By Anne Calef
March 17, 2023
Care work has forever been critical to the health and basic functioning of our society. However, as we detailed in our September 2022 report with SkillWorks, Care Work in Massachusetts: A Call for Racial and Economic Justice for a Neglected Sector, long histories of racial prejudice and gender discrimination have led to a systematic devaluation of these jobs. Poor working conditions and low wages for care workers have profound consequences not just on employee retention or the immediate economic security of care workers, but also the long-term wealth accumulation for care workers and their families.
One cause of the racial wealth gap is that White families are more than twice as likely as Black families to receive an inheritance or large gift from a family member or friend. This means that the legacy of exclusionary wealth-building policies of the past are very literally passed forward to the next generation. But roughly two-thirds of all Americans, regardless of race, receive no inheritance at all, meaning that most wealth comes from the accumulation of income, savings and investments earned over the course of one’s working life. The fact that women and women of color disproportionately work in care jobs that systematically pay lower wages and have worse benefits is therefore one contributing factor toward the racial wealth disparities we see today.
At the same time, our failure to provide accessible care services to all families hinders economic security and wealth accumulation for many other adults, who often must leave the workforce to care for loved ones when public supports prove inadequate. Again, these adults are more apt to be women, especially women of color. These impacts add up. While state-level estimates of the racial wealth gap by gender are not available, the Federal Reserve Bank of St. Louis has found that households headed by Latina and Black women have just 10 and 5 cents of median wealth, respectively, for every dollar of median wealth held by families headed by White men. This brief will explore how our undervaluation of care work feeds into the racial wealth gap and exacerbates gender-based disparities.
As is the case nationally, care workers in Massachusetts are overwhelmingly women. While women make up 49 percent of all workers in Massachusetts, they account for approximately 85 percent of home care workers and long-term care facility workers, and 92 percent of child-care workers. Home care workers include both personal care attendants and independent home care workers, and long-term care facility workers include jobs like Certified Nursing Attendants or Licensed Practical Nurses working in a senior home.
Low wages and a lack of employer-provided benefits make it difficult for workers to achieve the baseline economic security that is needed to build wealth. More than one quarter of Massachusetts child-care workers, one third of long-term care facility workers and almost half of home care workers are enrolled in the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), demonstrating how economically insecure many care workers are. Black and Latina women in the state are currently concentrated in these care fields, which contributes to the gaps in pay and in wealth that we see along both gender and racial lines. In Massachusetts, roughly one in ten Black and Latina women is a home care worker, child-care worker, or care worker in a long-term care facility.
Despite the low pay and poor working conditions for care workers, the reality is that care services are still too expensive for many families to afford, including for many care workers themselves. Family members often must reduce their paid work hours to provide care for loved ones. That usually means less money now and, problematically, severely reduced savings and benefits at retirement age. Recent research from the Federal Reserve Bank of Boston has demonstrated that wealth accumulation is driven directly by income earned and the number of years worked. When family members have to take a step back from work, it can limit their advancement opportunities and lifetime earnings. Lower lifetime earnings also translate to fewer opportunities to accumulate Social Security and other retirement benefits, leading to greater economic insecurity later in life.
Women are still more likely than men to leave a job to shoulder family caregiving responsibilities at home, leaving them stretched thin and more financially vulnerable, at all stages of their adult life. The National Women’s Law Center and Columbia University Center on Poverty and Social Policy found that universal access to childcare would increase the number of women with young children working full-time, all-year by about 17 percent, and by about 31 percent for women without a college degree. This increased labor market participation could grow lifetime earnings for women with two children by $94,000, with even greater effects for Black and Latina households, who are less likely to have a college degree.
At the same time, the lack of adequate care infrastructure forces many older adults to spend down their wealth so that they can access government-supported health insurance that covers long-term services and supports. Medicare, the public health insurance option available universally to adults over the age of 65, does not cover much of the long-term care that many adults need later in life, such as a home care aide to help with activities of daily living or moving into a nursing home. Private long-term care coverage typically comes with prohibitively high premiums, and like child care, these services remain too costly for many families to pay for out of pocket, despite the low wages that providers receive. For many adults, the only viable route to attain affordable long-term care is Medicaid, the means-tested public health insurance program.
Accessing Medicaid requires meeting income and asset requirements that vary by state. In Massachusetts, for example, the annual income limit for a single adult is just $6,264 and the asset limits for adults aged 65 years or older living in the community (not in a nursing home), is just $2,000 for an individual and $3,000 for a couple. A large swath of families that have too few assets to afford out-of-pocket long-term care and too many assets to qualify for Medicaid are thus forced to spend down their assets; for example, selling their home to pay for care until their funds are exhausted and they fall below Medicaid’s asset limits.
This has implications for intergenerational wealth transfers, as middle-class families have fewer resources to pass on to their children. Unfortunately, it is also more common for intergenerational wealth transfers to move in the opposite direction for Black families—with children and younger generations transferring assets to older generations to support their needs later in life. A 2017 report found that college-educated Black households were almost three times as likely to provide financial support to their parents than college-educated White households.
Care work is foundational to our economy, personal health, and community well-being. Our failure to value care work—by inadequately compensating paid care workers and providing few supports for family caregivers—is the product of a long history systemic racism and sexism that must be addressed if we seek a more equitable future.
The math behind providing affordable care to families and fair wages to care workers does not pencil out without significant government intervention. Raising Medicaid reimbursement rates for long-term care, strengthening public retirement benefits, creating universal access to long-term supports and services or child care, and expanding the Earned Income Tax Credit to include unpaid family caregivers are just a few ways that the state and federal government could build a more affordable and accessible care infrastructure.
Such interventions have important consequences for the racial wealth gap. Better valuing paid care work would improve financial outcomes and stability for the overwhelmingly female and predominately women of color caregiving workforce. Ensuring universal access to high quality and affordable care would allow many more women to enter the paid workforce, increasing lifetime earnings, and improving opportunities for wealth accumulation, particularly for Black and Latina women. Ultimately, closing the racial wealth gap will require work across numerous fronts; as we undertake that work it is imperative that we not allow the attitudes that have rendered care work unseen and unheard for centuries into our efforts to repair and redress harm.