The care economy and the role of caregiving in unpaid and paid work have been in the spotlight recently in the United States. In 2021, the proposed Build Back Better plan would have invested $400 billion in the care economy—including long-term care services under Medicaid, paid family and medical leave, and better pay for home and child care workers—but failed to pass after some legislators equated it with socialism. A recent executive order that integrates more supportive caregiving policies into federal government spending has largely skirted political debate, but it impacts a narrower slice of the population.

Why does the care economy matter? For one, the United States is aging but doesn’t have the care workers it needs—nursing home employees, home health aides—to support a growing population of older Americans. For another, child care shortages and costs are making it harder for people to participate in the workforce. Put simply, a healthy economy is dependent on a functioning care work system. On this World Population Day, we’re examining the state of the care economy in the United States—and looking abroad for ways to strengthen it.

Where does the U.S. care economy stand?

The United States’ lack of investment in the care economy may seem surprising to its international peers. The work that family members do for young and old alike is supported in many wealthy countries by government investments. Among 38 OECD countries, U.S. spending on family investments—including child credits, child care support, paid leave, and payments to sole parents—was just 0.7% of GDP in 2021, just above Turkey (0.5%) and Mexico (0.6%), and well below the OECD average (2.1%). The United States is often ranked as one of the least child- and family-friendly wealthy countries in the world, and today sits at the bottom of the list with Bulgaria and Chile.

Such disinvestments shine a spotlight on how devalued care work is in the United States. Demographics may play a role; women are overrepresented in unpaid and paid care roles. In 2019, 95% of early childhood education workers in the United States were women and were paid, on average, $14.22 an hour in 2022. Occupations where women predominate, like care work, pay lower wages than other occupations and because of the personal nature of the work may be viewed as less valuable than other jobs. Further, women’s unpaid caregiving is costly; American mothers lose an estimated average of $237,000 over their lifetimes in foregone paid work to provide family care.

The care economy will be increasingly important in an aging society

Long-term demographic change in the United States suggests the care economy should be a higher-priority investment. In 2020, 55.8 million Americans were ages 65 and older, a growth rate of 38.6% over the last decade, and 41.8 million adults were informal caregivers to those ages 50 and older. Caregiving to older adults will only increase over time as America continues to age.

Meanwhile, there is a shortage of home health and personal care workers—those who often care for older people—with no resolution in sight. Such workers in 2021 had median pay of $14.15 an hour, and despite a current shortage of workers, demand is anticipated to grow 25% in the next decade. The churn in such roles was high—even before the pandemic—with over 30% of home health nurses leaving their job every year.

It is estimated that 38% of home health and 25% of personal care aides in the United States are immigrant workers, suggesting that much of the future labor supply will depend upon immigration policies changing in the next decade. Even with recent proposals to boost immigration, the United States is working against declines in immigration from the pandemic and the previous administration’s restrictive policies. The prospects for more home health and personal care workers in the country are discouraging at present.

Though pronounced in the United States, the care-work crunch is not limited to the country and is emerging as a global challenge. Combined, OECD countries will need a projected 13.5 million long-term care workers by 2040 to keep up with the demands of their aging populations. Globally, there are shortages in the overall health workforce projected through at least 2030, and Africa, the Eastern Mediterranean, and the Middle East will face the biggest gaps. In part, this is because wealthier countries are recruiting health professionals to keep up with demand.

What lessons can the United States learn from other countries?

Low fertility, long life expectancy, and restricted immigration have made Japan “the world’s policy laboratory” as it grapples with an aging and shrinking population and the caregiving and fiscal constraints that come with it. It is the oldest country, with 30% of its population ages 65 and older.

To care for its older population, Japan has introduced a long-term care insurance system, community-based integrated health, and even robots as solutions. But care work, for now, requires a workforce, and a future workforce depends on fertility. Japan is planning to boost child care spending, encourage parental leave, and incentivize young families to move to rural areas, hoping to encourage people to have children and ease care burdens on young families.

Countries in the European Union are also aging and watching Japan closely. One proposed solution is to embrace more refugees and migrants, which would also boost the region’s younger and working-age populations. This year the United Kingdom for the first time created 60,000 migrant visas for social care workers to staff care homes or to provide domiciliary care to people in their homes – a partial solution to filling 150,000 vacant positions. Though migration policies around the health workforce must be carefully managed so that they don’t exacerbate pre-existing inequalities between countries, the World Health Organization cautions.

The United States has been slow to embrace viable and long-term solutions to the care economy challenges that its international peers have adopted. Given the shortages of care workers and the aging population, the country will need a more dedicated strategy to support the needs of the young and old alike, as well as their paid and unpaid caregivers. The success of the overall economy—not simply the care economy—depends on it.

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