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Should Government Subsidize Caregiver Wages? Some Evidence on Worker Turnover and the Cost of Long-Term Care in Group Homes for Persons with Developmental Disabilities

Journal Article
January 1, 2011

This study examines the implications of a hypothetical public policy that would subsidize direct care workers’ wages. The report found that a small wage subsidy would have a modest effect on reducing worker turnover, which could lower state-reimbursed training costs. The authors recommend a wage pass-through policy to help reduce turnover among direct care workers. Data were gathered from 200 Medicaid-funded Community Integrated Living Arrangements in Illinois.

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Key Takeaways

Higher turnover increased state-reimbursed training expenditures, workers in training, and compensation costs.
Providers are unlikely to reduce turnover since its associated costs are either tolerably small or borne by others.
It would be beneficial for the government to reduce turnover through wage subsidization in this sector.

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