The U.S. Care Economy: The Huge Price Tag of Caregiving

The cost of unpaid caregiving activities  in the U.S. is substantial. According to the most recent AARP report on this issue, if unpaid caregivers were actually paid for the time and services they provide, it would cost a whopping $600 billion. Let’s look at the specifics that comprise this staggering figure.

The Numbers Beneath the Number

First, let’s identify some of the care activities or chores that we are referring to when we talk about family caregiving services. This list is long and includes a wide variety of duties performed on a regular basis like: bathing and grooming assistance, preparing meals, taking to medical appointments, managing medications and medical claims, taking care of household duties and managing household finances. 

Now, let’s be clear about who is doing this work and the time they spend doing it. The $600 billion cost we mentioned initially, represents the actual value of work performed by 38 million unpaid caregivers in this country. These are family members or friends of care recipients who are unable to care for themselves. They spend an average of 18 hours per week providing unpaid care, which totals 36 billion hours annually. Based on an average hourly wage value of $16.59, this brings us to $600 billion (rounded off). Notably, this represents a $130 billion increase from the last AARP report conducted in 2021. 

Consequences of Leaving the Care Crisis Unchecked

If we look at both the paid care economy in the U.S. along with the unpaid care economy, the total cost of providing these services increases to an alarming $6 trillion dollars. This is a large number to ignore. And keep in mind that this number will continue to grow as the elderly population in this country continues to grow. Research predicts that if the care crisis remains unaddressed, the U.S. stands to risk a loss in goods and services between $290 billion and $500 billion in 2030. Only a short six years down the road. 

These losses are being fueled by low wages that are driving paid care workers out of the workforce. And in turn by unpaid care workers who leave their jobs to care for family members impacted by the dwindling pool of paid care resources. Clearly, a catch 22 situation.

Furthermore, if the pool of care workers continues to shrink while the pool of people needing care continues to rise, the situation is serious indeed. 

Getting on Track for Survival

The picture created by the data and facts around the current (and future) care economy is a bleak one. But, the good news is that there are actions businesses can take to help fortify themselves against the detrimental impacts of the care crisis. One major suggestion offered in the research is adopting “employee-first” policies. 

The family caregiver population is a cornerstone of long-term care in this country, with more than 60% of caregivers working either part-time or full-time jobs while caring for a loved one.

The AARP report suggests that this segment of the workforce deserves more government assistance in the form of tax credits, as well as employer family-friendly policies such as paid caregiver leave. (As we discussed in our previous blog, some employers are heeding this advice by adopting paid caregiver leave policies over the next two years).

As we mentioned, there is already a shortage of professional caregivers that falls well below the current and future demand for care. If the 38 million unpaid family caregivers we identified  before were to walk away from their care duties tomorrow, how would this void be filled? Or would it even be possible to do so? 

The solution to addressing current challenges and deterring future obstacles to our care economy requires us to be proactive. It requires action from both private and public sector employers to implement more flexible and supportive caregiver policies so that this work does not continue to remain under-valued. Additionally, more financial incentives to help support family caregivers, as well as better pay for professional caregivers, are imperative components to help attract and retain these workers.

Summary

The current U.S. care economy can be accurately described as grossly underinvested. The $6 trillion (comprised of both paid and unpaid care workers) poses a substantial risk to our overall economic financial stability. If government and business leaders continue to deprioritize our steadily growing care crisis, consequences will be dire for individual care recipients, their families and our communities. 

With at least 10,000 people turning 65 every day in this country, the demand for care workers is expected to increase by 25% over the next ten years. At the same time, the supply of home health care workers continues to shrink, with at least 30% of this group leaving their jobs every year even before the pandemic hit. If this huge gap between supply and demand continues to be ignored, it cannot help but to have a major impact on the health of the U.S. economy overall. 

Simply stated, people in this country are living longer, while the care resources they need are dwindling. This dynamic has resulted in more family caregivers leaving their jobs to take care of their loved ones. This in turn contributes to more vacant jobs in the workforce. Our care economy dilemma can be likened to carrying a bucket of water with a hole in the bottom. Simply continuing to replace the water that leaks from the bucket is an act in futility. We have to fix the hole!

Until the next blog. Thank you for stopping by, reading, and for caring!

Resources:

• AARP Report, Valuing the Invaluable by Susan C. Reinhard, Selena Caldera, Ari Houser, & Rita Choula, March 8, 2023.

• Care economy: The major economic crisis US business and government leaders are ignoring, January 17, 2023.

• Population Reference Bureau, To Fix the Care Economy, the United States Should Look Internationally by Diana Elliott, July 11, 2023.