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The Economic Impact of Caregiving


Approximately one in four U.S. adults care for an elderly relative, friend, or spouse with chronic conditions or a disability.

In 2009, the “estimated economic value” of their unpaid contributions was $450 billion, according to a recent report from the AARP Public Policy Institute, titled “Valuing the Invaluable: 2011 Update, The Growing Contributions and Costs of Family Caregiving.”

Here’s how economists arrived at that number: In 2009, there were approximately 42.1 million friend-and-family caregivers helping adults in the U.S., each of whom provided an average of 18.4 hours of care per week. Multiplying the total hours spent by an hourly “wage” of $11.16 yields $450 billion. That exceeds the $361 billion Medicaid spent in 2009 and approaches Medicare’s $509 billion budget in that year, the authors say.

That $450 billion figure also represents a 20% increase over 2007’s $375 billion estimate. Reasons include a 23% rise in the number of caregivers, a 9% increase in the number of hours spent on care, and a $1-per-hour hike in the “wage” used to determine the value unpaid caregivers deliver.

All this free labor means big savings to state and federal governments, which are already struggling with rising Medicare and Medicaid costs. (Those who spend down their assets can often qualify for Medicaid coverage of nursing home costs.)

Unpaid family caregivers are shouldering a majority of the burden of long-term-care in the U.S. The report says a majority (66%) of Americans with disabilities who receive care receive it at home—and for free. Another 26% receive some combination of family and paid help, with only 9% receiving paid help alone.  Evidence from other reports suggests that since the mid-1990s, families have cut back on paid care.

As the population ages, the report says, state and local aging and disability services programs have seen greater demand for services, including transportation and home-delivered meals. But budget cuts have left them with fewer resources.

To relieve the strain on unpaid caregivers, the report recommends that policymakers and employers take steps including:

•        Implementing flextime, telecommuting and other “family-friendly” policies.

•        Amending the Family and Medical Leave Act to protect more workers and for longer periods.

•        Increasing funding for respite programs, designed to give caregivers a break.

•        Reforming Social Security to allow caregivers who leave the workforce to continue to accrue benefits.


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    • It — is improbable!


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    • Most people overestimate the cost of a good long-term care policy. A healthy, married couple in their mid/late fifties, can share a policy that starts off with over a half million in benefits for about $100 per month per spouse.
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    • I actually had to cut down on my hours greatly at work to try and help out with the care of my grandmother who is actually still a fairly active woman. The problem is she has a few major surgeries over the last few months and it’s affected her mobility so everyone in the family assumes she needs round the clock help. I come by twice a day and check on her throughout the day via cell phone – I found an easy to use one from a prepaid provider, SVC. Beyond that, I don’t know what else to do…

    • Great insights – I wish U.S. employers had the same “vision.” Unfortunately a 2010 report by the Society of Human Resources Management showed that only 11% of all U.S. employers offer some sort of elder care or caregiving support for its workforce. This is a steep decrease from a high of 22% reported only a decade ago. This trend shows that employers are moving in the wrong direction if they hope to do 2 things: keep valuable employees on the job and productive and keep employees healthy and well. A recent MetLife/National Alliance for Caregiving study showed that U.S. employers lose $33 billion in productivity annually from caregiving employees and further that these employees cost employers 8% more each year in health care coverage costs. You might think this is great cause for employers to back away from their caregiving employees (73% of caregivers work full or part time) but when we watch the growing numbers of elders needing care in our society and we know the burden falls to family members – employers have to be part of the solution since their workplace issue will shift from child care in the 70s and 80s when women entered the workforce to the elder care needs of today and over the next 2o years with aging boomers. Some employers such as AARP, Genworth Financial and Unitedhealthcare understand the importance of family caregiver support – now it’s time to get other companies to join the club. Read more at caregivingclub.com.

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  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.