Understanding what the competition is paying caregivers will help you make the most informed decisions to stay competitive in hiring the best talent.
In any discussion on caregiver turnover, there’s an elephant in the room: the fact that one of the most effective long-term strategies to increase retention and hire better talent is simply paying caregivers more. While it’s not in the cards for most agencies to simply start paying caregivers significantly more without charging clients more, it’s important to track what competing agencies and other sources of competition are offering and frequently evaluate whether it’s time to increase your wages to stay competitive.
What are the advantages of paying caregivers more?
Besides making your caregiver recruitment efforts more competitive, paying more can save you money by reducing turnover costs. The average caregiver costs a hefty $2,600 to replace. Hidden and indirect costs add significantly to the cost of constantly hiring new caregivers. Long term, raising caregiver pay may be the one of the best things you can do to stay financially even.
This data from the 2020 Home Care Benchmarking Study shows the effects of increasing wage on turnover:
Are you paying your caregivers competitively?
While it can be difficult to determine exactly what your local competitors are paying, you can get a strong idea of the ballpark you should be in by using benchmarking data. Here’s some more very useful data from the 2020 study showing median hourly pay ranges:
Obviously, geographic location makes a significant difference in what kind of pay can be expected. Here’s the median hourly wages for caregivers classified as companions/homemakers by region:
- Northeast: $12.00
- Great Lakes: $11.25
- South: $10.00
- Central: $11.50
- Pacific: $14.00
It’s also interesting to note that the turnover rates in these regions correspond strongly to how much they pay caregivers. For more data—including region-specific data for other types of caregivers, regional turnover rates, and information on 24-hour shifts and overtime pay, purchase a copy of the 2020 Home Care Benchmarking Study.
Let’s shift gears and talk about caregiver benefits.
Benefits that Home Care Agencies are Offering to Caregivers
Benefits can be a useful way to increase the competitiveness of your compensation package without adding too much cost. While smaller agencies have less leeway than larger agencies to offer heavy-hitting benefits like insurance plans, every agency should carefully consider options and evaluate which benefits they’re able to offer. For instance, a small agency that is well-connected in their community might be able to offer a variety of discounts and perks at local businesses for relatively little cost. In addition, home care agencies should strongly consider offering benefits like sick days and paid vacation time.
Another option for employee incentives is to offer a referral bonus program. Any referrals that lead to hires will be extra income in your employee’s pocket. Caregivers always know other caregivers. This method is a great recruiting tool and gives current employees something to strive for.
Here’s a list of some of the benefits being offered by different agencies throughout the country. For a more complete list, see 47 Ideas For Employee Benefits For Caregivers.
Investing in Your Caregivers
A good retention strategy relies on a variety of factors including strong training programs, frequent recognition, and good communication among others. One of the most important ingredients in this mix is competitive compensation. While wages and benefits add significant cost (caregiver wages account for over half of the average agency’s expenses), it’s important to recognize the value of investing in your caregivers. Beyond reducing turnover costs, providing competitive compensation will help you attract better caregivers, raise morale, and result in better care for your clients. Evaluate what your agency can afford to offer, but remember that it’s also an investment.
It’s a domino effect. There is a chain reaction when you increase wages; caregivers become happier and are more on top of their work, leading to satisfied clients who will recommend and continue using your services.
What have you done to stay competitive? Let us know in the comments!
This information is very helpful. Thank you.
How can agency’s compete when reimbursement rates from state agencies are minimal. Offering benefits is expensive. How can we retain employees when we are limited by the states Ahcccs programs?
We have recently started a new caregiver agency and this info is really helpful. We need to keep retention in the back of our minds. Tips on how to retain caregivers is very useful. Thanks for giving out some basic metrics as well so we have something to compare our rates from. Thanks a ton!
My problem with this is our agency puts an ad on the indeed employment website to hire an pca based on experiences between 12est.up to 16.85. Saying base your pay on experience. I’ve had human services experience since I left high school and I had the résumé to prove this and when I started working for this agency they started me at the very least amount without any experience that is not fair to their people they’ve hired and new people they’re hiring will be making more money than me and I’ve been there five years .This needs to be rectified. Thanks for being able to leave a comment.
Hi Kathy, thank you for reading this article and commenting. I am sorry that you had a poor experience with your current location. I hope that they make a change in their compensation structure, and pay you what you deserve. Thank you for the work that you do!
Paid overtime IS NOT a benefit agencies can offer their caregivers! It’s a legal requirement since 2014.
Hi A, thank you for taking the time to read this article and to address your concerns. I agree overtime is not a benefit. I hope that through further education and training that other home care providers will catch onto this necessity.
The pay numbers for the Northeast are way off. I would suggest we should start with the goal of a living wage and try to get to a thriving wage. The numbers for each area of the country will be different but why are we always trying to cheap out when paying our care staff? Let the bill rates reflect a thriving wage and go from there.
Hi Mr. Knapp,
Thank you for your insights in regard to caregiver wages. These numbers are aggregates of various states across the Northeast, ranging from Virginia and up to Maine, and everything in the east of West Virginia. This figure may sound off for some areas. I agree caregivers deserve wages that they can thrive on. The industry needs to find ways to accommodate that need, and I believe that the nation is seeing this need and addressing it.
What happens when you are hired to provide care for one person and technically end up providing care services for two? You get offered one hourly pay and end up getting a lower hourly pay? You know that the couple you work for could definitely afford to pay you more? They compliment you constantly on your job performance has stated several times that you deserve more and get nothing? This causes great confusion. This is why it’s hard to keep good care givers like myself. A lot of us go above and beyond and do way more in our job descriptions because of the hearts we have. This is a major concern for me because a lot of actually enjoy what we do. Another thing that should fully addressed is we are caregivers. We provide companionship and safety and whatever the care plan states. WE ARE NOT MAIDS!