Mapping the Care Economy in 2026

March 20, 2026

The care economy crisis is poised to intensify in 2026. Labor shortages in both childcare and eldercare are colliding with rising demand, pushing prices up faster than overall inflation. Many working caregivers have little choice but to reduce work hours or leave the labor force entirely.

Our last report, “The Great Exit,” examined these trends at the national level. However, national averages can mask major differences across states and localities.

Care economy pressures are affecting states and industries unevenly. This report maps those fault lines, highlighting where system chokepoints constrain employers, workers and labor markets.

According to projections by the Congressional Budget Office (CBO), the population of Americans between 65-84 will grow by 7 million from 2025 to 2030.¹ An additional 5 million will be 85+ in the 2030’s. That means higher demand than ever before for eldercare and other healthcare services.

Despite a declining fertility rate, births rose in 2024 as more Millennials and Gen Z entered prime family formation years, aided by higher immigration. Even if births level off in 2025, childcare demand would still exceed supply.

Recent immigration curbs have accelerated the demographic crossover at which deaths exceed births in the US. Over the past two years, the CBO has revised that estimate from 2040 to 2030, reflecting reduced immigration and lower fertility.

Why it matters: The US risks having too few workers paying into Social Security and Medicare to support beneficiaries. Foreign-born workers pay taxes and are net contributors to these programs.² The result would be lower potential growth and increased strain on federal finances.

Hits a shortfall in workers

Immigrants comprise an outsized share of the formal workforce in childcare and eldercare. Foreign-born workers make up one-fifth of the childcare workforce nationally but two-fifths in California, Florida and New York.³ One-third of home healthcare workers are immigrants, as are over one-fifth in different facility-based care settings.⁴

Home health and personal care aides are the largest single occupation in the US economy. The Bureau of Labor Statistics (BLS) projected that it will be the largest growing occupation from 2024-2034.⁵

Yet the sector struggles to hire and retain workers. Turnover is nearly 80%, several times higher than in other industries.⁶ Low pay, limited benefits and weak career ladders drive churn. As in childcare, wages alone will not draw in workers; these are structurally constrained markets.

Demand is surging for both childcare and eldercare while the supply side is being squeezed further. Prices rose more than two times as fast as overall inflation since mid-2024 in childcare and late-2023 in home healthcare.⁷

The strain on the formal care workforce and large price increases affects the overall workforce. Workers in different industries take up more care responsibilities. That leaves many with little choice but to pass up career opportunities, reduce hours to part-time or leave the labor force.

Chart 1: Elderly dependency ratios up; 2030s increase driven by 85+

Ratio, dependents as share of working-age population (18-64)

Source: KPMG Economics, IPUMS USA ACS, Congressional Budget Office; Note: 2020 data not included because not directly comparable due to the pandemic

The dependency ratio, defined as the number of children under 18 and elders over 65 per working-age population (18-64), increased 10.7% (from 59 to 65) between 2010 and 2024.⁸ The elderly dependency ratio, specifically those aged 65+, rose 43.2% (from 21 to 30) over the same period. These increases occurred largely before the massive aging and retirement wave of the Baby Boomer generation.

The US dependency ratio is poised to rise, driven largely by population aging. Chart 1 shows the increase in the 2030s is concentrated among those aged 85+, whose care needs are most intensive. That will add strain to an eldercare system already under pressure.

National averages obscure wide state level differences in dependency ratios. (See Chart 2.) South Dakota, Delaware and Hawaii had the largest ratios in 2024 while Washington, DC, Colorado and Massachusetts had the smallest.

While the dependency ratio rose 10.7% in the US overall from 2010 to 2024, Hawaii (23.7%), Vermont (22.6%) and Delaware (22.3%) posted the largest increases. The smallest changes occurred in Utah (-5.8%), Texas (3.4%) and Arizona (5.5%).

The reasons for the shifts vary by state. In Vermont, the number of children and working age population declined while the number of people aged 65-84 nearly doubled. In Utah, the elderly population increased, as did children aged 5-17, but the working age population also rose.

State impacts: what higher dependency ratios change

These shifts are reshaping state and local economies. Higher dependency ratios, especially due to population aging, tend to:

Tighten labor supply, raising hiring friction and turnover risk.

Affect informal caregivers’ labor force attachment, as many reduce hours or leave the labor force due to more unpaid elder caregiving.

Strain public finances as revenue growth slows from a smaller tax base while age-related spending rises, especially health and long-term care.

Shift demand toward healthcare and social assistance, increasing the risk of workforce skills and training mismatches.

Reallocate housing and real estate demand toward accessible homes and senior care facilities, often alongside lower demand for existing structures like public schools.

Lower potential GDP growth unless offset by higher productivity, participation and/or migration.

Change the mix of local services towards older adult needs, including retail, transportation, education and other consumer services.

These dynamics increasingly inform how states and employers plan future investments. As the population continues to age, these effects will intensify, especially in states with the highest and fastest-growing dependency ratios.

Care-related constraints do not only affect eldercare. They also show up in childcare, where workforce disruptions similarly vary widely by state.

Chart 2: South Dakota, Delaware & Hawaii have largest dependency ratios

Ratios, dependents as share of working-age population (18-64), 2024

Source: KPMG Economics, IPUMS USA ACS

In 2024, the share of households with children facing childcare-related work disruptions was highest in Massachusetts (9.6%), Rhode Island (9.1%) and Alaska (8.3%).⁹Though Massachusetts and Rhode Island have relatively low dependency ratios, both face high costs of living and sizable childcare supply gaps.¹⁰

Among affected households, average work disruptions were largest in Connecticut (1,307 hours lost), Texas (1,211) and Hawaii (1,189).¹¹ Texas logged the greatest total hours lost (90.4 million), followed by California (73.2 million). Adjusted for population, however, the impact on Texas’ workforce was larger.

Total workforce disruption was even larger given that many workers simply left the labor force. Prime-age (25-54) mothers whose youngest child is under 5 left the labor force from December 2023 to February 2026.¹² The participation rate fell by 2.2 percentage points among those with a BA or higher; it fell by 1.1 ppts for those with no BA.

That national benchmark masks sharp state-level differences. Chart 3 shows that the participation rates shifted differently in New York, California, Texas and Florida, the four largest states by population. Whereas California exceeds the national average among those with a BA+, New York exceeds the benchmark for those with no BA.

Florida and Texas trail the national benchmark in both groups. The sharp decline of 5.5 percentage points for those with a BA+ in Texas is much larger than the national average.

These state differences reflect a mix of cost pressures, childcare/early education supports (including subsidies, paid leave and pre-K) and supply constraints, as well as broader tax and policy choices. Differences in industry mix, workforce composition and household preferences also play roles.

The takeaway is clear: certain groups are at higher risk of leaving their jobs due to the care economy crisis, creating productivity losses, higher turnover and hiring costs and deeper talent shortages in some places than others. Those dynamics translate directly into employer exposure, concentrated in specific industries.

Chart 3: State-level differences in labor force participation rates of prime-age women with young children

Percentage points, difference from Dec 2023 to Feb 2026, 12 month moving average basis

Source: KPMG Economics, IPUMS CPS

As of the latest count, 38.2 million individuals were unpaid eldercare providers in the US in 2023-2024, according to the BLS.¹³ Of those, 24 million had paid employment, meaning they were informal family caregivers while still working for pay.¹⁴ 52% were women; 48% were men.

Nearly one-half of these individuals were Gen X, one-quarter Millennial and one-fifth Baby Boomer.¹⁵ Both Gen X and Baby Boomers were overrepresented among workers providing unpaid eldercare given their share of the total workforce.

Unpaid elder caregiving is unevenly distributed across industries. (See Chart 4.) Healthcare and social assistance employs the largest number of unpaid caregivers (4.4 million), followed by professional and business services (3.5 million), educational services (2.8 million) and manufacturing (2.0 million).

Looking at industry shares, roughly one in ten to one in five employees in every industry provides unpaid eldercare. (See Chart 5.) Men make up the majority of unpaid caregivers in all industries besides retail trade, educational services and healthcare and social assistance; they are also overrepresented relative to their workforce share in nine of 15 industries.

Several of the same industries also face substantial childcare-related work losses. In 2024, healthcare and social assistance lost 82.8 million work hours due to employee childcare problems, followed by professional and business services (55.1 million), retail trade (45.8 million) and manufacturing (37.3 million).¹⁶

Taken together, these patterns underscore the growing overlap between eldercare and childcare demands. Among the growing sandwich generation, often mid-career professionals, care responsibilities increasingly constrain work. Without adequate supports, these overlapping pressures translate into hidden but ongoing costs for employers and the broader economy.

Chart 4: Workers providing unpaid eldercare by industry, 2024

Number, millions

Source: KPMG Economics, IPUMS American Time Use Survey (ATUS)

Chart 5: Share of industry workforce providing unpaid eldercare, 2024

Percent

Source: KPMG Economics, IPUMS American Time Use Survey (ATUS)

In 2026, growing challenges in the care economy will increasingly affect workforce outcomes, employer costs and overall economic performance. Though all states and industries are impacted, some are more at risk than others.

With risk comes opportunity. By mapping state- and industry-level fault lines, this report highlights where targeted investments can ease constraints and improve productivity. The care economy is quietly reshaping growth prospects, and leaders who respond early will be best positioned to gain an edge.

Footnote

Congressional Budget Office. “The Demographic Outlook, 2026 to 2056.” January 7, 2026.
Davis, Carl, Marco Guzman and Emma Sifre. “Tax Payments by Undocumented Immigrants.” Institute on Taxation and Economic Policy (ITEP). July 2024. and Bahal, Sanya. “The Effect of Immigration on Social Security’s Finances.” Bipartisan Policy Center. November 2024.
Powell, Anna. “Nearly Half a Million Early Childhood Educators are Immigrants.” Center for the Study of Child Care Employment, UC Berkeley. July 15, 2025.
Chidambaram, Priya and Drishti Pillai. “What Role Do Immigrants Play in the Direct Long-Term Care Workforce?” KFF. April 2, 2025.
Occupational Employment and Wage Statistics. “Occupations with the most job growth.” U.S. Bureau of Labor Statistics. August 28, 2025.
Famakinwa, Joyce. “Home Care’s Industry-Wide Turnover Rate Reaches Nearly 80%.” Home Health Care News. July 3, 2024.
Nestler, Matthew. “Weak job growth, large price increases and more work disruptions across care economy.” Care Economy Insights. LinkedIn. January 15, 2026.
Author’s calculations using American Community Survey (ACS) microdata via IPUMS. Ruggles, Steven, Sarah Flood, Matthew Sobek, Daniel Backman, Grace Cooper, Julia A. Rivera Drew, Stephanie Richards, Renae Rodgers, Jonathan Schroeder, and Kari C.W. Wiliams. IPUMS USA: Version 16.0 ACS. Minneapolis, MN: IPUMS 2025. https://doi.org/10.18128/D010.V16.0.
Author’s calculations using microdata from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) via IPUMS. Flood, Sarah, Miriam King, Renae Rodgers, Steven Ruggles, J. Robert Warren, Daniel Backman, Etienne Breton, Julia A. Rivera Drew, Stephanie Richards, David Van Riper, and Kari C.W. Williams. IPUMS CPS: Version 13.0 ASEC. Minneapolis, MN: IPUMS, 2025. https://doi.org/10.18128/D030.V13.0.
“Child Care Gaps Assessment.” Buffett Early Childhood Institute at the University of Nebraska. 2025.
Sarah Flood et. al. IPUMS CPS ASEC.
Nestler, Matthew. “Mothers of young children re-entering the labor force.” Care Economy Insights. LinkedIn. January 27, 2026.
“Unpaid Eldercare in the United States—2023-2024 Summary.” U.S. Bureau of Labor Statistics. September 25, 2025.
Broader surveys that include caregiving for adults of all ages or children with a medical condition or disability estimate a larger working-caregiver population. See AARP and National Alliance for Caregiving. “Caregiving in the US 2025.” July 24, 2025.
Author’s calculations using the microdata of the American Time Use Survey (ATUS) via IPUMS. Sarah M. Flood, Liana C. Sayer, and Daniel Backman. American Time Use Survey Data Extract Builder: Version 3.3 ATUS. College Park, MD: University of Maryland and Minneapolis, MN: IPUMS, 2025. https://doi.org/10.18128/D060.V3.3.
Author’s calculations using the CPS ASEC microdata via IPUMS. Sarah Flood et. al. IPUMS CPS ASEC.

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Relevant Results

National trends

At the precipice of a demographic cliff

Hits a shortfall in workers

State-level view: where care demand is structurally rising faster than labor supply

State impacts: what higher dependency ratios change

Childcare gaps disrupt some state workforces more than others

Industries hardest hit by employee eldercare responsibilities

Bottom Line

Footnote

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Subscribe to insights from KPMG Economics

Meet our team

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Headline

Mapping the Care Economy in 2026

Special report

National trends

At the precipice of a demographic cliff

Hits a shortfall in workers

State-level view: where care demand is structurally rising faster than labor supply

State impacts: what higher dependency ratios change

Childcare gaps disrupt some state workforces more than others

Industries hardest hit by employee eldercare responsibilities

Bottom Line

Footnote

Explore more

Subscribe to insights from KPMG Economics

Meet our team

Headline