When A Wage Gap Is Not A Skills Gap

(An initiative launched this month by the California Association of Health Facilities (CAHF), the employer group for the state’s 1100 skilled nursing facilities, recognizes that sometimes the most effective way to improve wages of low wage workers is the direct one: raise wages.)

In Gilbert and Sullivan’s Pirates of Penzance, the Major General exhorts the squad of policemen to combat the pirates. The policemen announce their intention to do so, singing “Away, away, We go, We go”. But they then proceed to continually march around in a circle. Exasperated, the Major General declares, “But you don’t go!”

Over the past two decades, Democratic legislators in California have talked about income inequality and loudly announced their intention to reduce it. They have declared there to be a skills gap in the state, and have poured large sums of money into human capital approaches. They have sought the answer in increasing college attendance (even though more than forty percent of California’s recent college graduates are in jobs that don’t require a college degree), establishing a new online community college for low wage workers (which graduated fewer than 20 workers in its first few years) and investing in a series of skills certifications, micro-certifications and badges, whose value for low wage workers remains unproven.

For many parts of California’s low wage workforces, there is no education or skills shortage. There is a wage shortage. And nowhere is this more true than the certified nurse assistant (CNA) workers, the men and mainly women who provide the direct care services in the state’s skilled nursing facilities for the elderly.

Earlier this month, the employer association of nursing facilities, the California Association of Health Facilities (CAHF) launched an initiative “Drive to 25” to increase CNA wage levels to $21 an hour in 2022 and then gradually to $25 an hour by 2025. The initiative sheds light on a low wage workforce that is not lacking in skills, but whose pay level is undercut by a number of labor market dynamics.

Today, there are approximately 1100 skilled nursing facilities in California, employing 139,000 workers. The greatest occupational share of this workforce is CNAs, who total roughly 58,000 workers. Pay for CNAs differs at locations throughout the state, with CNAs in the non-union facilities often starting at the local minimum wage. CAHF estimates the average CNA wage statewide at $17.29 an hour. It also estimates turnover in CNA positions at more than 52% annually.

“Though often viewed as a ‘low skill’ job, the CNA is far from low skill, drawing on a range of technical and social relations skills,” explains DeAnn Walters, a former Fresno-area nursing home administrator. “A CNA is certified through training and both a written and hands-on clinical skills test. The CNA must know primary body systems not only in a healthy person, but in one with multiple comorbidities, injuries or physical and cognitive challenges. Along with this technical knowledge, the CNA is expected to provide a high level of customer service and learn the individual expectations and preferences of the residents in a skilled nursing facility. Further, the CNA must document all services provided, communicate even minute changes to residents, and ensure that they are following hundreds of regulations, guidance and laws.”

And while the CNA is a job that most Americans praise for its value, few are willing to do it. Deborah Pacyna, who has worked with nursing homes for years in public affairs, notes that “People forget that when most Americans were safely sitting at home, collecting unemployment or telecommuting, certified nurse assistants were getting up and going to work. And not just 9 to 5. Graveyard shifts, double shifts, constant overtime, no vacation. There was no one else to feed, dress, bathe and change nursing home residents. As they provided intimate personal care, CNAs were exposed to COVID in the workplace. And they did all of this for minimum wage, or slightly above. These are the overlooked, overworked and underpaid members of the health care profession.”

The low pay of CNAs has been an issue for employers and workers for several decades. During this time, CAHF and California’s state job training system have tried various programs to increase wages of CNAs by training and certifications. These programs have barely moved the needle on wages, as the pay level reflects economic forces beyond skills: especially the high level of competition in the nursing home industry and price sensitivity, and the outsized role that government plays in setting the labor rates in nursing homes.

More than 80 percent of the funding for nursing homes in California comes from the federal and state governments (around 66 percent from Medi-Cal and 15 percent Medicare). The government payments structure for nursing homes is a byzantine one in which reimbursement rates are based on expenditures in previous years and only very indirectly reward individual facilities for raising CNA pay levels. There were hopes by longtime CNA advocates like Steven Dawson that the tight labor market in the pre-pandemic years of 2017 and 2018 would significantly drive up wages, but this never happened. Over the past year, the inability of nursing homes to retain CNAs has driven up wages by two or three dollars per hour in certain areas of the state, while leaving these wages well below other occupations.

“Drive to 25” will raise wages directly through mandating certain Medi-Cal reimbursement levels. If enacted by the legislature and signed by Governor Newsom, it will set CNA reimbursement rates at $20 an hour by September 2022, and gradually up to $25 an hour by January 2025. At the initiative’s launch, Craig Cornett, the CEO of CAHF, emphasized, “This reform is focused 100 percent on strengthening and developing the nursing home caregiver workforce and will not enrich facility operators.”

The initiative is a jobs-based approach (not a transfer payments-based approach), and puts money directly into the pockets of CNAs. It does not create a new state bureaucracy, or new non-profit groups, or other administrative structures that siphon off funds to others distant from the services. And though the initiative does not rely on skills certifications, CAHF has a companion strategy to reward skills upgrades.

Claire Enright, the CAHF training director, has partnered with employers this past year to develop a skills and experience reward program. In this program, advanced CNA job categories are established to reward CNAs who stay in the field (Senior CNA), and to reward the CNA who gains expertise in specialty fields (restorative care, dementia care). The funding for these advanced skill and experience payments, CAHF hopes to come both from Medi-Cal reimbursements and from employers.

The CNA position, like other lower wage positions, is often seen by policymakers as a job for workers to escape. The prevalent rhetoric today emphasizes “career ladders” and moving into jobs of “higher skills”. But, as Enright notes, it’s difficult to think of a more important job than CNA or one that truly utilizes more skills. The valued CNA is a craftsperson, performing tasks with unusual quality and dedication. There are a good number of CNAs out there today who are craft-persons. “They should be encouraged to stay in the field, and rewarded for doing so.”

Often in employment policy, government approaches overthink and overcomplicate, and march around in circles like Gilbert & Sullivan’s policemen. CAHF’s initiative recognizes that sometimes the most effective way to improve wages of low wage workers is the direct one: raise wages.