Minimum wage order sends veterans packing from nursing homes

[LTC8K6]

I suppose this is unintended consequences, but surely it could have been predicted.

http://www.ktbs.com/story/25467149/minimum-wage-policy-sends-veterans-packing-from-nursing-homes

SHREVEPORT, La -
Some military veterans are being forced to leave their nursing home. It's an unintended consequence of President Obama's executive order in February to raise the minimum wage for new federal contract workers from $7.25 to $10.10 an hour.

Sandy Franks, public affairs officer at Shreveport's Overton Brooks V. A. Medical Center, explains that nursing homes that have contracts for subsidized care from the Veterans Administration become federal contractors. If they refuse to raise their wages, their contracts will not be renewed.

Shreveport Manor is owned by Gamble Guest Care. Their Chief Operating Officer says if they raise wages for workers there, they have to do that at all eight of their facilities.

In a statement, Gamble COO Matt Machen said, in part, "The additional labor expenses are simply unaffordable. As such, many long term care providers have indicated that they will no longer seek or renew V.A. contracts."

Franks at the V.A. agrees that this has the potential to be a national problem as more V.A. contracts with nursing homes expire.

 

[Throckmorton]

Yeah, f*ck those caregivers, they're worthless and don't deserve such an exhorbitant wage as $10.10! F*cking burger flippers! Get a jerb! Learn some skills!

 

[Subyman]

Yeah, f*ck those caregivers, they're worthless and don't deserve such an exhorbitant wage as $10.10! F*cking burger flippers! Get a jerb! Learn some skills!

Its not about what's deserved, its about what the business can pay while maintaining a profit. 24 hour care is unbelievably expensive. Even a few cents can be thousands in profits vanishing. If the facility is no longer profitable due to the wage increases (nearly a 30% increase) then obviously the owners will shut down the facility. Its not a charity. FWIW, I've worked with a budget in 24 hour care facilities and the employee expense is 70% of the operating cost.

There may have been a situation where Obama's regulation increased the pay to a mandatory $10.10, but the VA may not have increased the compensation to match the regs. In that case, the business would be bleeding money.

 

[theeedude]

WTF, people taking care of our veterans aren't even getting paid $10/hr?

 

[JEDIYoda]

Yeah, f*ck those caregivers, they're worthless and don't deserve such an exhorbitant wage as $10.10! F*cking burger flippers! Get a jerb! Learn some skills!

You have no idea about caregivers...it is obvious you have never had to deal with a caregiver or have a loved one depend on a caregiver....I pity you and your insensitivity!!

 

[Subyman]

WTF, people taking care of our veterans aren't even getting paid $10/hr?

Nope. Check the requirements. Most are called DSPs. You don't even need a high school education. You take a course, learn CPR, and watch them to make sure they don't fall and such. Some cook meals. It's not a super hard job. They get paid to sleep as well.

They are usually looked after by a manager that has a college education and nursing is done by LPN/RNs.

 

[LTC8K6]

The VA is ending the contract...it's contract work.

The smaller businesses simply can't absorb the costs.

The larger ones will likely be able to raise wages and prices.

If the smaller business did raise wages, they'd probably have to lose employees and kick out patients anyway.

 

[LTC8K6]

If you raise the bottom rung to $10.10, then you have to raise the next rung, too. Etc.

An experienced and knowledgable employee is not happy with the same wage as the guy who just walked in the door.

 

[Throckmorton]

You have no idea about caregivers...it is obvious you have never had to deal with a caregiver or have a loved one depend on a caregiver....I pity you and your insensitivity!!

Is your sarcasm meter broken?

My mom is a caregiver and she makes $8/hr

 

[Subyman]

The VA is ending the contract...it's contract work.

The smaller businesses simply can't absorb the costs.

The larger ones will likely be able to raise wages and prices.

If the smaller business did raise wages, they'd probably have to lose employees and kick out patients anyway.

I think the major problem here is that they can't raise costs, because they are under federal contract. The reimbursement rates are fixed. My suspicion is that Obama raised the wages, but the federal reimbursement is lower than the new wage. Therefore the company has to pay out of pocket to fill the deficit, which makes the business unprofitable. With the VA already struggling, this could be an unfixable situation.

 

[LTC8K6]

I think the major problem here is that they can't raise costs, because they are under federal contract. The reimbursement rates are fixed. My suspicion is that Obama raised the wages, but the federal reimbursement is lower than the new wage. Therefore the company has to pay out of pocket to fill the deficit, which makes the business unprofitable. With the VA already struggling, this could be an unfixable situation.

It is at contract renewal time. I would have thought the new contracts would reflect higher wages, but you could well be correct.

 

[Fanatical Meat]

I'm not an expert on veterans care but I still call shenanigans. 24 hour care is stupid expensive and someone wants me to believe that if they're required to pay more than the current minimum wage they can't afford to be in business? Again sounds like a poor business plan to me.

 

[LTC8K6]

I'm not an expert on veterans care but I still call shenanigans. 24 hour care is stupid expensive and someone wants me to believe that if they're required to pay more than the current minimum wage they can't afford to be in business? Again sounds like a poor business plan to me.

It's contract work. Do the new contracts reflect the higher wages, or are the businesses supposed to make up the difference?

 

[Subyman]

I'm not an expert on veterans care but I still call shenanigans. 24 hour care is stupid expensive and someone wants me to believe that if they're required to pay more than the current minimum wage they can't afford to be in business? Again sounds like a poor business plan to me.

I've seen budgets for 24 hour care facilities. The minimum wage help is around 65-70% of the expenses. Raising the wage by 40% can easily kill the business. The business model was completely sound until the mandatory 40% wage hike. We aren't talking about a few cents per hour here.

Think of it this way, paying for one person to stay at a 24 care facility is:

24*365*$7.25 = $64,000
24*365*$88,000

That's $24,000 per man-year. If the facility needs ~10 people to run it at any one time, then that's a quarter million straight out of the profit margin. That can easily kill a business.

 

[mikeymikec]

IMO, care should never be run on a for-profit basis.

The next problem after that is personal profit, financial or otherwise; and the solution for that is problematic - trying to find people who actually care about the service users AND are good at managing people/resources.

I think the major problem here is that they can't raise costs, because they are under federal contract. The reimbursement rates are fixed. My suspicion is that Obama raised the wages, but the federal reimbursement is lower than the new wage. Therefore the company has to pay out of pocket to fill the deficit, which makes the business unprofitable. With the VA already struggling, this could be an unfixable situation.

Sounds like a standard political ruse.

 

[mrjminer]

I don't see how they couldn't have predicted shit like this to happen. The only conclusion I can draw is that they are trying to bank on people hating business more than people hating the government as a way to relieve themselves of the cost of support. Piece of shit politicians, per usual. Luckily, I don't think a lot of people outside of whacko politician land are going to blame the businesses for the government trying to buttfuck them into absorbing the cost of a federal benefit for veterans -- even if the business could actually absorb the cost.

Their reimbursements should cover any costs associated with the authorized services permitted for taking care of the veterans, and they should be permitted to increases in their pricing necessary to sustain service

 

[Subyman]

Sounds like a standard political ruse.

Not really. I'm neither for nor against Obama. There are certainly unintended consequences of raising wages, such as reimbursement not matching the new minimum as I stated.

 

[mikeymikec]

Not really. I'm neither for nor against Obama. There are certainly unintended consequences of raising wages, such as reimbursement not matching the new minimum as I stated.

I'm not for or against Obama either (not even from the US), but it is a fairly basic point of business that if the cost of doing business goes up, the amount of money coming in needs to cover it. This is the most basic example of that. If an employer ponders giving employees a pay rise, the employer's first concern is going to be whether the amount of money coming in is going to cover it over a given time metric appropriate for the way the business works. Unless the employer is very, very stupid.

I'll give Obama a bit of leeway though as (AFAIK, my understanding of American politics/structure, etc) he's not the immediate and direct employer of those he's giving the pay rise to in this (but he is indirectly, this VA model sounds similar to the UK's NHS), the actual employer(s) of the people being given the pay rise should have approached the government when they first heard of this idea being kicked around the halls of power. If they didn't, they're very very stupid.

If my comparison between the VA and the NHS is reasonably correct (though the profit / not-for-profit thing muddies the waters a bit but not a great deal in thsi respect I think), I would expect the UK government to get politically toasted if they mandated a significant pay rise for care assistants (which the employees sound like in UK terms), but forgot to communicate with the heads of the NHS first about it.

 

[shortylickens]

WTF, people taking care of our veterans aren't even getting paid $10/hr?

Which goes a long way to explaining the quality, doesnt it?

 

[boomerang]

I suppose this is unintended consequences, but surely it could have been predicted.

Not predicted by the current regime. Actions are good, the real life consequences are never given any thought. It doesn't matter, the initiative is a resounding success because the intentions were good! Those that are lucky enough to retain their jobs will be paid more. The social safety net will take care of those that find themselves unemployed.

How the VA actually deals with veterans is all over the news lately. I'm surprised there has not been a thread about it. The are calls for Eric Shinseki, the top dog to resign.

 

[mikeymikec]

Not predicted by the current regime. Actions are good, the real life consequences are never given any thought.

Hyperbole much

 

[Hayabusa Rider]

Hyperbole much

A little, not much. Pass a bill requiring something then it becomes someone elses problem. Requiring others to spend money but not providing the necessary funds? Mission accomplished!

FYI I'm for an increase in wages, but Obama knows everyone elses money doesn't grow on trees. That the Federal governments special gift. There ought to be a requirement that any bill be paid for. That may mean reworking rules and government bureaucracy to meet some sane practical standard and there's not a whole lot of that.

 

[mikeymikec]

A little, not much.

I would suggest living in a few countries that are really going down the drain before suggesting that America's leadership is 100% incompetent.

Zimbabwe, for example.

Right now I'm smirking because I would regard myself as pretty cynical regarding the abilities and motivations of governments such as the UK's or US's.

 

[OutHouse]

If you raise the bottom rung to $10.10, then you have to raise the next rung, too. Etc.

to expand on this. the DOD mim wage increase also includes restaurant workers on military post. if wages are increased the price of the meal also increases. there is a problem with that, the contracts these food companies work under says that on post meals can not have a higher price than meals offered off base. Contract violations means places close, thousands of people will loose their jobs and have no income at all.

 

[MongGrel]

My Grandmother is in assisted living and uses my Grandfathers VOF benefits for it mostly, still waiting to see how things are affected as my wife says there are some changes upgoming even in the management of the place.

Finally had that all sorted out and she's been happy for years, always a wrench getting thrown in the gears.