How Medicaid can fuel the care economy

The Biden administration has promised to ‘build back better’ by committing to relief and recovery after the worst economic crisis of our lifetime. This pandemic reveals a collective public health and economic vulnerability, but also a vulnerability that actively produces inequality. As such, ‘better’ means course-correcting and taking bold action to build a more just and equitable economy. The most recent unemployment report only heightens the importance of this commitment.  

While the January jobs report shows unemployment dropping to six percent for white people, it remains devastatingly high for other groups: unemployment sits at 9.2 percent of Black people, 8.6 percent for Latinx people, and 6.6 percent for Asian people. And with women leaving the labor force in record numbers, we are watching a crisis for women, particularly women of color, who are disproportionately suffering the economic effects of the pandemic.

Investing in the care economy and enshrining a right to care is essential to reverse these trends. Women need access to care, as mothers in particular have experienced a huge decrease in labor force participation as childcare has disappeared and schools have closed. Additionally, many of these women are workers in the care economy, who are among the most impacted by the pandemic. Despite their valuable work in caring for our loved ones, these workers either immediately lost their wages during the economic shutdown when they were unable to work from home, or put themselves and their families’ lives at risk by continuing to work and possibly exposing themselves to the coronavirus. The vast majority of this workforce is women, and disproportionately, reflecting historical racial and gender divisions in the labor market that are still felt today. 

While the pandemic has rendered the care economy — including child care, eldercare and domestic labor — more visible in our society than ever before, it still remains largely overlooked. As the government turns to investment for economic recovery, if we want to build back better, it is imperative that our new industrial policy includes broad investment in the care economy. 

We should be shifting our investments as a society in order to put workers first, to ensure a just economy that promotes shared prosperity. Despite the enormous shortage of workers in these roles, wages remain low. Investing in the care economy means investing in BIPOC women, making sure these are good jobs, with wages that allow workers to care for their own families as they care for others. It also means enshrining a right to care, as those same groups are most likely to be unable to access care when they need it. 

Our national recovery relies not only on investing in the public health response to the pandemic, but also investing in the essential workers who have been caring for us long before the pandemic, and who we will increasingly rely on long after this pandemic ends. 

The care economy is one of the fastest growing parts of our economy and large worker shortages are predicted in the near future. Home health and personal care aide jobs are expected to grow by 34 percent from 2019 to 2029, making them the sixth fastest growing occupation in the U.S. And yet, the average wage for these jobs is just $25,280 per year, or $12.15 an hour. 

Low wages in the care economy are often blamed on the ‘free market’. But that is not quite accurate. In the care economy, where so many workers are reimbursed for their work through Medicaid, the government has the power to effectively unilaterally increase wages by increasing Medicaid reimbursement and setting a higher wage floor for workers so middlemen are unable to skim off the top. 

This administration has put a focus on good jobs and building back better. There is no sector as poised to create as many jobs home health and personal aids given the huge projected growth in the next decade. Laying a marker down with investments in long-term care is possibly the largest down payment for growing millions of good jobs this administration can make, while advancing to unionization and improving care for families. Giving these jobs the respect and dignity of a livable wage so care workers can support their own families even as they are caring for others.

Care is necessary for every person and thus should be a right. At some point in our lives, every single one of us has needed or will need care. The distribution of care in a context of economic and social power imbalance cannot be left to the whim of a proverbial ‘market’  but instead should be the product of intentional social and industrial policy. Our federal budget reflects our economic and social values; increasing access to quality care and wages for care workers is a moral and equitable intervention that the Biden administration should take today.

But livable wages are just the first step in making care jobs good jobs. Workers also need a path to unionization so they can have a voice and build power, as well as affordable training, if a worker chooses, that is tied to future workforce needs. Due to the discriminatory Wagner Act, these groups were left out of historical organizing protections, a right which must be restored. These are common sense investments when we look at the critical role this workforce has played throughout the pandemic, and will play in the years ahead.  

Additionally, home care workers who are not citizens need a path to citizenship, so they are safe at work. There is a long history of exploitation of immigrant domestic workers. With a path to citizenship, workers will have a path to more rights and protections, safety at work and a care workforce with the dignity and respect it deserves. And models for this already exist: other nations, such as France, have provided citizenship to essential workers whose contributions were critical during the pandemic, yet the United States has not made the same commitment.  

The Biden administration has signaled their commitment to ‘build back better.’ Now is the time for budgets and actions to follow.  Not only will an investment in care workers help us get through the current pandemic, but it will help use build a more just economy that will allow us to thrive for decades to come.  

Darrick Hamilton is a university professor, the Henry Cohen professor of Economics and Urban Policy, and the founding director of the Institute on Race and Political Economy at The New School. Cassandra Robertson is the senior policy and research manager and senior fellow for the New Practice Lab at New America. Her writing has been published in both peer-reviewed and popular outlets.