Raising Direct Care Worker Compensation in North Carolina

Blog | July 9, 2025

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Direct care workers in North Carolina earn a median wage of $13.62 per hour (2022 data). To put that in perspective, that is 18.5% less than the median wage of direct care workers nationally ($16.72) and 6% less than the hourly wage of high school graduates in NC [1,2]. On top of low wages, many direct care workers are employed part-time, resulting in annual earnings that put them below or near the poverty line. As a result, direct care workers report difficulty making ends meet and must work multiple jobs and/or utilize public assistance programs.

 

With limited room for advancement and without clear career paths, direct care workers can expect only meager wage increases after working in the occupation for years. Nevertheless, direct care workers have demonstrated remarkable dedication to direct care work, even when they could be earning the same amount of money or more in fast food, housekeeping, or retail. According to a 2025 issue brief released by PHI, despite high rates of turnover in direct care jobs, 81% of direct care workers remain in the direct care profession [3].

 

For direct care workers who choose to leave the direct care workforce for other occupations, a major motivating factor is higher wages. The issue brief recommends “raising direct care worker wages to be competitive with other occupations that direct care workers may choose to do instead” [3]. Indeed, experience from other states suggests that compensation needs to be substantially higher than alternative low-wage jobs that pay the same but are less physically and emotionally demanding, plus perks such as working from home [4].

 

Currently, the direct care workforce is facing one of the most severe shortages among healthcare sector professions. In 2024, there was estimated to be 119,000 direct care workers in North Carolina, which is insufficient to meet the state’s caregiving needs. Projections warn that workforce development is not keeping up with the rate of population growth and aging. Employers compete among each other for the limited supply of direct care workers, and workers generally gravitate towards jobs that can pay the most. In this competition for workers, there are inevitably employers that are unable to fill their staffing needs, as experienced by rural health care agencies and home care specialties [5].

 

As the largest payer for facility-based care and home and community based services, Medicaid is a driving force in improving direct care worker compensation. On the one hand, fixed reimbursement rates effectively cap the wage level of direct care workers, but rate increases can potentially reach the entire direct care workforce, so long as measures are in place to audit and enforce that increased spending is passed through to the workers. Increasingly, states are addressing direct care wages through Medicaid payment and oversight mechanisms. For more details on state policy approaches to increasing direct care worker wages, please see this publication from the National Governors Association Center for Best Practices [6].

 

In 2024, the Biden administration issued a federal rule that requires home health care providers to spend at least 80% of Medicaid payments on direct care worker wages [8]. Although this ruling was met with applause from worker advocacy groups, the industry response has been more critical. In a letter to federal lawmakers, the CEO of the Home Care Association of America argued that the policy overlooked a need to raise reimbursement rates.

“The final rule prescribes how an agency may use current Medicaid funding rather than addressing the underlying workforce problem: the inadequacy of the rates themselves [emphasis added]. The rates are far too low and leave providers no leeway to continually invest and innovate. Encouraging states to increase reimbursement rates and offer an enhanced Federal Medical Assistance Percentage (FMAP) are the two most effective and efficient methods of raising direct care worker wages.”

Industry representatives warn that this federal rule will reduce access to care by undermining providers financially and forcing them to stop accepting Medicaid patients.

 

A recent Caregiving Workforce Strategic Leadership Council report, sponsored by the NC DHHS and Department of Commerce, offered four recommendations to address North Carolina’s direct care workforce needs [9]. One of the recommendations was to “create a living wage for direct care workers,” primarily through mechanisms that link wages to credentialing, training, and career advancement. Following the recommendations from this report, the Center on the Workforce for Health will be initiating a comprehensive wage analysis to identify and address wage disparities in the direct care workforce and explore innovative approaches to ensuring Medicaid rates can meet the forecasted demand for direct care workers.

 

Raising compensation for direct care workers is just one part of a comprehensive strategy to build a resilient, high-quality direct care workforce in North Carolina. Over the next several years, as policymakers consider solutions for the direct care workforce, we need to center the perspectives of direct care workers throughout the process. When we do that, it becomes clear that protecting their dignity as frontline workers begins by guaranteeing them a living wage.

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Written by

Patrick Y. Tang, MPH
Project Director, NCIOM

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References
  1. PHI. Understanding the direct care workforce. Accessed June 24, 2025. https://www.phinational.org/policy-research/key-facts-faq/
  2. Frey J. How much more high school graduates earn than non-graduates in every state. U.S. Career Institute. 2023. https://www.uscareerinstitute.edu/blog/how-much-more-high-school-graduates-earn-than-non-graduates
  3. Kim J, Stepick L. Moving within and out of direct care: an analysis of annual mobility of direct care workers. PHI. 2025. https://www.phinational.org/national-resource-center/resource/moving-within-and-out-of-direct-care-an-analysis-of-annual-mobility-of-direct-care-workers/
  4. Tyler D, Hunter M, Porter K, Horvath M, Suarez G. State efforts to improve direct care workforce wages: state case studies report. RTI International. 2024. https://aspe.hhs.gov/sites/default/files/documents/ba806f15767b42593752744aab3e17ba/dcw-wages-state-case-studies.pdf
  5. Forcina J, Collier C. Recommendations for HCBS worker certification. NC AHEC. 2024. https://www.ncdhhs.gov/nc-ahec-recommendations-dcw-hcbs-worker-certification
  6. Block L, Maxey H, Medlock C, Johnson K, Nielson B. Addressing wages of the direct care workforce through Medicaid policies. National Governors Association. 2022. https://www.nga.org/publications/addressing-wages-of-the-direct-care-workforce-through-medicaid-policies/
  7. PHI. Workforce Data Center. Accessed June 25, 2025. https://www.phinational.org/policy-research/workforce-data-center/#var=Wage+Trends&states=37
  8. Baxley J. New federal rule to boost pay for home health workers. WUNC. 2024. https://www.wunc.org/health/2024-05-03/home-health-care-providers-north-carolina-medicaid-pay
  9. NC Caregiving Workforce Strategic Leadership Council. Investing in North Carolina’s caregiving workforce. 2024. https://www.ncdhhs.gov/investing-north-carolinas-caregiving-workforce-recommendations-strengthen-north-carolinas-nursing/download?attachment