The Impact of Wages on Care Home Quality in England.

Abstract

In many countries, a large proportion of long-term care staff are paid at, or near, minimum wage, leading to concerns of negative effects on care outcomes. This study analyzed the effect of staff wages on care home quality ratings in England. A national staffing database of long-term care providers was matched with local-area information on needs and supply to construct a 3-year panel (2016-2018) of English care home observations. Using multiple imputation methods to address missing data provided a data set of 12,055 observations of 5,556 care facilities (both residential and nursing homes). We analyzed the effect of the facility-level average hourly wage of care staff on national regulator quality ratings. A measure of the impact of exogenous changes in the national minimum wage on care facilities was used as an instrument for wage. We find that wages positively affect care home quality ratings. Other things equal, a 10% increase in the average hourly wage of direct care workers would lead to a 7.1% increase in the likelihood that a care home will have a high-quality rating. The wage effect on quality was significant when controlling for staff skill mix, measured as the share of registered nurses in nursing home staff. This study provides important evidence of the positive impact that staff pay can have on the quality of long-term care. Our finding has important implications for appropriate levels of pay and the funding of long-term care.