Care economy: The major economic crisis US business and government leaders are ignoring

Each and every citizen can easily paint a picture of a parent or caretaker struggling to calm an upset child, or even a nurse helping an elderly patient manoeuvre through daily tasks.

These are commonly accepted aspects of daily life, but what often goes unaddressed is the emotional burden of this necessary role – how some people have had to abandon careers and schooling to provide care for their loved ones, while others depart the industry entirely because of low wages and long hours.

Now take those examples and multiply them by millions, for each job impacted, and the result is the $6 trillion care economy currently at risk of collapsing within the United States.

Comprising both paid and unpaid services, the care economy represents a sector of those who are responsible for providing care services to populations unable to independently support themselves, totalling roughly a quarter of the US gross domestic product (GDP) as of 2022.

Given historic labour shortages and compounding economic challenges in the wake of the COVID-19 pandemic, a massive chunk of US growth is at risk unless business and government leaders come together to address the crisis at hand.

According to BCG research, if the care economy continues to operate without improvement, the US stands to lose $290 billion in GDP in the year 2030 and beyond, which is equal to the total GDP of the US state of Connecticut.

Yet, that is just the mid-range scenario. Extreme forecasts put the GDP loss at about $500 billion in the year 2030, highlighting how the stakes are too high for leaders to not address this growing problem.

This insurmountable loss can be attributed to a few key aspects:

The companies most likely to weather any economic headwinds are those that embrace data-driven, employee-first policies. With speculation of a financial recession dominating the headlines, there is mounting pressure on executives to demonstrate how resilient their business models are. Strong employee-first policies enable leaders to showcase the benefits of investing in their workforce.

Employee well-being is, and should be, one of the top priorities for organizations transforming their operating strategies to be more resilient. As the workforce continues to rebound from COVID-19 and to adopt hybrid working models, employers need to be more flexible for those who are also providing care services to their families and professionally.

In the same BCG survey, working parents reported spending, on average, 30 hours a week on unpaid caregiving in addition to their full-time jobs. Adopting employee-first policies would address these critical gaps.

On the heels of the ‘Great Resignation’, these workers are going to favour companies who can provide certain policies and benefits to help offset the burden of providing care, specifically:

As influential as businesses are in moving the needle on the care crisis, this issue is too large for one sector to tackle alone. Partnership with the public sector is a major component of addressing the potential GDP loss.

To start, the US is the only Organisation for Economic Co-operation and Development (OECD) country without national paid leave policies. Paid leave enables caregivers to take the necessary time to support loved ones without experiencing major quality of life changes triggered by a dramatic decrease in household financial support.

Additionally, childcare via subsidized or universal programmes provides access to quality childcare support – and has already demonstrated clear benefits for states and districts, such as Washington, DC, where universal pre-kindergarten care has shown to increase maternal labour-force participation by 10 percentage points.

When it comes to the paid portion of the care economy, higher wages can ensure that jobs are seen as more attractive and valued by potential workers. Implementing higher wages can broaden the talent pool, but without proper training and recruitment measures, the pool is unsustainable.

It is important that public-funded care facilities implement proper training practices and leverage technology solutions and emerging innovations to ensure that caretakers can work more efficiently and relieve the more difficult aspects of the jobs.

In the absence of such options, data showed an increase in those leaving the workforce to become full-time caregivers, as well as caregivers leaving the workforce.

In addition to the aforementioned steps that the private and public sectors can take to address this crisis, technology will continue to be a massive proponent of innovation when leveraged properly. While major advancements have been made in autonomous aspects using technology, that is not what this article aims to suggest.

Where technology can be most useful is through the implementation of data to better empower caregivers and provide a more streamlined experience, be it in the paid or unpaid sector.

For example, virtual in-home care agents such as Sensi.AI can leverage artificial intelligence (AI), to better inform of a crisis, activating the caregiver in a more timely manner when the impact can be dire in a mere matter of seconds.

When woven into the fabric of an industry, technology often helps positive change and transformation.

For the care economy, it ensures a more resilient framework that can withstand generational changes and labour shortages to come.

It is easy to lose sight of a crisis of this nature as the global community continues to drive forward net-zero initiatives.

However, for leaders in the US, in order to demonstrate resiliency in all facets of their respective businesses, it is imperative that they redirect funding towards a more caregiver-centric employee experience. The risks to the care economy are too great to ignore.