Looking back over 2023, there were so many critical economic stories, including the rise of artificial intelligence, the Federal Reserve's campaign against inflation, and the strong job market.
Yet the most important economic story of 2023 might be disturbing evidence about America's broken caregiving system. The need for reform is, yet progress has been slow. Caregiving should top the list of household budgeting and retirement planning priorities.
Families are financially stressed by caregiving. Monthly payments for child care rose by 30% since 2019, according to Bank of America Institute. Nearly half of families earning less than $100,000 annually will spend more than $18,000 on child care, according to Care.com. AARP's report "Valuing the Invaluable" calculates family caregivers provided 36 billion hours of unpaid care to adults needing help worth $600 billion in 2021. That's up from $470 billion in 2017. Women who provide care for children and adults who need it lose an average of $295,000 in lifetime income (in 2021 inflation-adjusted dollars), according to an analysis by the Urban Institute.
There has been improvement. Thirteen states and the District of Columbia now have mandatory paid family leave systems while another eight states have voluntary paid family leave systems. There are additional state-backed experiments, such as Washington state's public long-term care insurance program. A House bipartisan working group on family paid leave recently released a draft framework with the goal of modestly increasing access to paid family leave.
None of these initiatives is sufficient to overhaul America's patchwork quilt of underfunded programs and services. The current approach isn't sustainable, but it will probably take years before we start seeing meaningful reform.
Few of us have sufficient resources to rely solely on savings for dealing with children or aging adults coping with mental and physical infirmities. But there is a lot we can do by taking the time to plan. For example, talking with family, extended family and your close circle of trusted friends about caregiving expectations and needs is critical. So is researching the public, nonprofit and private resources available in your community. The financial challenge of caregiving for both children and elders is a major factor behind the growth in multigenerational living. Would that work for you?
Household planning won't solve the care economy's deep-rooted problems. But planning will help households prepare better for their caregiving responsibilities.
Chris Farrell is a senior economics contributor for "Marketplace" and a commentator for Minnesota Public Radio.