Nurse Shortage — As retirees age and develop chronic health conditions, they depend on staff from all phases of the health care system. According to a new University of Michigan study 39 percent of Michigan nurses plan to quit in a year. Hospitals have been struggling for years to hire sufficient health care workers to keep hospital beds open. In March, Michigan hospitals had 27,000 open jobs. Nursing jobs are stressful. In the study, 60 percent of the nurses cited inadequate staffing and resources to deliver acceptable patient care.
Direct Care Wages —Low wages for direct care workers are impacting the ability of health providers to recruit and retain essential workers. They provide personal care, community living supports, and behavioral health services for people with disabilities. This is an example of where wages within the health care system have remained low, as they are financed primarily from Medicare and Medicaid with smaller reimbursement rates that often limit the number of providers. This dire situation has been made worse by the impact of the pandemic, high inflation, and increased wages in competing sectors.
Wages Can’t Compete — It’s not possible to compete with a new job that pays a couple of dollars more an hour but with less demanding work. Providers can’t increase their wages to those offered by fast-food and retail industries because the wage rate is set by the limited availability of Medicaid funding. Seniors rely on Medicaid, or health care for those with low incomes, as they deplete their savings, while paying for high cost long-term care.
System Failure — Direct care worker wages have not kept up as providers are not offering a competitive wage, leading to a system failure. This is the finding of a March 2023 survey developed by Incompass Michigan, a statewide network of human service providers, and the Michigan Assisted Living Association, a nonprofit organization representing providers of long-term care. According to this sixth annual workforce finding, wages are too low to keep direct care workers on the job. Nearly one-fifth, or 18.3 percent of their clients, are aging adults. The 2023 survey’s entry or starting wage for direct care workers is $15.20 per hour. The average current wage is less than a buck more, or $16.13. The workers average seniority is 5.32 years. These pay rates failed to keep many workers on the job as the 2023 average annual turnover rate was 41.5 percent.
Budget Action Now — Governor Whitmer recommended a 10 percent wage increase for direct care workers for fiscal year 2024. This is about $1.50 an hour, but it’s not even close to enough to stabilize the workforce. The survey recommends that the workforce needs a hike of $4 per hour for direct care workers with an equivalent increase for supervisors. In addition, the American Rescue Plan (ARP) funding could be used for one-time retention bonuses to encourage workers to decrease turnover plus encourage hiring. Michigan, like many states and local governments, has spent less than half of their ARP funds as of December 31, 2022, according to the Economic Policy Institute (EPI). These funds can be used to rebuild the public sector, but action is needed soon because the ARP funds have to be obligated by 12/31/2024 and spent by 12/31/2026.
Power Outage — After two ice storms in early 2023, leaving many Michiganders without power, the Michigan League of Conservation Voters aired ten ads in March criticizing DTE Energy and Consumers Energy for not investing in infrastructure and placing the interests of investors over customers. Lawmakers also questioned why the power was off so long and how the electric grid and utility infrastructure could be improved. The Public Service Commission (PSC) held more hearings with public comments on the outages and increased the power outage credits, making them automatic. These utility companies have been criticized before. What’s new is that leadership in Lansing is now demanding real solutions.
No Excuses — Although Michigan’s Attorney General, Dana Nessel, doesn’t have oversight authority over setting utility rates she can intervene and moved her criticism of the PSC and DTE Energy’s handling of recent Michigan power outages to Fox3 television. On the show “Let it Rip,” she said that after power outages years ago, she took members of the PSC on the road to get comments from utility customers about their service and found that the PSC wasn’t very responsive. In addition, at an early March House Appropriations Subcommittee on General Government, she said that DTE has gotten away with far too much for far too long while they raised rates without providing more reliability. Michigan’s power continues to go out, at a much higher rate than comparable states. She would like to see more transparency and accountability over how rate increases are spent by utilities, and their control over spending for political campaigns and dark Political Action Committees (PACs).
Pension Update — On March 23, 2023, the State of Michigan Investment Board (SMIB) met for the March 2023 Quarterly Investment Review based on data ending on December 31, 2022. Investment returns for the Michigan State Employees’ Retirement System (MSERS) were higher than peer median returns or similar plans, defined as the State Street Universe of public pension plans greater than $1 billion. Over the last ten years, the MSERS return was up a strong 9.6 percent on a cumulative basis. This return was higher than the median public plan of 7.8 percent for the same time period. These high, long-term returns add compounded value to our pension system.
Outperformed Peers — Over the last year, investment returns have turned negative due to the rise in global inflation, increasing interest rates, growing energy costs, and the war in Ukraine. Despite an economic downturn, the MSERS cumulative return for the year ending December 31, 2022, was -6.4 percent, compared to the lower return of the median public plan of -8.9 percent for the same time period. This MSERS return on investment is in keeping with the goal of performing in the top half of the public plan universe over the long run.
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