HB 4706: Impact on Direct Care Workers (DCWs) 

The Michigan Legislature is closing in on the FY26 budget, scheduled to take effect on Oct. 1, 2025.

Both chambers maintain the $3.40/hour wage increase for Direct Care Workers (DCWs). However, the House budget’s Section 1033 would reduce direct care agency rates by $4.56/hour—around 20% in funding. Agencies would still be required to pay the wage increase, forcing the entire reduction onto already thin operating margins and overhead.  

In fact, a 20% rate reduction far exceeds the percentage of funding that providers expend on administration. Overhead costs include employee benefits.

The consequences for DCWs and their employers will be severe. 

What the Bill Says

• Keeps the $3.40/hour direct care worker raise in place.

• Cuts $4.56/hour from the money agencies receive.

• Prohibits agencies from lowering worker wages to make up the difference.

 What That Really Means

• Agencies lose more money than they gain.

• Agencies still must cover payroll taxes, benefits, training, and overhead — without enough funds.

• Over time, agencies will close, cut back, or stop hiring.

 Simple Explanation

It’s like giving someone $10 for lunch but then taking $15 out of their wallet. You tell them they can’t spend less on lunch, but now they don’t have enough money for anything else.

It’s simply not possible to both protect wages and cut funds at the same time. 

The Result

• DCW jobs will be at risk.

• Workers will lose hours or employers.

• Families will lose access to critical care.

• People requiring DCW services will be unable to access them.