Survey results confirm that most older Americans would prefer to age in place. That desire is sometimes overridden by practical necessities when health declines. Some people need the around-the-clock care that nursing homes provide. Some who need help with the activities of daily living opt to move to an assisted-living facility rather than remodeling a large home to make it better accommodate their disabilities.
When seniors need help but do not require the 24/7 medical care that a nursing home provides, they can age in place with the help of in-home caregivers. Unfortunately, they can only exercise that option if caregivers are available in their area.
Most in-home caregivers are unpaid family members. On average, their lifetime income is reduced by 15% because they sacrifice their careers to take care of aging parents. That sacrifice lowers their retirement savings and makes it difficult to plan for their retirement.
Families that need caregiving help are often in a bind. Adult children provide caregiving services when the family cannot afford to hire a paid caregiver, but even if hiring a caregiver would allow them to earn more income than they would pay for in-home caregiving services, caregivers are in short supply.
The Caregiver Shortage
A nationwide shortage of paid caregivers in the United States is driven by increasing demand for their services. About 23% of Americans will be over the age of 65 by 2050, an increase from 17% in 2022. Americans who turn 65 have a 70% chance of needing the long-term assistance of a caregiver at some point in their remaining lives.
Over time, the market may adjust by providing more caregivers to meet escalating demand. Because caregivers are underpaid, however, workers have little incentive to choose caregiving as a profession.
If rising demand eventually elevates caregiver wages, older adults may have difficulty affording their services. While Medicaid has increasingly funded long-term care in the recipient’s home, the possibility of Medicaid funding cuts could exacerbate the turmoil in the caregiver labor market.
In addition, caregiving is difficult and demanding. Work schedules tend to be unpredictable. Companies that supply in-home caregivers face high rates of employee turnover. Companies may resist giving necessary training to caregiving employees if they suspect that the employees will quickly look for a better job.
The shortage is aggravated by competing industries that need the services of caregivers. Hospitals, nursing homes, and assisted-living facilities all hire caregivers. Companies that supply caregivers to seniors living at home are only part of a labor market that cannot meet the growing needs of employers.
Home Care Cooperatives
New research suggests that home care cooperatives might offer a partial solution to the shortage of home care workers. Cooperatives are owned by their members — in this case, home care workers who have joined together to serve clients who need assistance as they age in place. Employers following the cooperative business model typically hire new caregivers for a probationary period and, if they succeed, allow them to become cooperative members.
By joining the cooperative, workers have a say in their conditions of employment, including the compensation they receive. They can vote for Board members or run for a Board position. They also share in profits that the cooperative earns. While wages in cooperatives tend to be similar to those paid by traditional home care businesses, cooperatives often give a higher priority to providing health insurance, paid family leave, retirement plans, and other benefits than is common in the home care industry.
Having a financial stake in the business gives home care workers an incentive to remain in their jobs. Caregivers are more likely to feel respected in a workplace that they own. Interviews with cooperative members suggest that job satisfaction increases when workers join a home care cooperative, in part because they have greater input into a client’s care plan.
Experience shows that home care cooperatives have half the turnover rates that plague traditional home care businesses. While the work becomes no less difficult when performed for a cooperative, higher job satisfaction and better benefits offer caregivers an incentive to remain in the field rather than looking for a better job.
Cooperatives cannot provide an immediate solution to the shortage of home caregivers. As of 2024, there were only 22 home care cooperatives in ten states. However, the movement appears to be gaining momentum with more than a dozen startups underway. Their participation in the market may give seniors additional options when they search for the resources they need to age in place.