Investing in Quality Care has Positive Macroeconomic Effects

/ / Care Infrastructure, Child Care, Elder Care, elderly care, Gender-Equal Economy, Healthcare, Macroeconomics, Policy

Recent research by Lenore Palladino and Chirag Lala of the Political Economy Research Institute (PERI), University of Massachusetts Amherst, examines the effects of critical public investment in childcare, home health care, and paid family and medical leave (PFML) for the U.S. workforce, as proposed by the American Jobs Plan and the American Family Plan by the Biden-Harris Administration. 

The authors find that investing in childcare and home health care workforce has positive macroeconomic effects, and the care workforce spends its own money on goods and services through the rest of the economy. They also find that PFML positively boosts the economy, as workers spend the wage replacement income they earn.  

The authors model the effects of a $42.5 billion annual investment in childcare and a $40 billion investment in home health care with a minimum wage of $15 an hour and find that the proposed investment can create 564,000 additional jobs throughout the economy, and results in an increase in labor income of $82 billion annually. They find that universal paid family and medical leave, as proposed by the American Families Plan, would increase household income nationally by $28.5 billion, of which $19 billion would be wage replacement directly from the paid leave program, and $9.4 billion would be income earned by workers throughout the economy as people receiving wage replacement spend money on goods and services. This means that for every dollar spent on wage replacement as part of the paid leave program, other workers would earn an additional $.50.

RESEARCH BRIEF: The Economic Effects of Investing in Quality Care Jobs and Paid Family and Medical Leave

This blog was authored by Shirin Arslan, program manager for the Care Work and the Economy Project. 

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