Capitol Gains: The Sandwich Generation
By Ali Mickelson
Director of Legislative and Tax Policy
If you pay attention to the bills that are introduced, you may have seen one recently referring to the “Sandwich Generation.”
While the immediate image that comes to mind a group of Millennials in line at Subway, the term actually refers to a growing population of adults who are being “sandwiched” between two generations requiring care. The Sandwich Generation is a term for the increasing number of Americans who are financially supporting both children and an adult over the age of 65. One in seven middle-aged adults fits into this category in the United States, and 71 percent of this group is between 40 and 59 years of age.
The number of Americans in the Sandwich Generation has been increasing as has the cost of supporting multiple generations. With the staggering price of in-home medical care for elderly adults, including more than $21,000 per year for home-health assistance and an additional $3,600 per year for expenses such as groceries and prescription drugs, it is not surprising that caring for elderly family members is squeezing the family budget. However, in reality, the increased pressure on the Sandwich Generation is primarily coming from grown children rather than dependent adults.
Grown children moving back home has become more prevalent since the Great Recession. Forty-eight percent of middle-aged adults provided some financial support to a grown child in 2012. Young adult employment rates are the lowest they have been since the census started collecting unemployment data in 1948. Additionally, from 2007 to 2011, even young adults who were employed full-time experienced lower average weekly earnings than any other age group.
Supporting these adult and child dependents does not come without cost to the caregiver. For women, total lost wages due to leaving the labor force early and/or reduced hours of work because of caregiving responsibilities equals roughly $142,693. This results in lost Social Security benefits of $131,351 and lost pensions of approximately $50,000. Thus, in total, the cost of caregiving for women in lost wages and retirement benefits equals $324,044.
For men, total lost wages due to leaving the labor force early and/or reduced hours of work because of caregiving responsibilities equals $89,107 with an additional $144,609 in lost Social Security and $50,000 in lost pension. The total equals $283,716 for male caregivers.
Nationally, employers lose an estimated $33.6 billion as a result of caregiving, which equates to $2,110 per employee. This is in part because 70 percent of adults in the Sandwich Generation have to change their work hours to accommodate caregiving.
Those are just the direct financial costs those in the Sandwich Generation may have to absorb. There are many other considerations that can have an impact on adults caught in the middle.
For instance, members of the Sandwich Generation report decreased health outcomes, including increased emotional hardship and physical strain. In fact, employers’ health care costs are estimated to be 8 percent higher for employees with elderly caregiving responsibilities, which costs U.S. employers an estimated $13.4 billion annually.
Despite all of the social and economic costs, 75 percent of adults report wanting to be able to care for their elderly parents even when they are already caring for children. That is why this credit is particularly important. House Bill 1292 provides a refundable tax credit of up to $3,600 for members of the Sandwich Generation. This money would be tremendously beneficial to those families who need the additional support and is a good way for our legislators to target money at middle-class Coloradans.
