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A new study commissioned by the Michigan Direct Care Worker Wage
Coalition demonstrates—for the first time—the true return on
Michigan’s investment in the Direct Care Workers that specialize in
behavioral health issues.
For an additional $1 per hour investment, ROI totals $52.6 million. For a
$5 increase, that number grows to $261 million. Cost savings are
generated by increased tax revenues, lower turnover costs, and a
reduction in public assistance.
“These numbers demonstrate, for the first time, the real economic
benefits that can return to our state when we solve our direct care
challenges in the right way,” said Sherri Boyd, executive director and
CEO for The Arc—Michigan. “When it comes to addressing the needs of
our most vulnerable state residents and the people who serve them, we
have a lot of work to do.”
According to the study, which was authored by Great Lakes Economic
Consulting, a $1 wage increase would generate an estimated $4.8
million in additional state income tax revenue. A $5 increase would
increase revenues by $24 million.
Currently, DCW starting wages are $11.75 per hour. Many fast-food and
retail chains are offering considerably higher than this amount to their
starting workers, which has led to high levels of turnover among DCWs.
“For every dollar Michigan invests in its DCWs, we can reduce our
turnover rates by 2.87 percentage points,” said Todd Culver, CEO of
Incompass Michigan. “This reduction can save $5 million per year for our
state’s behavioral health care system, and—even more
important—ensure uninterrupted care for the people who rely on
quality care to lead their daily lives.”
Turnover has increased by three percentage points over last year,
according to the survey released today by Incompass Michigan and the
Michigan Assisted Living Association.
“Direct Care Worker salaries in Michigan’s mental health system are directly tied to Medicaid
funding, which has not kept pace with the needs of our state—not by a mile,” said Robert Stein,
general counsel for the Michigan Assisted Living Association. “Many of these workers do not
receive any medical or other benefits, and the work itself is extremely challenging. Currently,
many DCW organizations are having to turn people away because they simply lack the staff
necessary to deliver services.”
Raising wages for these low-wage DCWs also would reduce net spending on public assistance.
The report estimates that 18,250 of Michigan DCWs receive public assistance. A $1 an hour
wage increase would reduce public assistance by $3.2 million and a $5 increase would save $16
million.
The full survey and one-page summary are attached to this release.