The caregiving crisis is upon us

Every day I hear team members, colleagues, and customers talk about the stress of juggling schedules to get kids to events, taking kids or parents to appointments, managing finances for their household and sometimes for their parents, and countless other challenges that come along with the important work of caregiving. For some, these caregiving responsibilities are expected, but we can't forget that for many people, becoming a caregiver is disruptive, and they may be thrust into the role unexpectedly. 

Caregivers make up approximately 20% of the current U.S. workforce, and the trend is only growing. By 2030, an estimated 73 million people in the U.S. will be 65 or older, which will drive up the number of working caregivers in the sandwich generation — those caring for a child and an adult. And if you're wondering just how big of an impact caregiving has on employees — while 35% of all employees are concerned about feeling burned out, that number rises to a whopping 60% for people caring for both children and parents. 

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The financial implications are clear as well — nearly one-third (30%) of middle-income households have made a withdrawal from their retirement accounts to adjust for changes in their personal financial situations. Of those who made a withdrawal, 18% of those did so to pay for expenses related to an adult child or parent and 12% to pay for childcare needs. So how do we begin to address the caregiving crisis that is impacting the financial security of every generation of worker, and retired individual, in the U.S.? For starters, we have to understand the options on the table.

Tax policy solutions
Paid Family and Medical Leave (PFML) is an option that many caregivers see as a valuable resource. 

This is a program that is well-known, but extremely nuanced and oftentimes not fully understood. These PFML or paid family leave (PFL) programs require employers to provide eligible workers a portion of their pay when they're unable to work due to non-work-related illness or injury, pregnancy, childbirth, care for a sick or injured family member, child bonding, or certain military-related events. Some states have PFML policies that require paid time off for employees working in those states, regardless of the employer's location. While this is a great benefit for employees, it gets complicated for employers — especially those that operate in multiple states. And not only is it complicated for employers, but state lawmakers are trying to navigate policies that have no federal baseline of consistency, which means none of the 14 state PFML programs in existence are exactly the same.

To expand access to PFML, especially for employees in caregiving roles, we need to better support employers who are navigating this program. The good news is, we've seen consistent bipartisan support for some form of a PFML solution. The Employer Credit for Paid Family and Medical Leave, also known as the Fischer Tax Credit, makes it easier for employers to cover the cost of paying employees on leave by giving businesses the opportunity to earn a paid leave tax credit. This tax credit was signed into law as part of the 2017 Tax Cuts and Jobs At and is set to expire this year. As an important first step in addressing pain points for employers navigating PFML policies, it should be a priority for this credit to be extended beyond 2026. 

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For those who are struggling with the financial burdens of providing care themselves, we've seen other policies proposed. The Credit for Caring Act of 2024 would provide a nonrefundable tax credit for working caregivers. As the incoming Congress considers how to address the concerns of caregivers and their employers, it's clear that tax policy is going to be a critical component. Enacting or extending these policies to support both the employer and employee will be a great step forward in solving this crisis.

Bolstering the caregiving industry
Another option on the table is to bolster and incentivize the rapidly expanding caregiving industry. Individuals are looking for more and more care options every day. With the rising costs of assisted living, elder care, and childcare, solutions that help families navigate through dependent care options have increasing demand. 

More companies are looking to provide platforms that help family members find adult or childcare, provide access to experts who can guide them through the caregiving journey, or guide them on what financial tools are available to help protect financial futures — such as insurance solutions that provide benefits if activities of daily living are diminished. The government can play a role here in providing incentives for these businesses to continue to grow, and employers can direct their employees to these valuable resources.

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The risk is too high
Ultimately, the U.S. economy has a lot to lose if we do not figure out a solution to the caregiving crisis. A recent study from BCG predicts that beginning in 2030, the caregiver shortage will lead to a $290 billion loss per year to U.S. GDB. The risk of working individuals leaving the workforce to care for children or aging parents is only growing — and it's going to take employers and the government working together to find a solution that works.