Written by Matthew A. Piacentini Friday, 23 July 2010 00:00
At a legislative hearing Monday, two sides passionately presented arguments for and against $1 pay raises that are scheduled for Aug. 1 for home health care workers employed by the 35 agencies that have contracts with Nassau County through the Department of Social Services. The money paying the contracts actually comes from New York State funds, but the health care agencies said many difficulties also coming from the state are making it hard for them to function. The August pay increase would therefore cause layoffs and a shortage of home health care in the county, they argued.
Presiding Officer Peter Schmitt explained that the bill up for discussion would put a moratorium on the county’s Living Wage Law, which has dictated fair pay for companies that do business with the county since 2007. He explained that the agencies had come before the county legislature as what they called “a last resort,” frustrated with New York State, which certainly will not address any major issues before Aug. 1.
“It is despicable how people are being treated by the government in Albany,” he said.
The proposal on the table would allow for a raise on Aug. 1 that was determined around the consumer price index or CPI, which would be about 18 cents as opposed to the mandated $1. It would create a six-month moratorium on the Living Wage increase, giving the health care industry time to address the major issues at the state and federal level that they claim are making it hard or impossible to function profitably.
The current Living Wage for Nassau contracts is $13.10 an hour or $11.50 with health benefits. On Aug. 1, this rate will bump up to $14.10 or $12.50 with health benefits. Representatives testifying on behalf of the agencies said that the dollar might not sound like a lot – indeed Democrat legislators and union leaders asserted that it is not – but, in fact, the increase would translate into a major problem.
“One dollar seems inconsequential,” said Christine Johnston, executive vice president of the New York State Association of Health Care Providers, a trade organization advocating for providers. She said that while Nassau is demanding an increase, the state has been cutting payments and increasing taxes and mandated expenses, creating a losing game that puts providers in an impossible position.
Johnston said that other areas with living wage mandates find sources of revenue to supplement where the state is lacking so that the salaries are more manageable for employers.
Bob Callaghan, of the same organization, testified that the 35 county approved agencies serve about 3,000 families and employ about 5,000 people. Regarding these 5,000 workers, he warned, “Jobs are about to disappear in Nassau County unless the right thing is done.” He said that when the county began their wage law in 2007, it created “fiscal ramifications” for something “it had no responsibility to fund” and said he met with the Democrat-led legislature under Diane Yatauro to plead the case that mandated rate increases from the county combined with lower payments from the state equals jobs lost.
“On the line are jobs at a time of record unemployment,” he said. “The Nassau County Living Wage, which is the highest in the state…has brought home health care agencies to the breaking point.”
Where this group came up short at Monday’s hearing - and perhaps in these past protests of the wage law – related to the fact that they provided no solid numbers for the county. Legislators on both sides of the aisle said that they would need concrete details on how many jobs would be jeopardized and how exactly, financially speaking, the increase would push companies over the edge.
“If you’re making money on a worker, how can you say they have to be laid off?” Democratic Legislator David Dennenberg questioned. “If they’re out working, you’re making money.”
He went on to calculate that these companies enjoyed a roughly 25 to 30 percent profit margin. “You can afford a dollar in all that,” he said.
Two accountants representing the employers countered his estimate. Gary Carpenter, a CPA with the accounting firm Holtz Rubenstein Reminick LLP, testified that health care providers doing business in Nassau County have an actual profit margin of 2 to 3 percent once administrative costs, taxes and other issues are taken into account.
“This is a cost-based system,” said Christopher Doulos, another accountant representing the agencies. “There is no way [New York State] would let you make that kind of margin,” he told Dennenberg.
Republican Legislator Denise Ford questioned then determined that the agencies were not seeking cost-saving measures in other areas, like sharing rent or administrative costs with other companies. On the same side of the aisle, Legislator Howard Kopel said that more agencies should perhaps be allowed to work in the county, to create more competition and resolve the issue that way.
In the end, a vote on the bill to suspend the wage law had to be put on hold due to the shortage of details from the employers. A special session will take place this coming Monday, in which the agencies must provide actual information on their bottom lines.
“We were told this was the straw that would break the camel’s back,” said Presiding Officer Schmitt. “You’re saying that if this goes into effect on Aug. 1, on Aug. 2 jobs are going to be lost, but you have to quantify it. You need to demonstrate that your business model doesn’t work, [with the increase] but that hasn’t been proven. If this will cause layoffs, how many?”