Value the Caregiver, Grow the Economy

Compensating caregivers and educators adequately is essential to attract and retain talent in these vital sectors. The pay must remain competitive with other parts of the economy, such as manufacturing, which often offer higher wages. Despite teaching and caregiving practices remaining constant over decades, wages must reflect the changing economic landscape. Over time, providing these important services may become more costly, necessitating a larger share of economic resources. However, as overall wealth and productivity increase within the economy, the affordability of these services also improves, mitigating concerns about rising costs. Understanding the Baumol Effect illustrates that as long as the economy experiences growth driven by productivity in various sectors, rising prices in labor-intensive areas can be managed, allowing for a positive outlook on public spending trends.