An Assessment of the Association Between Wages and Fringe Benefits on Nurse Aide Turnover in Nursing Homes

Objective: To assess cost-effective strategies to reduce nurse aide turnover, this study examines the relationship between turnover and compensation, including wage rates, spending on fringe benefits, and specific fringe benefit offerings. Study Setting and Design: The study uses national data from 2022 and 2023, a period following major COVID-19 labor market disruptions. The analysis uses regression models to assess the impact of wages and fringe benefits on turnover, with additional subgroup analyses by ownership type (for-profit, not-for-profit, and government). Data Sources and Analytic Sample: Data were sourced from Medicare Cost Reports, the Payroll-Based Journal Public Use Employee Detail File, and Care Compare archives. After excluding nursing homes with missing observations and applying exclusions for outliers, the final analytic sample included 19,238 nursing home-year observations from 12,116 unique nursing homes. Principal Findings: The results indicate that higher wages and fringe benefit spending are both associated with slightly lower nurse aide turnover. A 10% increase in wages was linked to a 0.28 (95% CI: 0.04, 0.53) to 0.39 (95% CI: 0.09, 0.70) percentage point reduction in turnover, an effect primarily driven by for-profit nursing homes. Fringe benefit spending was significantly associated with lower turnover among for-profits and not-for-profits, with a 1-percentage-point increase in fringe rates reducing turnover by 0.08 (95% CI: 0.01, 0.15) to 0.28 (95% CI: 0.23, 0.34) percentage points. Specific fringe benefits, such as daycare assistance and accident/disability insurance, were associated with lower turnover. A simulation analysis suggests that investments in fringe benefits are more effective at reducing turnover than equivalent investments in wages. Conclusions: Nursing homes seeking to reduce nurse aide turnover should consider enhancing fringe benefits in addition to increasing wages. Given the higher cost-effectiveness of fringe benefits in reducing turnover, policymakers and nursing home administrators should refine these strategies to improve workforce stability and care quality.