Is the Decline in Productivity Linked to Our Aging Population?

For the first time since the late 1970s, productivity in the U.S. has fallen for three straight quarters. This decline has been called “perfectly normal” by some experts, while others say the slide makes it “hard to be anything other than pessimistic.”

We can’t seem to agree on why productivity is declining. Explanations include the rise of imports, the increase in automation, weak business investment, the stagnation of wages, and the levelling off of efficiencies gained by the tech revolution. Miraculously, the kitchen sink hasn’t been implicated.

Most seem to be throwing up their hands and calling it a “mystery.”

Yet for the multitude of explanations for the cause, meaning and solution to the most protracted decline in productivity since the Carter administration, one foundational element has been ignored: changes in the workforce and workplace behavior as a consequence of increased longevity and an aging population.

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A good example of the profound shift is the impact of elder caregiving on older workers. As the population ages, American adults are finding themselves thrust into the role of unpaid family caregivers. The 80+ demographic is growing faster than any other, and their adult children are becoming their caregivers.

Elder Caregiving is a massive, complex job, and it can be all-consuming, with an impact on the productivity of family and friends of these seniors in need. Yet, only very few workplaces recognize that employees are struggling to care for parents, spouses or other elder loved ones. From the Fortune 100 to a pizza shop in the Bronx, employees in their 50s, 60s and 70s are spending more of their time on elder caregiving, while employers and economists assume they’re ‘just working.’

This illustrates a major mismatch between 20th century workplace practices and policies and 21st century needs, demands and real lives.

Consider, for example, the staggering number of Americans who act as family caregivers. According to research from AARP and the National Alliance for Caregiving, nearly 20 percent of Americans -- approximately 40 million individuals -- provide care to an adult. Of these, the vast majority – roughly 85 percent – are providing care to an adult age 50 or over.

It is likely that this figure is artificially low. Many people who provide care do not think of themselves as a “caregiver,” and surveys often struggles to identify accurately the number of people who provide caregiving.

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Of those surveyed, 61 percent admit they sometimes come to work late, leave early, spend time during the day online or on the phone focused on helping mom or dad with the fall they just had, getting to the doctor or hospital … well you get the picture. No mystery here on the impact on productivity.  

Moreover, research finds that the average adult child caring for her father spends 24 hours per week providing care. That’s the equivalent of three work days. As a result, the value of family caregiving in the U.S. amounts to a jaw-dropping $450 billion per year.

If that figure were taken as revenue, family caregiving in America would be the second-largest company in the world, behind only Walmart and ahead of Exxon, Apple and Berkshire Hathaway on the Fortune 500 list.

The elder caregiving burden disproportionately affects women. Approximately two-thirds of elder caregivers are women, and more than half of these women are now part of the “sandwich generation,” caring for both aging parents and young children. As we celebrate the strides that women have made in the workforce over the past half-century, it would be hypocritical not to recognize that this success is hamstrung by elder caregiving. In a troubling trend, the female labor force participation rate in the U.S. has declined from 59 percent in 2008 to 56 percent in 2014. If we wish to open further opportunities for women professionally, we must find ways to empower them to balance work and caregiving.

Last month’s roundtable sponsored by the Women’s Bureau of the U.S. Department of Labor gathered 20 forward-looking businesses to discuss policies that can benefit both employee caregivers and employers. Bank of America Merrill Lynch was a notable attendee, as it offers employees flextime, compressed work weeks, back-up care and a care referral service. Another attendee, CBS, offers eldercare programs and dependent care spending accounts. We’re just getting started.

A recent study by AARP and ReACT, employer-focused coalition dedicated to addressing the challenges faced by employee caregivers, finds that there is “a business case for family caregiver-friendly policies,” and that “such benefits allow caregivers to balance their jobs with other responsibilities.” In fact, the study found that for every dollar invested in flextime, businesses can expect a return of between $1.70 and $4.34, and for every dollar invested in telecommuting a return of between $2.46 and $4.45. Spread across employers, this could help mitigate the national productivity loss now epidemic.

Nor is this just an American issue. In Europe, the EU has officially recognized the profound character of this uniquely 21st century challenge by supporting a new CARE (Care and Ageing Reimagined Across Europe) Initiative under their EIT Innovation Program. And in Asia, from Japan to China, South Korea to Singapore, the impact is equally profound.

As Labor Day approaches, let’s find ways to be honest about the changing character of work in our 21st century – and recognize that one reason the productivity loss seems to be “such a mystery” is because few are looking at it through the 21st century aging lens.

By Michael Hodin, The Fiscal Times