February marked the 27th anniversary of the federal Family Medical Leave Act (FMLA). It allows people to take time off work, typically without pay, to recover or care for a loved one, primarily a child, a parent or an ailing spouse. While the FMLA was groundbreaking in 1993, today it doesn’t go far enough to address the economic challenges of caregiving. The lack of supportive federal work-family policies, like paid family and medical leave, long-term care insurance and adequate incomes for paid caregivers, means that family caregivers often face the hard choice between working for pay and caring for others. The result is lower pay and fewer savings for family caregivers’ own future, who are often already in a financially vulnerable position to begin with. The lack of strong policies makes a bad situation worse.
Improving public policies to support for caregivers is crucial for all, although the issue is often couched only as a women’s issue. Yes, women still tend to be more likely to be caregivers and thus bear the brunt of adverse financial effects that can come from caring for others. They frequently earn less, cut back on hours at work and even leave the labor force all together when facing the dual challenges of working for pay and caring for somebody else. These detrimental effects for women are furthered exacerbated by stereotypes that women should assume caregiving responsibilities. But, arguing that such policies primarily support women misses the point. Women won’t truly see equal opportunities and society will not get the full benefits from women’s full labor force participation – more innovation and faster economic growth —if their income and wealth disadvantages due to caregiving persist. Moreover, a large and growing share of men are taking on caregiving for family members and they also feel the financial pinch from caring for others. Addressing the financial challenges that caregiving brings with it is critical to create truly equal opportunities for all and strengthen the economy as a result.
People often decide to care for others out of love and a sense of responsibility. This doesn’t mean that caregiving doesn’t have an economic impact on family caregivers. It does. Caregivers, especially women, tend to see lower wages and end up working fewer hours. And caregiving poses unpredictable challenges to people’s work schedules as they often have to deal with unexpected events such as a child getting sick with the flu or a parent’s fall at home. Caring for somebody else can thus be especially hard for people who already have unpredictable and unstable work schedules. People then have to balance and often choose between working for pay and caring for somebody else.
These adverse labor market outcomes make it harder for family caregivers to save for their own future. They have less money and have a harder time planning for the future. They also have less access to an employer’s retirement plan because they work too few hours or have to switch jobs more frequently to accommodate the dual demands of working for pay and caregiving. The result is then a twofer of economic insecurity: current economic hardship and prolonged insecurity into the future.
In addition, caregivers can also experience negative health effects, especially when they care for aging parents and ailing spouses. Those situations can be physically demanding, emotionally stressful and socially isolating. Parental and spousal caregivers are more likely to suffer from back pain and depression, among other health issues. Worse health raises costs and again makes it more difficult for caregivers to put money away for their own future.
Caring for others goes along with less wealth as data from the University of Michigan’s Health and Retirement Study shows. Consider the data on parental caregiving, for instance. My collaborators, Michele Tolson and Frank Porell, and I compare two groups of people whose parents need help with personal care such as eating, bathing and toileting. We call one group potential caregivers, when their parents or in-laws need help, but they themselves do not provide that help. And we call those who provide unpaid care “current caregivers”. We also identify those who have provided care to parents in the past, but no longer do so now and those who do not have parents who need now or in the past. Current caregivers have fewer retirement savings in their 401(k)s than potential caregivers (see figure below). Among women, past caregivers have also less wealth than current or potential caregivers, suggesting that they will not recover their retirement savings after caring for an ailing parent ends. Our summary data show that wealth gaps between caregivers and non-caregivers are even greater when people care for a sick or disabled spouse. Caring for others goes along with fewer savings over extended periods of time, especially for women, and thus worsening gender retirement wealth inequality.
Addressing the financial challenges that people experience when caring for a loved one then will boost economic security across many dimensions, not just for women. This help can come from more paid family leave options. It can also come from greater scheduling flexibility at work. And it will require more investments in the caregiving infrastructure – more affordable long-term care insurance and greater financial support for paid caregivers — to address looming shortages of paid and trained caregivers. This can complement the work family caregivers do and ease their financial challenges.
As our population gets older, our policy support system for dealing with the caregiving challenges has been woefully inadequate. The FMLA is almost three decades old and was a good start, but it was not nearly enough. As a result, many working-age families, especially those who are financially vulnerable to begin with, are often making sacrifices in job to help and are getting financially squeezed in the process. Designing a stronger and more comprehensive financial support system for caregivers will ease the financial risks of this labor of love.