Building the Caring Economy

It’s “Infrastructure Week”. President Trump has yet to offer a real plan to create jobs by investing in our nation’s infrastructure, but we’ve got one. Building the country’s caregiving infrastructure would simultaneously address two national needs: the need for care and the equally pressing need for good jobs.

For many American families, the struggle to get by is compounded by the demands and expense of caring for young children, older family members, and/or family members with disabilities.

Public investments to expand formal caregiving would put Americans to work while addressing the weaknesses in the nation’s caregiving systems: affordability, workforce compensation, and quality.

High-quality caregiving across the life span benefits young children, people with disabilities, and older adults, as well as their families and our economy. But despite its recognized benefits, the expense of such care currently puts it out of reach of too many families. The median cost of child care exceeds what the Department of Health and Human Services considers to be affordable, even for middle income families. And child care expenses pale in comparison to the cost of long term support, which at over $45,000 for a year of full-time home care – five times the median care cost for an infant – far outstrips the resources of most older adults and their families.

This means that family members are largely dependent on each other, or on friends, for both early and long-term care. More than three-fourths of young children whose mothers work are cared for by a relative. Among older adults who aren’t in nursing homes, only 3 in 10 supplement informal care with paid help. Juggling these responsibilities is costly not just for families – the value of wages parents forego to care for young children alone is estimated at $96 billion a year – but also to the productivity of the economy.

Families’ limited resources coupled with insufficient public subsidies perpetuate low pay across both the early care and direct care workforces. In every state, the median income for these workers falls below 200 percent of the federal poverty level for a family of three.  And since workers’ wages increase only minimally with advanced skills or tenure, they have little incentive to engage in training that would improve care quality, or to stay in the field long term.

As a result, two-thirds of low income children are in care arrangements that do not meet the standards that have been shown to produce developmental gains.  And high turnover disrupts continuity in the care of people with disabilities and older adults that affects their health and can lead to more costly institutionalization.

So what would help?

Building the country’s caregiving infrastructure requires direct investments that subsidize families’ costs, promote quality care, and increase caregivers’ income. Coupled with wage enhancements for caregivers currently supported by federally-funded programs like Medicaid and the Child Care and Development Block Grant, these initiatives would expand the market for paid care and promote recruitment and retention of workers.

To demonstrate the job creation potential of increasing access to high quality early care, for example, we examined the cost and fiscal impact of expanding programs to include all young low income children who are not currently in a regular care arrangement—about 5 million children.

Under our proposal, the federal government would offer to fund the direct labor costs of new classes, with class size and teaching ratios in line with recommendations by the American Academy of Pediatrics. Each class would be staffed by one aide with at least a high school degree, an associate-level assistant, and a half-time bachelor level teacher shared across classes.

Children would gain exposure to a highly qualified caregiver, as urged by the Institute of Medicine, for at least half of each day. Full-day, full year programming would be provided to meet the needs of working parents and maximize the benefits to children. Wages would start at $15 per hour and rise to equal that of kindergarten teachers for staff who obtain bachelor degrees.

The federal investment would cover about 80 percent of the cost of care. To draw down funds, states would commit the rest, which could spur creative strategies to minimize expenses and even pressure employers to pay a fair share.

Early care advocates tend to highlight the significant long term impacts of early investments. But our approach would pay off for the economy in the short term, too, creating around 1.3 million new jobs at an estimated cost of $62 billion a year. That’s expensive, but we estimate that it could generate around $70 billion annually by increasing federal tax revenues, boosting local economic activity, and reducing public benefits.

A real infrastructure plan would create jobs while strengthening communities. Investing in caregiving would do both.

Laura Tatum is the Director of Jobs and Education and Nina Dastur is a Senior Fellow on the Project on Deep Poverty at the Georgetown Center on Poverty and Inequality. They are authors of the recent report “Building the Caring Economy: Workforce Investments to Expand Access to Affordable, High-Quality and Long-Term Care.”

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