The Hidden Value of Social Security Disability Insurance: Why It’s Important During Benefits Enrollment
People with disabilities and their caregivers deserve better than a return to the status quo. Now is the time to put the combined strengths of our government and private sector to work as we look to address the need for Paid Family Medical Leave and build a stronger, more sustainable future for all Americans.
There is no denying that caregiving is among the most essential services for any community—whether for children, older adults, or anyone requiring help with the activities of daily living. Nothing drives home this reality more than finding yourself relying on family to help you manage through health challenges, as I recently did.
My cancer diagnosis two years ago, in fact, was less life changing and more life affirming as I leaned into everything and everyone I held dear. And they did the same in return. Priorities became clear and time more precious. Those focus points along with my faith, family, and friends who cared for me–without question—helped save me.
On a broad scale, our country owes caregivers the same degree of gratitude and appreciation we saw expressed for essential workers during the first months of the pandemic. These are the people we rely on to care for our children, parents, siblings–and one day, perhaps, ourselves. And yet, too often, caregivers may suffer serious and long-term financial consequences by taking on full- or even part-time caregiving responsibilities.
If we are serious about creating a truly prosperous, stable U.S. economy, we must use all the resources at our disposal to support people with disabilities, and caregivers and their families in economically sustainable ways.
One of the most viable solutions would be to provide all workers with a reliable source of income when they must temporarily leave the workforce to care for themselves or others.
While demand for caregivers increases, their financial future hangs in the balance
The number of Americans providing unpaid care increased over the past five years from 43.5 million in 2015 to 53 million. And, well before the pandemic reached our shores, there was ample evidence of the economic strain on caregivers, their families, and the economy. The effects of the pandemic only intensified the strain both on those who care for others, and on those who require time off to care for their own mental and physical well-being.
A Caring Across Generations’ study estimated the income lost by those leaving the workforce to become caregivers cost the U.S. $4.2 billion in annual tax revenue. Those same people will lose, on average, more than $300,000 in wages, Social Security benefits, and pensions over their lifetimes—setting the stage for future economic challenges. Not surprisingly, in its report, Caregiving in the U.S., AARP found close to half of caregivers surveyed experienced at least one resulting financial impact, such as exhausting short-term savings, taking on new debt, and leaving bills unpaid.
Due to its high labor intensity, the caregiving sector has the potential to generate twice as many jobs per dollar as physical infrastructure construction. Revamping current policy to minimize the economic challenges of caregivers will benefit individuals and families. It is also a meaningful way to address the major demographic shift underway across the U.S., which could lead to a 75 percent increase in the number of older Americans requiring hired care.
The passage of the CARES Act in 2020 was a step in the right direction by creating an emergency paid leave program for employees of small businesses. It was extended on a voluntary and temporary basis by the American Rescue Plan and will expire on September 30, 2021.
If passed, provisions of the draft American Families Plan proposed by President Biden in April could open the door to the creation of a national paid family and medical leave (PFML) program. In the meantime, however, while some workers currently have access to PFML, the range of available solutions are far from equal or adequate. The Bureau of Labor Statistics reports only 31 percent of the nation’s lowest-paid private-sector workers have access to paid sick days, for example, compared to 94 percent of the highest-paid workers.
It is time for a permanent, comprehensive, and bipartisan federal PFML program that works for all of America’s workers. The good news is there is a viable path to reach this goal based in the outcomes already accomplished through public-private partnerships, which Prudential details in its latest paid family leave whitepaper.
A public-private partnership can help address PFML and solve the caregiving crisis
There are three critical steps to delivering a sustainable, national PFML solution for all workers:
1. Acknowledge and address the paid leave gap for people of color and low- to moderate-income families
Less than one-third of U.S. private-sector workers in the lowest 10 percent wage bracket have access to paid sick days, according to 2020 federal labor data. In contrast, 94 percent of private-sector workers earning in the highest 10 percent wage bracket received paid sick coverage. Female, Black and LatinX workers historically dominate the caregiving sector and currently earn an average hourly rate of $11.87, according to Payscale.com. And Black and LatinX workers are less likely than white or Asian American workers to have any leave benefits at all.
2. Enlist the participation of private employers
The business case for broadly accessible PFML is clear: workers stay home to recuperate from illnesses or to provide care for sick dependents when taking paid leave is an option. Employees with workplace benefits that provide financial security like paid leave are happier, more loyal, less distracted, more productive, less absent, and return to work faster. In addition, 10 years into California’s paid leave program, 87 percent of the state’s employers reported no added costs to their programs.
3. Leverage the experts
Ensure that all legislation includes the option for employers to partner with the private benefits sector. This alternative supports cost efficiencies and enables timely delivery of benefits by leveraging the expertise, infrastructure, and capacity the private sector offers.
The U.S. has a success story that spans generations when government and the private sector partnered to promote worker financial security. A familiar example is the income streams most retirees depend on—a combination of Social Security benefits and an employer-sponsored plan such as a 401(K), 403(b), SIMPLE Plan or ROTH IRA. We can apply this same approach to paid leave, this time leaning on the private insurance sector’s technology and expertise in administration, risk pooling, absence management, and return-to-work programs.
The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This document has been prepared solely for informational purposes.
Related posts
