Back in 2011 I was working in San Francisco on a mobile payment startup. My father still lived in Columbus, OH and my 97-year-old grandmother lived alone in Seattle, WA. Despite having most of my extended family in Seattle, they were little to no help to my dad when it came to finding and managing reliable caregivers for my grandmother. It became such a frustrating ordeal for my dad that he had no choice but to drag me into it, too.
There I was, the CEO of a blossoming tech startup in the Bay, spending five hours per week sifting through caregiver applications from Craigslist in my spare time. We tried going through agencies but the price point, even for an upper-middle class family such as ours, was way too high. Most of the agencies I called quoted me $28/hour or more.
So we reverted back to Craigslist. As a professor at Ohio State University, my father took a multiple-week leave of absence from the University so he would have time to fly to Seattle, interview dozens of caregivers, and hopefully find one that he liked and trusted. This three-week leave turned into a six-week leave very quickly, as we dealt with a whole slew of accountability issues. And we discovered that managing our caregivers was even more difficult. Our caregivers were sending us paper time sheets through the mail (over 2,000 miles away) and we were mailing back cash and paper checks. Even worse, we had no idea when the caregivers were in the home or what they were doing while they were there.
The whole thing was a giant calamity.
Here's what scares me, there are millions of other people out there like my dad. And they deal with these same issues every day, and they didn't have a tech-enabled millennial such as myself to help them in the process. So after this experience, I spent the next few months learning as much as I could about the home care market in the United States before starting a company (HomeHero) to address the problem. In my research, here were some of the most unsettling facts that I uncovered.
1. The senior population is growing faster than caregivers.
The 85+ population is projected to quadruple by 2050, but the caregiver population will only double over the same time. Because of increases in life expectancy at older ages, people 85+ now comprise of 4.7 percent of the older population, as compared with only 2.8 percent in 1980. By 2050, this share is likely to reach 10 percent. Despite caregiving being the fastest-growing job in America, the ratio of available caregivers relative to the number of seniors who need care is dropping dramatically each year, making it even harder to find reliable care. [US Census]
2. Over 15 million Americans are unpaid caregivers.
More than 65 million people (30 percent of adults in the United States) currently provide care for a chronically ill, disabled or aging family member or friend. Most adults will be a caregiver for someone in their life. [Family Caregiver Alliance]
3. Agencies are very expensive.
Despite providing an added layer of protection in the hiring process of a caregiver, agencies are not very affordable. The highest rates in the country are found on the west coast. The typical home care agency in California charges $27.50 per hour for a simple two-hour shift with a senior. For live-in clients, the average rate is $275 per day. Assuming you need around-the-clock care (which many families do), it would cost an American family over $100,000 per year out of pocket. For non-live-in clients, the average is 16 hours of care per week (four shifts per week at four hours each), so it would cost a family over $21,000 per year. [2013 Private Duty Benchmarking Study]
4. Most caregivers earn below minimum wage.
The caregiver workforce as a whole earns a median national rate of $9.25 per hour or $125 per day. This means agencies will keep 60-70 percent of the caregivers salary in agency fees (client pays $27.50 and caregiver takes home only $9.25). The exorbitant margins can be attributed to the gross number of inefficiencies that have plagued agencies for decades. [Indeed]
Despite the growing need for home health services, the median annual wage for the country's nearly 3 million caregivers was less than $21,000 per year, according to the U.S. Department of Labor.
5. Most people who have Alzheimer's don't even know it.
Nearly half of adults aged 85 and over have Alzheimer's disease. Over 15 million caregivers provide care for a senior who is suffering from Alzheimer's or other forms of dementia. Every 67 seconds someone in our country develops the disease, and it is the sixth leading cause of death. Unfortunately, 40 percent of people with Alzheimer's have not been diagnosed. This is in part because of the difficulty with detecting early-stage Alzheimer's or mild cognitive impairment (MCI). [Alzheimer's Association]
6. Caregiver turnover for agencies and families is over 60 percent.
For home care agencies, the measly wages result in caregiver turnover rates averaging 60 percent annually, according to the Paraprofessional Healthcare Institute (PHI). It also makes recruiting and retaining workers difficult, affecting quality of care. For families, the turnover rate is even higher, at 75 percent. Many agencies have a very commoditized view of caregivers.
7. By 2025 there will be 1 billion seniors in the world.
Every day more than 10,000 Baby Boomers turn 65. This will continue every day for the next 19 years! The estimated number of centenarians (people age 100 or older) in the United States will grow 700 percent by 2040. According to the Census Bureau, the number of people in the United States age 65+ will exceed the number of people age 18 and younger for the first time in 2050. While the trend of our society getting older each year, it also presents huge challenges on our health workers and other health care resources. [Census Bureau / Nurse Assist]
8. Ninety percent of seniors have their closest adult child living in a different city.
Over 10 million adults in the United States provide long-distance care to an elderly family member. Ninety percent of seniors do not live in the same city as their closest adult child. For these individuals whose family members live far away, the managing of caregiving decisions pose extra challenges, especially emotionally and financially.
9. Half of seniors 75+ live alone.
Today almost half (47 percent) of seniors aged 75+ live alone. As people get older, their likelihood of living alone only increases. Loneliness contributes to cognitive decline, risk of dementia, arthritis, impaired mobility and depression. Lonely people are also more likely to engage in unhealthy behavior. According to a 2012 study, both social isolation and loneliness are associated with a higher risk of mortality. [Proceedings of the National Academy of Sciences]
10. 6 million seniors are living below the poverty line.
According to the Supplemental Poverty Measure (SPM) by the US Census Bureau, over 6 million seniors (15 percent) were living below the poverty level in 2011. The share of seniors living in poverty under the supplemental measure is especially high in some areas. For example, about one in four seniors (26 percent) are living in poverty in DC under the supplemental measure. This is an alarming statistic, despite the daily costs of living for seniors being much lower than most adults.