Living Wages for Public Sector Workers is an Investment in a Thriving, Affordable City
By Carla Sinclair, Senior Communications Associate, Stephanie Rosoff, Associate Research Director, Alison Diéguez, Program Director, and Cecilia Low-Weiner, Senior Research Associate
Childcare, healthcare, elder care, mental healthcare—these jobs and others that make up the human services sector provide the foundation for communities across New York State. While among the fastest-growing and most in-demand types of labor, the average wages fall far below a living wage. CUNY ISLG conducted a return-on-investment analysis to understand what raising average wages would do for the workforce, their communities, and the New York economy.
New York is at an inflection point, and the affordability crisis is at the center of it. The majority of renters in New York City spend more than a third of their income on rent. Healthcare premiums for many are set to skyrocket in 2026. Average childcare costs have increased 43 percent since just 2019. The senior population is getting ever bigger, and the cost of caring for them is outpacing inflation.
Both newly elected and incumbent policymakers at the New York City and State levels have promised to tackle issues that impact New Yorkers’ budgets through new policies and programs, such as building more affordable housing and offering families universal childcare. These ideas are, generally, wildly popular: for instance, nearly 80 percent of NYC residents “favor expanding city-funded preschools to 2-year-olds.”
If implemented thoughtfully, these sorts of programs can have a real impact on New Yorkers, especially those in the working and middle class. Looking at free childcare, research has found it to be both financially and developmentally beneficial: a study done by Yale on a New Haven pilot program showed that it boosted families’ earnings by 20 percent, with a return-on-investment (ROI) analysis showing $6.13 for every $1 spent; a review in Early Childhood Research Quarterly found that these programs create “substantial short and long run benefits” for children, especially those from low-income families.
The debate surrounding these programs is often on who’s going to pay for it. But another critical question is who is going to get paid for it.
The debate surrounding these programs is often on who’s going to pay for it. But another critical question is who is going to get paid for it—as in, who will staff the childcare workforce that must inevitably grow to meet demand? Who will fill highly needed home health care positions as the population continues to age? At a time when the human service sector is facing high turnover and vacancy rates, new strategies are needed to incentivize new pathways into the sector and to retain a highly trained workforce. There needs to be an intentional recruitment plan to hire human services workers, as well as a plan to pay them a living wage so that this expanding workforce doesn’t fall into the same affordability traps policymakers are looking to fix. A new ROI analysis from CUNY ISLG shows boosting wages would both fix existing wage gaps and have positive impacts on communities, local businesses, and the overall economy.
Read the full Sustainable Services, Economic Growth, Living Wages report here.
The Growing Wage Gap in the Human Services Sector
The human services sectors—many of which are contracted by the government—are some of the fastest growing industries. A CUNY ISLG analysis conducted earlier this year found that these sectors grew 89 percent in the past two decades, with home health care, child day care, and services for the elderly at the top of the list. However, the people who make up 80 percent of this workforce—home health aides, nursing home assistants, and childcare workers—are among the lowest paid. For childcare workers, the average annual salary was $37,970 a year, with wages topping out at $50,000, even when accounting for higher levels of experience or skill.
For those living in New York, especially in the city, those wages put them far below what many experts deem a livable wage, calculated at between $55k-$59k a year for a single person—higher if that person has children or other dependents. Given this, many workers in these occupations have higher poverty rates, higher public benefit utilization rates, and lower health care insurance coverage than other New Yorkers. Twenty percent of childcare workers in New York State, for instance, live below the poverty line; 22 percent of these households receive SNAP benefits. Besides the incongruity of someone being paid to provide public services needing public assistance to make ends meet, these low wages serve as a deterrent to people entering and progressing within these fields, making it difficult to attract and retain skilled workers to care for New York’s children, elders, or anyone who needs home health care.
Besides the incongruity of someone being paid to provide public services needing public assistance to make ends meet, these low wages serve as a deterrent to people entering and progressing within these fields, making it difficult to attract and retain skilled workers to care for New York’s children, elders, or anyone who needs home health care.
Raising Wages lifts the Economy for All
In the past few years, there have been a number of legislative pushes to give New York State human service sector workers a living wage. In practice, this would mean raising wages that now hover around $40,000 a year to $60,000, or to about $29 an hour, and institute annual inflation increases. The new ROI analysis from CUNY ISLG sought to understand the economic impact of this increase on the New York State economy, the returns for individuals and communities, and the impact on the human services workforce itself.
More Revenue to the New York State Economy
In short, the analysis found that raising wages for human services workers would cost New York State $7b to $11b annually, but would result in $575m more in income tax revenue a year, $400m in state and local sales tax, and $14-23b in increased economic activity statewide through the economic multiplier effect. The statewide poverty rate among human service workers, now about 15 percent, would drop to under 6 percent.
The statewide poverty rate among human service workers, now about 15 percent, would drop to under 6 percent.
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An economic multiplier is one way to fully measure the impact of increased wages and consumer spending. The economic multiplier effect is a measure of how the economy grows when money circulates (is spent by consumers). Specifically, it measures the “multiplier” for each dollar spent in the local economy. For example, one dollar spent in a local business may get reinvested in that business and further grow the local economy. Thus, if raising wages for the human services workforce results in increased spending, the new spending is expected to support the local economy.
A More Financially, Emotionally, and Physically Healthy Community
This would have a big impact on members of the human services workforce, their families, and the communities as a whole. When people can consistently meet basic needs—such as housing, food, healthcare, transportation, and childcare—they experience less stress and greater stability in all areas of life. Financial resiliency allows them to withstand unexpected financial shocks, like medical emergencies, and plan for the future, including saving for education, housing, or retirement; it also helps them avoid predatory loans and maintain better credit, supporting long-term financial stability. Beyond economic benefits, increased wages have implications for the physical and mental health of individuals, the well-being and development of children, public health infrastructure, and the overall strength and safety of communities.
With a Better Workplace, Higher Quality Services
Lower wages mean challenges in recruiting and retaining staff, which means higher rates of employee turnover and burnout as well as disruptions and inconsistencies for the people receiving services. This has especially been an issue in the childcare and home health care sectors, which provide emotionally and physically laborious work. Higher wages translate into staff being better resourced, both at home and at work, with the tools to deal with challenging situations. This can lead to less burnout, turnover, and service disruption, as well as better recruitment and retainment of those with more experience and skills.
Higher Wages as Strategic Pathway to a more Equitable City
New York policymakers are right to focus on affordability as a crucial policy issue. It is quickly becoming the defining issue of the time. But as CUNY ISLG’s research shows, the services that buoy communities are also provided by the community, and a living wage for this workforce must be included in any policy proposal.
Raising wages for human services workers not only is beneficial to those individuals; it is also a strategic policy intervention with far-reaching benefits for communities and the broader economy. Increased compensation strengthens the foundation of local economies,
Raising wages for human services workers not only is beneficial to those individuals; it is also a strategic policy intervention with far-reaching benefits for communities and the broader economy. Increased compensation strengthens the foundation of local economies, especially in low-income neighborhoods where many of these workers live and spend their earnings. By boosting incomes in these communities, higher wages can help reduce poverty rates among this workforce and interrupt cycles of financial instability or vulnerabilities, along with meaningfully improving the wellbeing and health of workers, and their families. These benefits all come to bear on creating healthier, safer, and more resilient communities.