The Caregiving Crisis

by: Christian González-Rivera, Director of Strategic Policy Initiatives, Brookdale Center for Healthy Aging

Among the social needs and rifts uncovered by the COVID-19 pandemic, the importance of caregiving is one of the most personal. Those who depended on babysitters, day care centers, schools, and home health aides now had to navigate caregiving themselves. For many, juggling work and caregiving was a significant burden. Caregivers who were unable to work from home had bigger challenges, since they depended on friends and family who now risked their own health to care for others.

The tradeoff between work and caregiving duties is nothing new. And with the older population growing faster than any other age group, many more people will be called to take on caregiving duties in the coming decades. More than 2.5 million Americans are currently in their nineties, more than triple the number who were that age in 1980. Similarly, the number of Americans who are in their eighties has doubled. Many will need varying degrees of personal care as they grow older.

There are about 48 million unpaid caregivers in the United States. Nine out of ten of them care for a relative, and half of those are the recipient’s children or children-in-law. Partners and spouses account for just 12 percent of caregivers, 10 percent are non-relatives, and the rest are relatives other than their spouse or children.(1) This means that caregivers are usually younger people who are more likely to be in the labor force and must make emotional and financial sacrifices to take care of their loved ones. And for no financial compensation, to boot.

Three out of four caregivers are women and if they cannot pay for help, they end up carrying most of the caregiving burden themselves. There are almost no public or private programs that support caregivers, leading the authors of one study to write that “the best long-term care insurance in our country is a conscientious daughter.”(2)  Raising children and caring for the previous generation are some of the many invaluable, yet uncompensated duties that women are still expected to fulfill.

Importantly, while this work is uncompensated, it is not free labor. Caregiving carries a real economic cost for the many women—and some men—who must compromise work or school in order to carry out their duties. These costs come in the form of limiting work hours, delaying education, turning down job promotions, being unable to relocate for better opportunities, and taking a lifetime earnings hit if they have to stop working for a few years or even retire early to attend to caregiving. One study estimates that the opportunity cost of interrupting a career to assume full-time caregiving duties may be as high as three or four times a person’s potential annual salary, once you factor in the effect of interrupting a career on lifetime earnings.(3)

In fact, caregiving duties contribute to the reversal of gains that women have made in the workforce over the past few decades as more women than ever are forced to exit the workforce to become full-time caregivers. The labor force participation rate for mothers peaked in 1999 after having steadily increased since the 1970s.(4)  At that time, just 23 percent of mothers were out of the labor force. As of 2019, that figure had risen to 27 percent as paid caregiving costs outpaced wage increases on the lower end of the income distribution.(5)

Caregivers also put their own retirement security at risk because they do not accrue Social Security benefits if they take time off work. This is especially damaging to lower wage workers in the long run because Social Security benefits constitute a bigger portion of a lower wage person’s income after retirement, since few have other retirement savings. Also, lower lifetime earnings due to taking time off work also means smaller Social Security checks.

Women over the age of 50 spend more hours per week on caregiving than younger people do. For employed people, this is a critical time when they are likely trying to build a nest egg for retirement. For people on a career track, this is the point in their lives when they are earning the most. It’s also the time when workers are most vulnerable to age discrimination; if you lose your job it can be difficult to get another. Discrimination on the basis of age is compounded by discrimination against caregivers; though it’s illegal, many employers are still reluctant to hire or promote a woman who they think might get pregnant or who admits to having caregiving duties. This means that disruptions to employment caused by caregiving may knock people out of the labor force long after their caregiving duties have ended.

Caring for friends and family with different needs incurs different emotional and financial costs, but the highest costs come from caring for a person with dementia. One study found that those caring for loved ones with dementia spend an average of $62,000 a year in out-of-pocket expenses, which is 81 percent higher than the average spending on patients without dementia.(6) For families with little wealth, the out-of-pocket expenses associated with the intensive care of a person with dementia will deplete any savings they have accumulated.

Cumulatively, these economic hits have cascading effects across the course of people’s lives and across generations. Reduced work hours and derailed career tracks contribute to the gender pay gap between working men and women. Later in life, lower lifetime earnings and the erosion of savings due to the costs of caregiving result in lower Social Security payments and a smaller nest egg for retirement, leading to a widening gender poverty gap.(7) Wealth depleted by caregiving expenses and opportunity costs results in little to no inheritance for subsequent generations.(8) The impact on wealth is most devastating for Black families. The average Black person who dies with dementia will deplete all of their savings and have no assets to pass on. In contrast, the average white person in America has ten times the wealth of the average Black person. While they also take a hit to their assets, critical possessions like homes remain to be inherited.(9)

The lack of public support for caregiving is a particular threat to the economic security of the American middle class. Rich women pay for the childcare and eldercare their families require, while those with incomes low enough to qualify for Medicaid may be able to get the public support they need. But the vast majority of people do not qualify for Medicaid and must rely on whatever help they can manage to pay for. Home care for adults averages about $25 per hour.(10) Many families cannot afford the amount of care necessary to avoid disruptions to their careers while ensuring that their loved ones have the help they need.

The cumulative cost to the economy from lost work hours will increase as more of the population is forced to cut back on work to care for relatives. One study puts the current economic cost of lost wages at $67 billion and estimates that by 2050 that cost will have doubled to anywhere between $132 billion and $147 billion. The increase is fueled primarily by the growth of the disabled older population and the increased share of caregivers who have more education and higher wage jobs that they would be giving up to care for loved ones.(11)

The most effective solution to this problem would be to provide universal coverage for long-term care. This would provide a ready source of income for caregivers, whether they are family members or outside home health aides. Earned income should offset some or all of the opportunity cost of providing care, while allowing caregivers to continue earning credit towards Social Security. Outside of Medicaid and some programs for military veterans, there are currently no programs that pay friends and family for the costs they are incurring.

President Biden’s childcare and eldercare tax credits are an important recognition that for many lower income people, earnings from paid labor are insufficient for raising children. But a tax credit will only help cover direct costs of care. It would not get caregivers needed income nor help them save for retirement.

Making this important change to our healthcare system would finally acknowledge that family caregiving is not free labor. Among the many lessons that voters and policymakers should learn from the COVID-19 pandemic is that the uncompensated labor of family caregivers—as well as the poorly paid labor of childcare workers and the unrecognized work of public schoolteachers—keeps the economy running. The stubborn resistance to the value of personal care also minimizes the anxiety that comes from losing your independence due to failing health and not knowing who will come to help. Or from the other side: seeing your parents or another relative in failing health and having to choose whose life plans will have to be sacrificed to meet their care needs. Americans would breathe more easily if we knew that a safety net was there for us no matter what turns our health will take later in life.

References

(1) AARP and National Alliance for Caregiving (2020, May 14). Caregiving in the United States 2020. https://doi.org/10.26419/ppi.00103.001.
(2) Bott, N. T., Sheckter, C. C., & Milstein, A. S. (2017). Dementia Care, Women’s Health, and Gender Equity: The Value of Well-Timed Caregiver Support. JAMA Neurology, 74(7), 757–758. https://doi.org/10.1001/jamaneurol.2017.0403.
(3) Madowitz, M., Rowell, A., & Hamm, K. (n.d.). Calculating the Hidden Cost of Interrupting a Career for Child Care. Center for American Progress. https://www.americanprogress.org/issues/early-childhood/reports/2016/06/21/139731/calculating-the-hidden-cost-of-interrupting-a-career-for-child-care/.
(4) Madowitz, M., Rowell, A., & Hamm, K. (n.d.). Calculating the Hidden Cost of Interrupting a Career for Child Care. Center for American Progress. https://www.americanprogress.org/issues/early-childhood/reports/2016/06/21/139731/calculating-the-hidden-cost-of-interrupting-a-career-for-child-care/.
(5) Bureau of Labor Statistics. (2021, April 21). Employment Characteristics of Families—2020. https://www.bls.gov/news.release/pdf/famee.pdf.
(6) Kelley, A. S., McGarry, K., Gorges, R., & Skinner, J. S. (2015). The Burden of Health Care Costs in the Last 5 Years of Life. Annals of Internal Medicine, 163(10), 729–736. https://doi.org/10.7326/M15-0381.
(7) http://www.ncdsv.org/SSNCPL_Woman-View-Older-Women-and-Poverty_3-30-2016.pdf
(8) Kaplan, R. L. (2018). Family Caregiving and the Intergenerational Transmission of Poverty. The Journal of Law, Medicine & Ethics, 46(3), 629–635. https://doi.org/10.1177/1073110518804216.
(9) Kaufman, J. E., Gallo, W. T. & Fahs, M. C. (2020). The contribution of dementia to the disparity in family wealth between black and non-black Americans. Ageing and Society, 40, 306–327. https://doi.org/10.1017/S0144686X18000934
(10) Paying for Senior Care. Cost of Care Calculator. https://www.payingforseniorcare.com/new-york
(11) Mudrazija, S. (2019). Work-Related Opportunity Costs Of Providing Unpaid Family Care In 2013 And 2050. Health Affairs, 38(6), 1003–1010. https://doi.org/10.1377/hlthaff.2019.00008