Role of Nursing & Residential Care Facilities in the Pennsylvania Economy

Abstract

The Penn State Workforce Education and Development (WED) Initiative conducted an analysis of the economic impact of nursing and residential care facilities in Pennsylvania in the last part of a three-part series of analyses of the economic impact of jobs in the health care sector. The WED Initiative previously released findings from studies of the economic impact of ambulatory health care services in Pennsylvania and of hospitals in the Commonwealth.Nursing and residential care facilities deliver the bulk of long-term health care in the Commonwealth. Long-term health care is delivered institutionally in hospitals, nursing homes, assisted living facilities, personal care homes, continuing care retirement communities, and community-based settings (e.g., as adult day care) as well as in home settings. The Pennsylvania Department of Aging defines long-term care to include a wide range of assistance, services, or devices provided over an extended period of time that are designed to meet medical, personal, and social needs in a variety of settings or locations to enable a person to live as independently as possible.Nursing and residential care facilities employed 193,686 workers in 4,273 Pennsylvania facilities during 2008. A little over one-half of these workers were employed in eight of Pennsylvania's 67 counties (in order: Allegheny; Philadelphia; Montgomery; Delaware; Lancaster; Bucks; Chester; and Lehigh).Employment in Pennsylvania nursing and residential care facilities grew by 5,227 workers between 2004 and 2008. Average annual earnings per worker in the industry were $33,924 in 2008, although earnings differed significantly by occupation. For instance, on average, 817 general and operations managers employed in nursing and residential care facilities earned $37.29 per hour worked, while 2,466 medical and health service managers earned $32.32 per hour, 9,222 registered nurses earned $28.69 per hour, and 42,123 nursing aides, orderlies, and attendants (21% of all workers in nursing and residential care facilities in Pennsylvania) earned $11.92 per hour.In contrast, 61,552 workers, representing 31% of total employment in Pennsylvania nursing and residential care facilities, earned $9.86 per hour or less in 2008, which is the poverty wage for households composed of two adults and two children in Pennsylvania (cf., Poverty Thresholds for 2007 by Size of Family and Number of Children). Nearly half of these workers, 28,364 workers, were home health aides.Less than 1% of workers in nursing and residential care facilities in four occupations-religious workers, dining room and cafeteria attendants, waiters and waitresses, and child care workers-earned less than $8.00 per hour, which is considered the living wage for a one-adult household in Pennsylvania. The living wage is defined as the hourly wage rate that an individual must earn to support a family, if the individual is the sole provider and is a full-time worker (2080 hours per year). The living wage varies by the number of dependents an individual supports as well as by the region in which the individual resides.The supply of workers to nursing and residential care facilities in Pennsylvania is uncertain due to issues surrounding taxes on health care providers, intergovernmental transfer funding, and future directions of Medicaid programs. Recruiting, training, and retaining workers for nursing and residential care facilities is, and is likely to remain, challenging. Estimates of annual turnover rates of these workers across the U.S. range from 45% to 105%. Vacancies are difficult to fill. The National Center attributes high turnover and vacancy rates to: high physical and emotional demands of jobs; low and uncompetitive wages compared with other occupations; and poor job design and supervision.A 2001 summary of 901 telephone interviews with administrators of nursing and residential care facilities by the Pennsylvania Intra-Governmental Council on Long-Term Care revealed that high vacancy rates and labor shortages were faced by Pennsylvania nursing and residential care facilities. As a consequence, use of overtime and independent contractors increased and service was cut back. The 2001 report also highlighted demographic threats to maintaining the workforce in nursing and residential care facilities. Females between 25 and 45 years of age, who typically fill the ranks of the nursing and residential care facilities workforce, are decreasing as a proportion of labor force participants, a trend that will continue.Nursing and residential care facilities are classified in North American Industrial Classification System code 623. According to the U.S. Bureau of the Census, establishments in this industry provide residential care combined with either nursing, supervisory, or other types of care as required by the residents. In this subsector, the facilities are a significant part of the production process and the care provided is a mix of health and social services with the health services being largely some level of nursing services. During 2007, 3.0 million U.S. workers were employed in 75,606 nursing and residential care facilities with a payroll of $74.3 billion.A related study released by the WED Initiative in September 2007 examined the labor market for long-term care workers in Bucks and Montgomery counties in Pennsylvania.