Can't Grow Old Without Her

Tale as Old as Time

The U.S. labor market remains remarkably tight two years into the Fed's most aggressive tightening cycle since the early 1980s. The unemployment rate is little changed from when the Fed first started hiking rates (3.7% today versus 3.6% in March 2022), while more small businesses continue to report having difficulty filling positions than at any point in prior cycles. Part of the labor market's strength reflects the long tail of the initial monetary and fiscal policy support put in place in response to the COVID-19 pandemic. But it also reflects the slow-burning effects of the country's aging population that is reshaping nearly all dimensions of the U.S. economy.

The traditional working-age population (16-64 years old) is projected to grow only 0.2% per year through 2032. In comparison, the ranks of Americans age 65 and older is estimated to grow 2.3% per year, with the population 75+ growing the fastest of any age group at a 3.9% annualized rate (Figure 1). Not only will more subdued growth in the traditional working-age population put direct strains on labor growth ahead, but, as we explore in this report, the surge in elderly Americans stands to indirectly weigh on the labor force as a rising share of the population requires eldercare. Care responsibilities related to deteriorating health have been shown to negatively impact economic growth by increasing absenteeism, relegating workers to part-time employment or driving them out of the labor force all together.¹ For individuals, the need to care for aging loved ones can sidetrack careers, reduce earnings and force early retirement, putting caregivers in a more financially fragile position.

Perhaps not surprisingly, women shoulder a disproportionate share of these care responsibilities, and with them a disproportionate share of the costs. Yet women are not only leaned on more heavily for unpaid care, but they play an outsized role in providing paid care as well. As the population rapidly ages, it won't be able to do so gracefully without her.

Care responsibilities related to deteriorating health negatively impact economic growth by increasing absenteeism, relegating workers to part-time employment or driving them out of the labor force all together.

The Rise of Eldercare Needs

The U.S. population is growing older. In 2022, 22% of the population was 65 years of age or older, up from 17% a decade earlier, and the U.S. Department of Labor (DoL) projects the ranks of seniors will continue to rapidly expand in the coming years.² The share of the population ages 65+ is set to reach a quarter of the total population by 2032, as seniors account for three-quarters of the gain in the civilian non-institutionalized population over this period. The oldest group of Americans will drive the bulk of the gain; individuals ages 75+ are projected to account for more than half (+10.6 million people) of the 18.7 million rise in the total population by 2032 (Figure 2).

With a growing portion of the population reaching their senior years, the need for eldercare has never been greater. Need for physical assistance rises with age, as does the incidence of disability, which can affect an individual's ability to care for themselves.³ In 2022, the share of the U.S. population that had difficulty with self-care was 6.2% for those age 65 to 74 and 14.2% for those age 75 years and over. Those shares translate to over 5.3 million elderly people having difficulty caring for themselves in 2022, about 500,000 more people than prior to the pandemic in 2019. If those shares were to remain constant—a conservative assumption in our view as the oldest cohorts become increasingly “old”—the aging of the population would lead to 1.7 million more Americans requiring care by 2032 (totaling 7.1 million people).

Individuals ages 75+ are estimated to account for more than half of the projected rise in the population by 2032.

Demand for social assistance and home health aides is thus set to rise, as are unpaid care responsibilities. While the growing need for eldercare represents a potential boon for certain types of employment, it also threatens to drive more workers out of the labor force. Women disproportionately stand in the middle of these crosscurrents given their outsized roles in both paid and unpaid caregiving.

Women Have Become Increasingly Important Players in the Labor Market

Stepping back, the expanding demand for eldercare has occurred alongside women becoming increasingly important players in the labor market. Women make up a near-record share (46.8%) of the labor force today and, as a result, have helped to ease hiring difficulties that emerged even prior to the pandemic.

The growing ranks of working women reflect stronger gains in labor force participation relative to men (Figure 3). The labor force participation rate gap between men and women currently sits at an all-time low. Participation gains have been impressive among women in their “prime” working years (ages 25-54), but also among women ages 55+, with this group representing essentially a record 10.6% of the total labor force today (Figure 4). Rising participation and employment among women has accounted for more than 90% of middle-class household income growth over the past four decades, which underscores the macroeconomic potency of women's labor force advancements.⁴ To the extent that growing eldercare responsibilities dent women's ability to participate in paid employment, economic growth suffers via weaker labor supply.

Unpaid Care Disproportionately Shouldered by Women

While women's share of the formal labor force is hovering around an all-time high, women are also more likely to take on informal care work, contributing to the persistent labor force participation deficit with men. Early in their careers, women shoulder more childcare responsibilities, the implications of which we discussed in a previous report. But caregiving responsibilities often continue with the aging of parents and other elderly family or friends. According to the American Time Use Survey, 37 million people, or 14% of the population, provided unpaid elderly care in 2021-2022. Among those caregivers, 59% were women, and in digging deeper older women in particular bear the brunt of unpaid eldercare (Figure 5). Women ages 55+ comprised 28% of all unpaid eldercare providers over 2021-2022. The comparable share among men ages 55+ was 18%.

Among those men and women providing care, there is no significant difference in the average hours devoted to unpaid eldercare. However, with women more likely to be caregivers in the first place, women in aggregate provide the bulk of unpaid care hours. On days set aside for eldercare, unpaid providers spent an average of 3.6 hours per day on their care responsibilities. If we assume the quality of care provided is equivalent to that of a home health and personal care aide, then the value of unpaid care provided by women was worth $113B in 2022.⁵

Balancing any caregiving responsibility with employment can be difficult, and older women's outsized share of unpaid eldercare is one prominent factor in lower labor force participation for this group. As shown in Figure 6, 1.9 million women ages 55+, or 68% of those not in the labor force for reasons other than retirement or disability, reported not participating in the labor market due to family obligations in 2023.⁶ Reducing that number to be on par with men of the same age would be equivalent to a 0.6 percentage point increase in the economy-wide labor force participation rate.

Women who provide unpaid care but stay in the labor force are also more likely to decrease their paid hours worked. The share of women 55+ working part-time due to family obligations was 5.3% in 2023, compared to 1.3% among men. In other words, unpaid eldercare constrains older women's labor force engagement, and if responsibilities were more evenly distributed, women ages 55+ could have made even stronger contributions in recent years to the labor force.

Women comprise 59% of the economy's 37 million unpaid providers of eldercare.

When a family member falls seriously ill, women are 20% more likely to report being the primary caregiver than men according to a Pew Research Center study.⁷ One reason women often take on more unpaid eldercare work is that women tend to live longer than men and are more likely to care for an ailing spouse. Another is that women continue to earn less than men. The pay gap between full-time working men and women remains stuck around 83%, meaning it can make more financial sense for a daughter than a son to step back from paid employment to care for an elderly parent. That said, embedded in the persistent pay gap between men and women is the earlier toll of childcare and lingering social norms as women as caregivers. These disproportionate care responsibilities at both ends of the age spectrum can strong-arm women into career breaks and/or entering into lower-paying occupations that provide more flexibility for unpaid family needs.

Eldercare needs can also arise unexpectedly, and the suddenness of demand can lead to unplanned changes in employment. Researchers at the Center for Financial Security found that an eldercare need lowered women's likelihood of being employed more than men's within the first two years of the caregiving spell.⁸ A separate study from the Center for Retirement Research found that near-retirement age individuals are 12.1% more likely to retire earlier than planned if a parent moved in with them, presumably for eldercare reasons.⁹ This rapid and often unexpected shift in employment status can leave women at a disadvantage when preparing for their own retirement. Exits from the labor force, even if temporary, can have lasting effects on career earnings and retirement finances.¹⁰ Re-employment often comes at a lower earnings trajectory, and time out of the workforce along with reduced career earnings weighs on eventual Social Security payments.¹¹

The suddenness of eldercare needs can lead to unplanned changes in employment and have lasting effects on career earnings and retirement finances.

At What Cost?

The demand for informal, or unpaid, care comes as the costs of formal care are prohibitive for many. Genworth, a provider of long-term care insurance, estimated the annual median cost of a private room in a nursing home facility was $108K in 2021. Separate data show consumer nursing home costs vastly outpacing household income and the overall cost of living (measured by the Personal Consumption Expenditures Deflator) over the past few decades (Figure 7). Less intensive forms of care, such as adult day care ($20K), in-home care services (~$55K) and assisted living facilities ($54K), cost less but are often still prohibitively expensive; the median income for a household headed by an individual age 65 or older was just $48K in 2021. While many recipients do not pay these costs in full, even with financial assistance from Medicare, Medicaid or private insurance, estimated costs would eat up more than half of the median household income of individuals ages 65 and over.¹²

Paid Eldercare Relies on Women Even More than Unpaid Care

With a higher share of working-age women today juggling careers while the population rapidly ages, demand for paid eldercare has also risen sharply. This need is also met primarily by women. Women account for three-quarters of the healthcare practitioners and technicians tasked with keeping the aging population healthy, but play an even larger role in day-to-day care jobs. Women comprise 82% of home health and personal care aides, arguably the single most important occupation for eldercare as these workers provide support in daily activities and health monitoring to people with chronic illnesses and disabilities (Figure 8).

The growing need for paid care therefore also represents an opportunity for women's employment prospects in the years ahead. The DoL projects that job growth in healthcare will outpace overall employment growth over the next decade (Figure 9).¹³ Specifically, it expects healthcare practitioner & technical occupations and healthcare support occupations together to account for roughly 40% of the net jobs gained over 2022-2032, even as those occupations account for 9.5% of employment at present. Home health and personal care aide jobs are projected to grow a staggering 22% over this period and to account for 805K of the 4.7 million jobs added through 2032—the most among more than 800 detailed occupations—to result in home health and personal aides becoming the most widely-held occupation in the United States by 2032.

Women account for 82% of home health and personal care aides, which are expected to grow 22% through 2032 to become the most widely-held occupation.

Filling the fast-growing need for healthcare support workers may be challenging as women ages 55+ account for an outsized share of employment in these occupations, but are also the demographic group most likely to be juggling unpaid care responsibilities. Women ages 55+ make up 27% of workers in healthcare support occupations, which is roughly 2.5 times greater than their share of the overall labor force and well above the share of men of the same age in these occupations (3%).

Yet rising demand for healthcare support-related jobs are likely to offer some relief to older women's employment prospects as other jobs disappear. According to the DoL projections, traditionally female-dominated jobs in office & administrative support and in sales occupations (especially secretaries and administrative assistants, financial clerks and other office support workers) are conversely most at risk for employment declines over the next decade, as new technologies are ripe to replace more administrative and routine tasks (Revisit Figure 9).¹⁴

While a shift toward a more care-oriented economy will offer employment opportunities to women as other historically female-dominated jobs are projected to decline, wages in these labor-intensive jobs tend to be low. The median annual pay for home health and personal care aides was just $30,180 in 2022, about a third lower than the national median wage for all occupations ($46,310) and lower than many of the jobs disproportionately held by women that are projected to decline in coming years (Figure 10). Overall healthcare support occupations are only slightly better off with a median wage of $33,600, but the comparison is sunnier for women who work as healthcare practitioners & technicians, particularly registered nurses, where the median salary is 75% above the median for all occupations.¹⁵

Although many of the jobs supporting the aging population pay a relatively low level of wages, compensation has experienced striking growth over recent years. Average hourly earnings in many eldercare-related industries have outpaced growth in the overall healthcare & social assistance industry as well as average wages in total private services since the COVID-19 pandemic emerged and over the past year (Figure 11). Even as the economy moves on from the initial pandemic-scramble for healthcare workers, the rising demand for eldercare and middling growth in the working-age population should keep wage growth for healthcare support workers relatively strong and support the women supporting us.

Earnings in many eldercare-related industries have outpaced average wages in total private services since the COVID-19 pandemic emerged and over the past year.

Strong wage growth among healthcare workers and care providers will likely pass through to higher eldercare costs given the relatively limited scope for productivity gains in the sector. But as previously alluded to, the U.S. government shoulders much of these costs, in contrast to childcare. Researchers at the National Bureau of Economic Research estimated that the cost of paid long-term eldercare totaled around $180 billion in 2019 and that the U.S. government paid for 63% of that total cost through Medicaid and Medicare programs.¹⁶ Federal healthcare costs are set to rise as the population ages in the coming years. The Congressional Budget Office estimates total spending on healthcare programs will rise nearly 70% over the next decade (Figure 12), which is approximately 30% faster than all other federal outlays.¹⁷ While these programs include other forms of healthcare spending beyond that dedicated to long-term eldercare, it demonstrates the growing demand for healthcare in the United States as the population ages. Under the current trajectory, government spending on healthcare stands to add to the deficit, crowd out other forms of spending, necessitate higher taxes, or lead to some combination of the three.

Eldercare Is a Cost to Us All

Women are central to providing eldercare in our economy, but rising eldercare demands affect us all. Close to 40 million Americans provide eldercare today; about 37 million do so informally in the form of unpaid care, while another two million are employed as home health and personal care aides. While a disproportionate share of caregivers are women, the sheer number of families in need of eldercare in coming years will ripple across the economy.

The population ages 65+ is set to reach a quarter of the total population in a little under a decade, which by our conservative estimates suggests 1.7 million more Americans will require care by 2032. This aging demographic profile of the U.S. poses a direct challenge to labor supply in that there will simply be fewer Americans of traditional working age. The less-widely recognized indirect challenge to supply is that rising eldercare responsibilities can weigh on the labor force participation of working-age Americans, particularly women. The potential reduction in the labor pool may not appear to be a big issue today as the Federal Reserve is trying to cool off the economy, but looking beyond the current cycle, this participation hurdle contributes to a dismal labor force growth outlook.

More persistent shortages of labor will prove challenging for businesses and, all else equal, could be costly in terms of its potential to put upward pressure on wages and ultimately prices. Employers may benefit in offering workers flexibility to care for aging family members or young children. McKinsey & Company's 2023 Women in the Workplace report found that employers underestimate how important flexibility is to employees and that women place more importance on flexibility, specifically when choosing when and where to work.¹⁸ Bridging this gap may be the key to attracting talent at a time when the pool of potential labor is growing slowly.

Families may also increasingly turn to formal, or paid, eldercare. Employment opportunities in care-centric industries will likely remain robust as a result. This will provide job opportunities to women as other traditionally female-dominated jobs are at risk of disappearing amid a rise in automation. However, these care-oriented jobs are relatively low pay. Along with the unequal provision of unpaid care, which drives more women out of the labor force or into part-time and lower-paid employment than men, the growing need for eldercare is yet another hurdle to women's financial well-being and retirement preparedness. And with paid eldercare disproportionately provided by older women, this workforce is set to be facing its own tug-of-war between unpaid family care and paid employment.

The bottom line is that the rising need for eldercare is a cost to us all. Whether you're stepping out of the labor force to care for a family member or loved one directly, laying out the monetary expense of a nursing home facility or in-home health aide, or simply contributing in the form of (potentially higher) taxes, we all pay for eldercare. Yet women have and are positioned to shoulder a disproportionate share of caregiving ahead. As the United States transitions to a more care-oriented economy, it will need her.

Employers may benefit from offering workers flexibility to care for aging family members at a time when the pool of potential labor is growing slowly.

Endnotes

1 – Tang, B., Li, Z., Song, Hu., Xiong, J. “Economic Implications of Health Care Burden for Elderly Population.” Inquiry. September 2022. (Return)

2 – We use projections for the civilian non-institutionalized population throughout this report from the U.S. Department of Labor (DoL). In its projections, the DoL uses the U.S. Census Bureau population projections as an input; however, the Census Bureau forecasts the entire resident population, while the DoL publishes estimates for the civilian non-institutional population, which is defined as people age 16 and older residing in the United States who do not live in institutions and who are not on Active Duty in the Armed Forces. We use the DoL's population projections, which are mechanically lower than the Census', because the civilian non-institutional population is the relevant denominator for the labor market statistics we are interested in, such as the labor force participation rate. See the methodology section of Labor Force and Macroeconomic Projections Overview and Highlights, 2022-32 for more detail. (Return)

3 – The Census Bureau estimates about 47% of individuals ages 75 and older have at least one disability. See “Overcoming Challenges in the Disabled Community” (June 2023) for more detail. (Return)

4 – Sawhill, I. and Guyot, K. “Women’s work boosts middle-class incomes but creates a family time squeeze that needs to be eased.” The Brookings Institution. May 2020. (Return)

5 – To approximate the value of unpaid care provided by women, we assume the quality of care is similar to that of a home health & personal care aide. Thus, we take the median hourly wage of personal aides, which averaged $14.33 over 2021-2022, and multiply it by the hours of unpaid care provided by women per day over that same period, which was 1 hour on average. We then annualize that product and multiply it by the total number of female unpaid eldercare providers, which was 21.89 million. The final product is $113.3B worth of unpaid care provided in 2022. (Return)

6 – The Current Population Survey asks individuals who are part-time or not in the labor force to categorize the reason for their employment situation. Reasons include seasonal work, labor disputes, weather events, holidays, childcare problems, illness, other family/personal obligations, education/military obligations, among others. “Eldercare” is not an available reason to report, so for purposes of our labor force calculation we assume all women ages 55+ who report not being in labor force due to “other family/personal obligations” are likely providing eldercare or childcare.

Our calculation for the number of men and women in 2023 is an annual average from each month's Current Population Survey responses, and not a total over the year. (Return)

7 – Parker, Kim. "About one-in-four U.S. workers have taken leave to care for a seriously ill family member." Pew Research Center. March 2017. (Return)

8 – Truskinovsky, Y. and Maestas, N. “Caregiving and Labor Force Participation.” Retirement and Disability Research Center at University of Wisconsin-Madison. 2020. (Return)

9 – Munnell, A., Rutledge, M., and Sanzenbacher, G. “Retiring Earlier than Planned: What Matters Most?” Center for Retirement Research at Boston College. February 2019. (Return)

10 – “Caregiving in the U.S. 2020: A Focused Look at Family Caregivers of Adults Age 50+.” AARP and National Alliance for Caregiving. November 2020. (Return)

11 – Enda, Grace and Gale, William G. "How does gender equality affect women in retirement?" The Brookings Institution. July 2020. (Return)

12 – Many care recipients do not pay these costs in full. Medicare and Medicaid together financed 75% of in-home eldercare services and 56% of nursing home and assisting living care in 2018. After accounting for smaller contributions from private insurance and other forms of assistance, individuals typically shouldered 10% of the cost of in-home care and 24% of the cost of nursing home care. If we assume these shares have held constant, the median nursing home resident paid $26K out-of-pocket for a private room in 2021. Even with the financial assistance, that bill eats up more than half of the median household income among individuals ages 65 and over.

See Gruber, J. and McGarry, K. “Long-Term Care in the United States.” National Bureau of Economic Research. November 2023. (Return)

13 – Javier Colato and Lindsey Ice. October 2023. “Industry and occupational employment projections overview and highlights, 2022–32,” Monthly Labor Review, U.S. Bureau of Labor Statistics. (Return)

14 – See the U.S. Department of Labor's projections for the fastest declining occupations. Older women represent an outsized share of administrative occupations and account for over a third of secretaries and administrative assistants, which the BLS projects will lose about 10% of its jobs over the next decade. Likewise, older women are about 20% of financial clerks, which are projected to decline by 7%. (Return)

15 – See Healthcare Occupations in the U.S. Department of Labor's Occupational Outlook Handbook for more detail. (Return)

16 – See citation in endnote 12. (Return)

17 – Author calculations based off of the Congressional Budget Office 10-Year Budget Projections, February 2024. (Return)

18 – Field, E., Krivkovich, A., Kügele, S., Robinson, N. and Lareina, Y. "Women in the Workplace 2023." McKinsey & Company. (Return)