Pluralistic: Care Inflation (18 Jan 2023)

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The old woman in the shoe. She stands before her shoe, wearing a fierce expression and brandishing a switch, as a line of downtrodden children file into the shoe. Behind her is a three-dimensional 'line-goes-up' graphic with a dollar-sign at the tip of its surging, rightmost arrow.

Care Inflation (permalink)

You can be forgiven for thinking that the Great Inflation Story is how a recent once-in-a-century pandemic, combined with a senseless war, combined with monopolistic price-gouging, temporarily drove prices up by less than ten percent, prompting calls to crush worker power and suppress wages in order to "reduce demand" for scarce goods:

But for all the attention we gave to this transient inflation, there has been precious little alarm over the soaring inflation in "Care Labor" – daycare, preschool, nursing homes and medical services – whose price growth has outpaced the Consumer Price Index (CPI) every year since 1997.

Care inflation has severe knock-on effects for the rest of the economy. When workers can't find someone to look after their kids, their elderly relatives, or a sick or disabled partner, they are often forced out of the workforce, or they give up good jobs and accept lower wages and worse working conditions so they can take the time to do care labor.

Writing for The American Prospect, Nancy Folbre unpacks the causes and effects of this massive, long-term inflation, and offers a compelling explanation for why it garners so little attention (spoiler: because it mostly harms women, especially low-waged women):

It's a subject Folbre is eminently qualified to write on. She is an emeritus professor of economics at UMass Amherst, where she directs the Program on Gender and Care Work. Her blog, Care Talk, is a must-read on this subject:

Folbre notes that workforce participation by working-aged people has declined since 1999, as an ever-larger slice of our productive capacity has been sidelined by the need to stay home and do care work. This unwaged care work can't pay the bills, leaving workers to fill in the gaps with insecure, low-paid jobs. This, in turn, leaves workers dependent on community ties that make it impossible to relocate in search of better jobs.

Despite a quarter century of price increases, "child care workers and nursing home aides have been and remain among the most poorly paid workers in the US." In health care, workers other than MDs have seen only modest, subinflationary pay increases.

Unlike manufacturing and customer service, care work can't be offshored. You can't ship your toddlers, elderly parents, or disabled spouse to a poor country where low-waged workers will take care of them. The declining pool of low-waged immigrant labor only partially offsets this disparity between the price of care and other services.

Leaving care work to the market – rather than subsidizing care through public services – enriches a small pool of shareholders, especially backers of the private equity funds that have "rolled up" smaller care facilities and practices, slashing wages and jacking up prices:

For anyone who doesn't own a private equity fund, the rising price of care work exacts a terrible toll. Public investment in care work has a "high social payoff" – it is necessary to produce the next generation of productive workers and the goods and services they will provide to each other and everyone else:

The rising price of care is an example of what AFL-CIO Chief Economist William Spriggs calls "inequality inflation." When care is left up to the market, affluent families bid up the price of decent care. Poor families drop out of the market altogether, because it's cheaper for them to forego waged work than it is to outbid a professional family for care work.

This "pits low-wage workers providing care services against low-income consumers" – any time a care worker gets a raise, it gets harder for low-waged families to afford care work. The care work market gets hollowed out, with a high-end servicing the richest 10 percent of households, and Medicaid providing stopgap service for the very poorest, while everyone else is out in the cold.

(This has political consequences. As Folbre writes, "No wonder families with incomes just above the official thresholds for public assistance are politically disenchanted.")

The unwillingness to commit public funds to care work produces inexorable pressure to reduce the labor costs of care. For decades, care workers have seen their colleagues laid off and been told to work longer hours to pick up the slack, yielding a care sector filled with burned-out, demoralized workers.

And, as Folbre points out, care workers are disproportionately female – as are the workers who leave the waged workforce to work for free providing care to their family members. Unpaid "women's work" is badly accounted for in tradition economics, which gives politicians cover for inaction as women are forced out of the labor market by failures in the care economy.

The (predominantly) women who do unpaid care work are heavily reliant on programs like Temporary Assistance for Needy Families (TANF), which is not indexed to inflation and has fallen in real terms every year since 1996 – a total drop of 40% in a generation.

Even if you don't care about gender equity, equity for disabled people, or a dignified old age for our elders, this should concern you: "Our economic system runs on human capabilities, and these are not a costless resource supplied by some self-sacrificing Mother Nature. Our own production, development, and maintenance requires both personal commitments and public support."

Public investment in care work would do more to curb this critical form of inflation than any interest rate hike. "[Care workers] will never be as cheap to produce as television sets, cars, or even robots. We will remain more valuable, even if we can’t be bought and sold."

Folbre's excellent piece is part of an equally excellent series at the Prospect: The Great Inflation Myths is a riveting, ongoing series of articles that demystify inflation through a political economy lens, probing the causes and effects of inflation on real human lives, beyond esoteric economic equations and jargon:

Hey look at this (permalink)

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Colophon (permalink)

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