paid labor force who take on unpaid-care duties for family members. According to Berkowitz and Leimkuhler, “Many of these (care) jobs are ripe for innovation, and responsible AI technology could bring more good than harm in assisting parts of our workforce that are stretched to the breaking point.”
“Electronic Visit Verification has contributed to the growing landscape of punitive technologies that target and criminalize both low-wage workers and public benefits recipients.”
At the same time, direct care workers are vulnerable to the risks of digital technologies. Many low-wage direct care workers are already misclassified as independent contractors rather than as employees. Moreover, workforce management, often involving ubiquitous surveillance, is a key selling point for several new digital apps being introduced into the workplace. While wages for direct care workers are already low, digital technologies could make it even more difficult for workers to negotiate for better pay. There’s also concern that the technologies could lead to job displacement, as could be the case in other industry sectors.
An array of new AI-driven apps are increasingly being used to monitor and manage these workers. Many of these apps are created and marketed by companies that are not listed on public markets but are instead backed by venture capital or private equity firms. One app, for example, advertises that with caregiver turnover on average at 65% for the industry, it “empowers agency owners to gather real-time insights from their staff throughout the day, providing an upper hand on employee churn and retention efforts.” Another app offers video cameras for home care: “The use of AI technology also helps in managing and deploying staff more effectively. By providing real-time updates on client status, agencies can allocate their workforce based on actual need, leading to more efficient use of resources, and reducing caregiver burnout.”
One digital technology for many home health workers is Electronic Visit Verification (EVV), introduced by a 2016 federal law that requires verification for personal care services provided to Medicaid patients. EVV systems were designed by the federal government to curb “fraud, waste, and abuse” but critics say they also amount to constant surveillance of workers and their clients. The most common version of EVV is a mobile app that workers or their clients must use with a smartphone or through a landline phone or website. “EVV has contributed to the growing landscape of punitive technologies that target and criminalize both low-wage workers and public benefits recipients,” writes Mateescu of Data & Society. Since EVVs are federally mandated, concerns about their impact might be addressed most effectively through public policy advocacy by investors.
The home healthcare industry is highly fragmented, with 11,400 “home health agencies” in the U.S. as of 2020. The U.S Department of Labor reported that investigations in 2022 of more than 1,600 residential care facilities, nursing facilities, and home health providers had identified violations in 80 percent of its reviews, with the most common violations related to “failures to pay overtime or federal minimum wages or the misclassification of employees as independent contractors.” The initiative found violations disproportionately hurt women of color — particularly in the Black, Hispanic, and Asian, including Filipina, communities — who are often employed as home care aides, certified nursing aides, and licensed practical nurses.
In April 2024, the Washington Post reported numerous complaints about an algorithmic system used by Brookdale Senior Living (NYSE:BHD), a leading operator of senior homes in the U.S. with 652 facilities. Employees said the company’s algorithm underestimated the amount of labor they needed to meet resident needs. “While assisted-living chains promote their properties like all-inclusive resorts with round-the-clock care, many operate more like assembly lines, where low-wage workers perform a series of discrete, predictable tasks, documents and interviews with industry veterans show,” the Post reported. “Brookdale, based in Brentwood, Tenn., pioneered staffing systems based on algorithmic formulas, an approach experts say is ill-suited to caring for the elderly, who are growing more frail and are more likely to suffer from chronic conditions than previous generations.”
Humana (NYSE: HUM) is a leading provider of home healthcare aides, having spent billions in recent years on acquisitions. It now offers home care aides through its CenterWell Home Health division. Humana’s network includes 350 locations in 38 states; the division reportedly includes around 43,000 caregivers — but Humana does not seem to include those caregivers in its employee count. CenterWell leads the highly fragmented home health industry with a reported 6% share of the market as of Septmeber 2022.