Across the United States, millions of individuals quietly provide unpaid care for their loved ones, from aging parents to disabled family members. According to the AARP in its “Caregiving in the United States 2020” report, about 53 million Americans provided unpaid care to an adult with health or functional needs. In this article, we will delve deeper into the direct and indirect economic impacts of caregiving, shedding light on the potential consequences of undervaluing care and underinvesting in it, and highlighting possible solutions.
“Family caregivers are the backbone of our care system, providing billions of dollars in unpaid care each year.” – Nancy LeaMond, AARP Chief Advocacy and Engagement Officer.
The Direct Economic Impact of Caregiving
The monetary value of unpaid caregiving work
The caregiving landscape is dominated by family members who provide unpaid assistance to their loved ones, often because they have no choice. AARP estimates that in 2021, family caregivers provided 36 billion hours of care valued at $600 billion, up from 34 billion hours of care valued at $470 billion just two years before. Paid caregivers are simply too expensive for most families, and the home care workforce shortage means they are not available to families who can afford them. In fact, the cost of long-term care services in the United States in 2021 ranged from $20,280 per year for adult day health care to $108,408 per year for a private room in a nursing home.
Employment and income implications for caregivers
As caregivers juggle their responsibilities, they often face significant challenges in balancing work and caregiving duties. This may lead to lost wages, missed career opportunities, and to job loss. Family caregivers lose $522 billion in wages annually, according to the Rand Corporation. This is especially true for women, who comprise the majority of caregivers (61 percent) and who are disproportionately affected by the income disparities associated with caregiving.
In addition to providing care for free and potentially losing wages, family caregivers also spend their own money on care expenses for their loved ones. According to the AARP, informal caregivers spent $7,242 on average in 2021. Expenses included medical supplies, home improvements, and rent, among others.
Gender disparities in caregiving and income
Women are more likely to take on caregiving roles than men, and they often experience a greater financial impact as a result. On average, female caregivers provide 21.9 hours of care per week, compared to 17.4 hours for men, according to the AARP. These disparities contribute to the gender wage gap, making it even more challenging for women to achieve financial security and long-term stability.
“Caregiving is not just a women’s issue, but a societal one that requires a collective response. We must break down the barriers that prevent both men and women from participating fully in caregiving and work to create a more equitable system that supports all caregivers.” – Anne-Marie Slaughter, President and CEO of New America.
The Indirect Economic Impact of Caregiving
Healthcare system savings and cost-shifting
By providing care at home, family caregivers play a vital role in supporting the healthcare system, reducing the need for more expensive institutional care. The cost-shifting that results from informal caregiving can lead to significant savings for the healthcare system. However, the burden often falls on caregivers themselves, who may experience physical, emotional, and financial strain as a result of their caregiving responsibilities.
Burden on caregivers’ health and well-being
The demands of caregiving can take a toll on the health and well-being of caregivers, leading to increased stress, anxiety, and depression. Around 39 percent of caregivers report experiencing high emotional stress due to caregiving, while 17 percent report experiencing high physical strain, according to the AARP. Additionally, caregivers are more likely to suffer from chronic health conditions and have a higher risk of experiencing burnout. These health issues not only affect the quality of care provided but also result in higher healthcare costs for caregivers themselves.
Social and economic ripple effects
The economic impact of caregiving extends beyond individual caregivers and their families, affecting businesses and communities as well. Employees who struggle to balance caregiving and work may be less productive, which can lead to decreased profitability for businesses. According to a Harvard Business School report, “The Caring Company: How Employers Can Help Employees Manage their Caregiving Responsibilities,” there are two types of hidden caregiving costs for companies: costs associated with turnover and costs associated with productivity loss. Turnover involves replacing employees who leave, lost knowledge, and hiring temp employees to cover for absent employees. Productivity loss includes employees being absent or distracted, and others having to pick up their workload.
The economic cost to U.S. businesses for lost productivity due to caregiving responsibilities is estimated to be between $17.1 and $33.6 billion annually. Moreover, the financial strain experienced by caregivers can lead to reduced consumer spending, which in turn affects the broader economy.
“We need to recognize that family caregiving is not only a personal responsibility but a shared social responsibility. Supporting caregivers is an investment in the well-being of our families, communities, and economy.” – Ai-jen Poo, Executive Director of the National Domestic Workers Alliance.
The Future of Caregiving: Policy Implications and Potential Solutions
As the population ages and the demand for caregiving services increases, it is essential to address the challenges faced by caregivers and invest in solutions that support their invaluable work. By 2030, the older adult population is expected to reach 74 million, up from 55.7 million in 2020, significantly increasing the need for caregiving services. Here are some potential policy interventions and investments to consider:
- Financial support and tax relief for caregivers: Providing financial assistance through tax credits or direct payments can help offset the costs associated with caregiving, reducing the burden on caregivers and their families.
- Accessible and affordable respite care and support services: Expanding access to affordable respite care and support services can provide much-needed breaks for caregivers, reducing the risk of burnout and improving their overall well-being. Government programs and community-based organizations can play a vital role in making these services more accessible and affordable.
- Encouraging employer support and workplace flexibility: Employers can play a crucial role in supporting caregivers by offering flexible work arrangements, such as remote work, flexible hours, or paid family leave. By implementing supportive policies, employers can help alleviate some of the challenges faced by caregiving employees, leading to increased job satisfaction and retention.
- Expanding public awareness and valuing caregiving work: By increasing awareness of the economic value of caregiving and celebrating the contributions of caregivers, society can foster greater appreciation and support for this vital work. Public campaigns and educational programs can help change societal perceptions of caregiving, leading to more equitable treatment and recognition of caregivers.
- Strengthening social safety nets and support systems: Ensuring that caregivers have access to adequate healthcare, retirement savings, and other essential social protections can make a significant difference in their ability to manage the demands of caregiving. Strengthening social safety nets and support systems can help caregivers maintain their financial stability and overall well-being.
- Investing in caregiving infrastructure and workforce development: As the population ages and the demand for caregiving services increases, investing in caregiving infrastructure and workforce development will become increasingly important. By expanding training programs, improving working conditions, and offering competitive wages, we can attract and retain a skilled and dedicated caregiving workforce to meet the growing needs of our society.
Recognizing an Invaluable Resource
The economic impact of caregiving in the United States is significant, yet often hidden from view. By recognizing and valuing the essential role that caregivers play in our society, we can begin to address the challenges they face and support their invaluable contributions. Let us advocate for policy changes, support caregivers in our communities, and work together to create a more equitable and compassionate society for all. By doing so, we can ensure that caregivers receive the recognition they deserve and that their efforts contribute to a healthier, happier, and more resilient society for generations to come.
Caregivers’ Impact on Population Health
Caregivers make up 25% of the US population and they are more likely to develop chronic conditions like heart disease, diabetes, or cancer. Providing care at home has a significant impact on both the caregiver and those they care for. As the American population grows and ages, the reliance on family caregivers will increase. Learn how having a caregiver support strategy can help your organization address population health needs.
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