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Home Care Costs for Seniors Hitting Record Highs

As demand surges, the cost of at-home elderly care reaches record levels

June 5, 2024  – Home care costs for the elderly has surged to unprecedented levels. In April 2024, the average daily cost of home care services reached $172, up from $151 the previous year. This marks almost a 14% increase, which is the second highest year-over-year rise recorded, according to the Bureau of Labor Statistics.

This increase in home care costs is largely attributed to the rise in labor expenses since the COVID-19 pandemic began and a growing demand fueled by an aging population. The U.S. is expected to need to fill over 9 million open direct care positions by 2031, according to PHI

Marc Cohen, a gerontology professor at the University of Massachusetts Boston, explained that the market dynamics of increasing demand against a shrinking supply of labor are pushing prices upward. “When you have increasing demand and shrinking supply, the market works: You get higher prices because people have to pay more to find people to do this work,” Cohen noted during an interview with ConsumerAffairs.

Cohen also highlighted the fact that the home care cost increases are not driven by profits. Instead, the are driven by the need to offer competitive wages to attract workers to an industry that has historically been undervalued. “Until the pandemic, home care workers were grossly underpaid… The notion that…the reason the prices have been increasing is because there has been a major extraction in profits – that’s just not true.”

Home care remains a more economical option compared to nursing homes, but these price hikes still poses significant challenges. The average hourly wage for home care workers has climbed to $27, or approximately $42,000 annually. Despite the increase, this is still a more economically viable option than institutional care.

To address and potentially reduce these soaring costs, Cohen suggests finding ways to strengthen the labor pool. In order to do this, governments need to ensure adequate funding is directed towards improving worker conditions and creating better career opportunities. Additionally, the country should look to further tap into the immigrant workforce. Without this subset of the workforce, we could see home care costs go up even more because there wouldn’t be enough people to provide home care services.

Overall, while the home care costs for the elderly are increasing, the emphasis must remain on enhancing the working conditions of caregivers and quality of care. We need to ensure that both consumers and providers are supported in an increasingly strained healthcare system.

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