A Care Economy Primer for Investors
The pandemic has brought the care economy into focus as a lever for systemic change and gender equality. As we launch the GenderSmart care economy initiative, Sana Kapadia explains why it’s time to address the full spectrum of care work, globally, in both formal and informal economies.
The care economy covers everything from health and wellness, to household management, after school programs and childhood enrichment, mental health, disability, in-home care support, end of life planning, and B2B businesses serving care providers. It occurs across formal and informal economies, covers both informal and formal care, and reflects the ILO 5R framework for Decent Care Work. This involves recognising, reducing, and redistributing unpaid care work; rewarding paid care work; and ensuring representation of care workers. Addressing the full spectrum of care work is both essential to a functioning economy and systemically undervalued - largely because it has historically been done by women.
“Addressing the full spectrum of care work is both essential to a functioning economy and systemically undervalued - largely because it has historically been done by women. ”
Globally, women do three times the amount of unpaid care work, making it a leading driver of gender and economic inequality. Women also comprise 70% of paid care workers globally, who are often poorly paid, marginalised, and operating outside of the formal economy. In the United States, nearly a quarter of care and domestic workers are living below the poverty line, earning a median of $10-12/hour and unable to receive the sick and paid family leave benefits that would allow them to take care of their own families. Similarly, in Latin America and the Caribbean, it is estimated that 16.5 million women or about 14% of women in the labour force, are engaged in paid domestic work. However, a majority of these are in the informal economy, often in precarious conditions and without access to social protection. These factors, exposure to gender-based violence, lower incomes and more are accentuated when factoring in specific racial and ethnic categories.
Nurturing the Business and Investment Case
Recent evidence of the care economy’s viability as an investment theme includes:
Employer-supported high-quality early childhood care provides positive benefits around women's labour force participation, retention rates, productivity, diversity and more. IFC's research and working group are focusing on this
New, innovative and in some cases, technology-based models are reducing time poverty, mental load of care, and social isolation
Investors motivated by impact, development finance and women's economic empowerment can access a deepening evidence base and underlying research on care economy investment. This is highlighting the links between an enhanced care economy foundation and economic empowerment, agency and equity, with greater impact for BIPOC communities. In the US, Pivotal Ventures estimate that the care economy is a $648 billion opportunity
Tools and frameworks have launched, including the Oxfam care responsiveness barometer and toolkit and their toolkit on including the impact of social norms in unpaid care, ICRW's Coalition for Women’s Economic Empowerment and Equality (CWEEE) and others focused on engaging men
New communities of practice and groups focused on this thematic include the Springbank Collective, IFC working group, NBER economics of aging workstream and the Centre for Global Development
Regional and social dynamics, policy, gender norms, and other economic factors also need to be considered when exploring care economy opportunities. For instance:
In Latin America, some care economy models are focused on formalising unpaid care work and there is also rising interest around elder care.
In the US, there are vibrant pods of activity at the policy level and the Biden-Harris administration has taken a strong stand on the centrality of care to the economic recovery. In the investment sphere, senior citizen care-focused venture Honor raising a $370mn Series E or enterprises like Mahmee, Milstork are incredible examples of the models emerging and thriving.
A Global new Community of Practice
The momentum is both inspiring and encouraging. Yet across regions, there are different socioeconomic and policy factors at play. Allocators have varying levels of readiness, and the best use of capital, or most effective business model, isn’t always clear. This all needs tending.
GenderSmart and its partners are thrilled to be coming together to launch a dedicated care economy initiative that is focused on building investor capacity to catalyse the deployment of more capital. Over the coming months, we will address the uneven distribution of unpaid care and domestic work for women and girls, as well as the spectrum of formal, paid care economy opportunities and solutions across the Global South and North. Only by building the evidence base and sharing what good looks like will we be able to unlock the full potential of investment in this area.
If you’d like to join us, please get in touch.