According to the latest unemployment numbers, the U.S. unemployment is at a low rate of 4.1% and many companies are having a hard time finding workers. This good news for job seekers may have some scary implications for people needing help with care in the future.
Much of the labor shortage is for highly skilled workers in fields such as technology and advanced manufacturing. However, the labor shortage also affects so-called "lower skilled" work such as trucking and retail. In fact, many people are worried that this is a long-term trend that could impact future growth opportunities in this country.
Another industry that is being impacted is long-term care. According to a 2017 Reuters news story, Paul Osterman, Ph.D., a professor of human resources and management at the Massachusetts Institute of Technology, said of the demographic trends: “It's an absolute train wreck waiting to happen,”
According to the professor, there will be a national shortage of 151,000 paid direct care workers and 3.8 million unpaid family caregivers by 2030. That's expected to increase consistently, with an estimated gap of 355,000 paid workers by 2040.
In addition to the labor shortage, other national trends are impacting the availability of caregiving in the future. First, many states, like California, have required that home health care workers be employed as W-2 instead of "Uber-like" independent contractors. This resulted in innovative companies who were offering lower cost care not be able to compete in the marketplace. In addition, mandated state and local minimum wage increases also mean the cost for care will be driven higher.
The result? According to the Genworth Cost of Care Survey, home health care aid costs increased over 6% in 2017, much higher than the inflation rate. The cost of a home health care aide is now $22 per hour nationally with costs higher in certain areas. If trends continue, expect some very expensive costs for home care in the future.
A couple of things may help keep the costs down in the future. First, technology solutions can help with care at the home, including advances such as safety equipment and caregiving robots. However, there is still need for the human touch and people will always be the preferred caregivers!
Secondly, some type of national immigration reform could also help with labor shortages. Currently, many caregiving jobs, both for childcare and seniors, are being held by undocumented workers. If this model changes with allowance for future immigration it could help increase the supply of legal workers and lower labor costs.
In the meantime, how can people plan for the future cost of care? One idea is to Consider Long-term Care Insurance. Buying LTC Insurance now can help pay for care in the future. Here are some tips to consider when buying coverage that will keep up with the increasing cost of care:
- Look at plans that keep up with inflation. Many policies offer this option and the impact can be dramatic.
- Although newer products are priced conservatively, if you are worried about premium increases, consider plans with guaranteed premiums. Newer products from life insurance company have this option.
- Compare products that offer coverage for both professional care and informal care from friends and family. This option costs more but will pay benefits regardless of who is doing the caregiving - such as a family member.
- Pick a policy that fits your budget. The average cost of LTC Insurance is about $2,000 per year. A good rule of thumb is that premium cost shouldn't be more than 5% of your annual income.
Increasing care costs can be scary. However, there are opportunites to plan ahead using LTC Insurance that can provide policy benefits worth hundreds of thousands of dollars. Start planning today.