Obama crushes agencies in overtime

There has been a push lately by the Obama administration to basically screw up the personal care that people with disabilities, like myself, receive. Some people with disabilities have people come into their homes in order to help with a wide range of things. Myself, I need help with things such as dressing, eating, bathing, toilet, transportation along with other things. I love my staff (people who perform the job go by many names, around here they are call staff)! You get a very unique and humbling perspective when you are hungry but have to wait for somebody to come into your home and have them feed you your food that has been sitting in your kitchen the whole time you were hungry. Or having to go to the bathroom and having to wait to use your own bathroom until someone comes into work. My staff is quite literally my life line!

Now a quick outline of how a lot of these staff get paid and then I will get into how the Obama administration is going to screw things up for the people with disabilities and even for the staff members themselves. There are essentially two ways someone can get paid for this type of work, they can either become an independent provider or they can work for an agency. The Obama administration is messing with agencies so I’m not going to explain independent providers. The way most, if not all, agencies get paid is by billing a source $xx and then paying the staff a portion of $xx. Personally my payment source is medicaid and at the time of this writing, the agency receives $19.04/hr. Out of that they pay the staff who take care of me.

Under current law, agencies are not required to pay their staff minimum wage or overtime compensation and this is what the Obama administration is trying changed. Let’s start with the minimum wage argument. Can anybody really tell me of any agency who pays their staff less than minimum wage? I’m betting not and if you can, they are most likely just starting out or they are very poorly ran and probably not lasting long. If the agency is just starting out, shouldn’t we want to make it as easy as possible for them to get on their feet? Some people would argue that employees deserve a certain amount. Here is an insane idea, if you are one of those deserving people, DON’T APPLY FOR A JOB THAT PAYS LESS THAN THE MINIMUM WAGE! Pretty damn simple if you ask me! So the push to pay the staff minimum wage is just a shock ploy to get more support for the legislature. By explicitly requiring agencies to pay minimum wage, it makes agencies seem like monsters who pay their employees dirt.

Now let’s discuss the overtime compensation requirement, which is most definitely going to be a problem. So we are on the same page, by overtime compensation I mean when somebody works more than 40 hours a week, they receive 150% of their normal hourly wage for each hour they work over 40 hours. This is also called “time and a half”.

As stated before, under current law, agencies are not required to give overtime compensation. This might seem appalling to some but let me stop you right there by sharing my opinion of this magical ceiling of 40 hours per week and then I will get back to facts. If you truly believe that the government should say how much someone can humanely work without requiring additional compensation then I would like to say, shut the hell up! I would like to invite you to try to work at a quarter of the speed and see how much you want to work! This is what I do. Due to my disability, everything I do takes at least four times longer than other people without disabilities. I laugh at the idea of a 40 hour week! As do most business owners and people who love their job!

Forgetting about the opinion aspect of the mandated overtime compensation, let’s look at the logistics this will impose on agencies. A typical private sector business has two ways to raise their profit margins, they can either raise the price of their goods/services or they can lower their business expenses. This is not the case with these types of agencies, when billing the government. The agencies get the hourly rate that they are going to charge dictated to them by the government. This means the only way for these agencies to raise their profit margin is to lower their expenses. Any business owner with half a brain is going to do whatever they can in order to lower expenses before they start lowering employees’ pay.

Basic rule of business is, your company is only as good as its employees. You don’t pay your employees enough, they get upset, leave, word gets around that you don’t pay enough and pretty soon you can’t get anybody to work for you and you go out of business. Of course pay is not always the deciding factor as to if people want to work for a company. An essential principle of the free market system.

If an agency has to lower their expenses in order to raise their profit and they don’t want to cut employee pay, they have to start cutting back in other areas. They might start with figuring out how to use less office supplies, look into a less expensive building, or whatever else they can do to lower expenses. While they are deciding what they can cut, they have to also keep the quality of their service up, especially agencies such as these since they’re responsible for taking care of people.

I can tell you from personal experience that the quality of care an agency provides is very closely tied to the way they operate their company and how they treat their employees. My previous agency and my current one I know relatively well in regards to how they run their company. My previous agency was owned by somebody who was people oriented and not very business minded. This probably seems like what you would want from a company that is taking care of people. The problem with that is, they didn’t know how to balance making their staff happy and at the same time keeping the consumer happy. As a result I would very regularly have new staff. If you have never had someone take care of you, I can tell you that it’s not the most pleasant experience having a stranger helping you use the bathroom or bathe you. This is one reason they are my previous agency.

My current agency is owned by someone who is more business minded and I can say without a doubt that the quality of care they and the employees provide is astronomically better! They know how to balance the staff’s happiness with my own, something I would have no idea how to do! Due to this I have much less turnover with my staff, which makes me much happier and my life a lot easier. With both agencies, it’s not black and white. My previous agency wasn’t complete business stupid and my current one isn’t insensitive, just when you put business aspects a little higher on the importance scale, you will typically see better results in unexpected areas.

Knowing all that, how is the new overtime compensation requirement going to hurt agencies and their consumers, and their employees? With my agency, they start paying new employees about $9/hr. and they typically give raises every year. With the agency making $19/hr. and paying the employee $9/hr., the agency is already down to about a 53% profit. Obviously with everything I just said, you want to keep employees for as long as possible and if the employee gets a raise every year, the profit margin goes down. I have one staff who has been working for the agency for a little over four years now and makes $10.50/hr. so every hour she works, the agency’s profit margin drops to about 45%. This probably sounds like a pretty good deal, right? It would be if you didn’t have any other expenses like rent, office supplies, paying the people who work in the office, and other various expenses that I don’t know about. That 45% profit gets eaten up real fast.

Have you ever worked for a company who is enthusiast about handing out overtime? Probably not, and ever wonder why? A little secret people might not know is, profit is actually a great thing! It allows for things like raises, Christmas bonuses, and other perks like keeping the company open when there is an unexpected expense! So anybody who has associated the word profit as a bad thing, I’ll put it as simple as I can. Without profit, you wouldn’t have a job for very long! Lower profit margins means higher risks a company will go out of business. And in many cases, it also leads to less happy employees since it leads to less flexibility and perks. This is why companies are hesitant to hand out overtime unless it is necessary, it is not a matter of greed as it may seem.

Take my staff who makes $10.50/hr., if the agency has to pay her overtime compensation, she will make $15.75/hr. each hour she works past the magical 40 hour ceiling. Making the profit margin for those hours about 17%, add in other business expenses and those overtime hours are now actually losing money for the agency. A more “comical” situation is another employee who has been working for the agency for much longer and makes about $12/hr. so her overtime compensation would be $18/hr. Remember these agencies only receive $19.04/hr. from the government. Basic arithmetic tells me that doesn’t work!

The overtime compensation requirement is going to put enormous pressure on these agency to make sure that nobody works more than 40 hours in a week since it is simply not affordable. This is going to hurt some staff because some work more than 40 hours a week because that is what they have to do in order to make enough to live. If they are no longer allowed to work more than 40 hours, they are going to have to get a second job to make up that difference and juggle two work schedules. It also means the agency is going to have to hire more people to cover the hours the original staff is no longer able to work. This too might sound like a good thing since more people would have jobs. The reality to this is, if you have never worked in the field, it’s not always easy to get people to work this kind of job. Not to mention once the employer side of Obamacare kicks in, more employees you have, the more the agency is going to be paying for health insurance! Again, the agency is not being greedy, it’s just the matter of the numbers not working!

Staff having their work hours limited is also going to cause problems for the people they are taking care of in a number of ways. One of which is simple comfort. As I said before, it’s not the most pleasant thing having someone help you use the bathroom or bathe you. I’m nowhere near shy either so I can only imagine what it is like for people who are! Besides the personal care aspect, some people with disabilities cannot handle a lot of variations so having the same person with them as much as possible works the best.

Another way this hour limiting is going to affect the consumers is by having to make sure they’re back at their home by the time it’s the end of the staff’s shift. If the consumer wants to go to see a movie that starts at 4 and the staff’s shift ends at 5, it’s no longer possible without hurting the agency if the extra hours are going to put the staff over 40 hours. In order to reduce the risk of somebody going over 40 hours, agencies are actually going to have to limit the staff to about 38 hours.

As I started out this article, I love my staff, they make the life I have possible. I am absolutely for paying good staff more but you have to think logically, is it possible. I can’t stand people who dwell on fairness while trying to get rules/regulations/laws enacted. Sometimes things are simply not possible. If the Obama administration is successful in getting this legislature passed, which it seems like they will eventually, it is going to severly hurt agencies, their staff and the individuals they care for.