A National Strategy to Grow Home Care Cooperatives?

Participants at the USDA Interagency Working Group Meeting See Role for Government Leadership

by Karen Kahn

In early May, the U.S. Department of Agriculture (USDA) Interagency Working Group on Cooperative Development gathered for a second annual meeting with representatives of cooperative development organizations and worker co-ops. This year’s meeting focused on training and partnership opportunities with federal agencies that could help support the sector. The Interagency Working Group was first authorized in the 2014 Farm Bill, to promote a “whole-of-government approach to using cooperatives to solve public policy challenges,” according to National Cooperative Business Association (NCBA CLUSA).

The growing need for quality home care is indeed a public policy challenge. According to the ICA Group, in light of high annual turnover rates (67 percent), by 2024 the industry will need to recruit 13 million new caregivers to meet growing demand. That spike in demand comes from the aging baby boomers: by 2021, 10,000 boomers will turn 75 every day.

In light of high annual turnover rates, by 2024, the home care industry will need to recruit 13 million new caregivers to meet growing demand.

Already, home care agencies, particularly in rural areas, report severe shortages of workers. In a low unemployment economy, few workers are willing to accept the low wages and difficult working conditions that come with these jobs. Though high demand in most industries would force wages to rise, in home care, public reimbursements are often too low for agencies to pay a living wage.

In the face of these challenges, the federal agencies attending the meeting-the U.S. Department of Labor, U.S. Department of Health and Human Services, and the U.S. Department of Housing and Urban Development-provided information on how home care cooperatives could take advantage of federal job training and apprenticeship funds.

The cooperative developers and co-ops in attendance, by contrast, emphasized the need for a national strategy, rather than a piecemeal approach.

“We know our population is aging in rural communities. We want to keep these people in their homes. We know this represents job creation and rural economic activity. As I sit here and listen to you discuss all these little pockets [of funding], I’m struck by, what if USDA said, ‘Let’s implement a national strategy and find resources. It’s going to be one-stop shop for training, technical assistance and development,’” said Judy Ziewacz, a board member of the Cooperative Development Foundation.

Ziewacz pointed out that historically co-ops have solved a variety of rural needs-for example, rural electrical co-ops brought electric power to underserved rural communities. The USDA drove that solution.

Kevin Edberg, executive director of Cooperative Development Services, which operates in the upper Midwest, suggested that regional strategies might also be effective. He pointed to Washington State, where there is the greatest concentration of home care cooperatives and wondered if there was a way to replicate that work nationally. The Northwest Cooperative Development Center has succeeded in launching three home care cooperatives in recent years; another three are in the development phase.

The Northwest Cooperative Development Center has succeeded in launching three home care cooperatives in recent years; another three are in the development phase.

Dave Hammer of ICA Group pointed out that there isn’t much time to solve the home care crisis. “We’re looking at the biggest demographic shift in our lifetimes, and if we don’t start thinking about a solution, we’re really setting ourselves up [to fail],” he said.

But with average reimbursement for Medicaid-funded home care at $16 to $17 per hour, it is challenging to build a viable business that pays a living wage. Worker cooperatives may be able to navigate these constraints more easily than firms whose ownership needs to withdraw profits after paying for labor: when employees are also the owners, as is the case in a worker cooperative, profits and wages are split between fewer stakeholders.

The ICA Group has helped to grow Cooperative Care in Wautoma, WI. But workers continue to earn between $9 and $12 per hour because of the state’s low reimbursement rate. Nonetheless, with the ICA Group’s support in building a strong management structure and a culture that respects and values its caregivers, the business has grown to 40 workers serving six counties. Now, ICA is exploring the role of platforms and other networked business models that can help small home health care cooperatives access economies of scale, further increasing the viability of this model.

As of 2018, Cooperative Care was one of 10 home care cooperatives across the country. Cooperative Home Care Associates, in the South Bronx, is the nation’s largest worker cooperative, with over 2000 workers. Though small in number, these businesses have had a positive effect on the industry, according to Margaret Bau, a cooperative development specialist at USDA Rural Development. Cooperatives are focused on improving the quality of jobs for workers, and they have reduced annual turnover rates to well below the industry average of 60 percent.

The challenges to growing the sector, however, are steep. In 2017, the ICA Group, along with the Cooperative Development Foundation, published a strategy document focused on the home care sector. Deeply committed to a cooperative strategy, the authors nonetheless note, “Persistent public underinvestment in the home care sector has led to a caregiver crisis, and in virtually every market there are enormous barriers to success and scale.” But taking cooperatives to scale, they argued, could also build a stronger voice for home care workers and create the political will necessary to increase public investment.

To begin to strengthen and grow the sector, the two organizations have launched the Homecare Cooperative Initiative, to provide business resources, best practices, and thought leadership to the field. It’s an important step that would benefit from a more robust USDA initiative to use home care cooperatives to address the caregiving crisis, particularly in rural areas. As Ziewacz said to the group gathered at the interagency working group meeting, “This is an urgent need-keeping our elders in the community not only allows them to age at home, but also keeps their assets in the community and preserves a lot of rural economic activity.”

The author thanks Elizabeth Lechleitner of NCBA CLUSA for her original blog post covering the Interagency Working Group meeting.

Karen Kahn is editor of Employee Ownership News, a publication of Fifty by Fifty.

Fifty by Fifty is working to transform the U.S. economy by growing employee ownership. To receive our monthly newsletter, visit our website at www.fiftybyfifty.org.

Originally published at https://www.fiftybyfifty.org on May 29, 2019.



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