What does caregiving cost businesses? In answering this question, it’s important to begin with an understanding of what caregiving is, who caregivers are, and the incidence of caregiving. It is also important to understand that only the financial cost can be estimated; intangible costs, such as the business owner’s peace of mind, are difficult to value.
Caregivers are family, friends, partners, and neighbors who provide assistance to persons who have functional limitations. The assistance provided is help with activities of daily living (ADLs), such as bathing, grooming, feedings one’s self, ambulation (moving from beds to chairs and back again), and incontinence. ADLs generally describe personal tasks necessary to get through the day. Caregivers may also assist with instrumental activities of daily living (IADLs) such as shopping, meal preparation, housework, money management, and using a telephone. Many of these tasks are labor-intensive. They can be exhausting.
Although many caregivers are male, statistically, the typical family caregiver is a 46-year-old woman. She will be caring for her widowed mother. Most often, her mother does not live with her. She is married and employed. Fifteen percent of caregivers provide care to someone who lives at least an hour away.
As of November 2006, an AARP estimate indicated that between 30 million and 38 million adult caregivers provide care to adults with a functional limitation. The U.S. Department of Health and Human Services places the number of caregivers closer to 50 million. These caregivers suffer lost wages, lost retirement benefits, lost healthcare benefits, isolation, stress, depression, and tend to have increased health problems of their own. Ignoring the intangibles, the estimated financial value of the care provided is $350 billion annually.
More than sixty percent of caregivers are in the workforce. A MetLife report published in 2006 estimates that 7,010,520 caregivers are working full-time, providing more intense care for someone over the age of 18.
In 2002, caregivers comprised at least 13% of the workforce and some estimates indicate that within the next five years, more than one-half of the U.S. labor force will be caregivers. According to the AARP, 92% of working caregivers reported major changes in their work patterns:
- 83 percent report arriving late/leaving early, or taking time off during the day.
- 41 percent report having to take a leave of absence.
- 37 percent report going from working full time to part-time.
- 35 percent report giving up work entirely.
- 15 percent report losing job benefits.
- 14 percent report turning down a promotion.
- 12 percent report choosing early retirement.
As caregivers miss work, or as valued employees leave the workforce, businesses suffer losses associated with replacing employees, absenteeism, care crises, workday interruptions, supervisory time, unpaid leave, and reductions in hours from full-time to part-time. More than seventy percent of surveyed employers feel that staffing problems related to caregiving have increased over the past ten years, and ninety-two percent believe the problem will increase over the next ten years. There are good reasons for concern; the Bureau of Labor Statistics estimates growth in the labor market will decline through 2016 as baby boomers retire and because the participation of women in the workforce appears to have peaked.
The 2006 MetLife report estimates that replacement cost for employees leaving the workforce were $1,279,122,806 for men and $1,543,338,888 for women. Absenteeism costs were $491,970,602 for men and $2,938,293,389 for women. The cost of partial absenteeism was $373,663,120 for men and $450,849,345 for women. Workday interruption costs were $995,654,080 for men and $1,837,317,082 for women. The cost due to crisis in care was $$737,955,377 for men and $890,392,124 for women. Costs related to supervision were $332,389,985 for men and $447,878,487 for women. Costs associated with unpaid leave were $655,960,335 for men and $791,459,666 for women. Costs associated with reducing hours from full-time to part time were $2,082,292,692 for men and $1,267,434,715 for women. The total of these costs is $17,115,972,695. However, these business costs are limited to losses related to the 7,010,520 employed caregivers providing intensive care. When the numbers are adjusted to include all employed caregivers, 15,933,000, then business losses total $33,619,070,346. The average cost to business per full-time employed caregivers was $2,110.
The cost of lost productivity due to caregiving is substantial. When contrasted against other productivity losses, those attributed to caregiving represent one-half the cost of losses due to common pain conditions such as arthritis, headache, back, and other musculoskeletal conditions. It presents three-fourths of lost productive work time due to depression. Another hidden expense is the increased cost of health care, and resulting in increases in the cost of health insurance since caregivers tend to develop chronic conditions of their own at twice the rate of non-caregivers. One study showed that 75% of caregivers reported negative health consequences, including depression, stress, panic attacks, headaches, loss of energy and sleep, weight loss, and physical pain.
Individual incentives and encouragement are unlikely to address business concerns since caregiver-employees often see no economic alternative. The above estimate of the value assumes that 34 million caregivers donate 1,080 of care per year, with each hour valued at $9.63. However, if caregivers attempted to hire assistance from an agency, a MetLife survey of long-term care costs estimates the average cost of a paid caregiver ranges from $13 to $24 per hour.
Incentives that show promise are those which invest in the community or in employees across the board, essentially spreading the caregiving risk across the employee base. About 33% of large companies now offer basic eldercare benefits. These benefits often include resource materials and referral services, unpaid leaves of absence, dependent care flexible spending accounts, counseling, backup eldercare, subsidized in-home emergency care or adult daycare, on-staff geriatric care specialists, the inclusion of an older relative on a health insurance plan, and workplace support groups.
Employers who choose to forego developing in-house programs can, in many cases, provide for their employees by supporting existing community efforts. For example, an employer that chooses to forego offering in-house adult day care services might provide funding for a community adult daycare program. Organizations such as the Alzheimer’s Association often organize support groups; donations to these organizations extend their ability to serve local communities and are tax-deductible. Area Agencies on Aging serve as an information clearinghouse in many communities and caregiver employees can be referred to them for information concerning benefits and services available to families.
Underlying the crisis, though, is a lack of preparation. Most families are ill-prepared to respond to a chronic care crisis. A recent research brief published in the online McKinsey Quarterly, What Consumers Want in Health Care, states that a contributing factor to unpreparedness is “confusion about what medical care will or can cost—a confusion that can lead to poor financial planning.” Education, then, should be part of a progressive response to assisting families so they are not taken by surprise when a crisis occurs.
Education remains a problem, though. Although some larger companies are taking progressive steps, a 1998 survey of human resource directors indicated that 37% did not feel like their organizations made a real and ongoing effort to inform employees of available assistance for managing work and family responsibilities. Though there is no hard research on usage, field researchers believe that even when companies do offer benefits, only 2% of employed family caregivers take advantage of them.
One solution employers might consider is providing group long-term care insurance. Even if it is unavailable for parents of employees, it would: (1) educate employees regarding long-term care insurance so those employees seek it out for their parents; (2) it would provide assistance if an employee’s spouse required long-term care; and (3) it’s the right thing to do for employees, especially if the employee pays a portion of or most of the premium. One reason for providing group coverage is that it eliminates the necessity for individual medical underwriting. That makes it available to employees with pre-existing conditions.
Another possible solution is transforming the model from mere education to advocacy. By enlisting educational support from elder law attorneys, employers might empower their employees to seek out those programs and services that will alleviate confusion and resulting stress. Although many elder law attorneys focus primarily on asset protection, a growing number of elder law attorneys have adopted a “life care planning” approach to elder law. Those attorneys, most of whom have joined the Life Care Planning Law Firms Association (www.lcplfa.org), generally employ nurses, social workers, and other professionals, and work with clients over an extended period of time. Their goal is to return the order to the family’s life and to help elders and persons with disabilities age in place.
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