The United States has an aging population that is expected to grow around 14% in the next five years, reaching about 71.6 million people in 2030. This growth is fueling expansion of the care economy. In the United States, the cost of formal care is estimated to be $648 billion. The care economy refers to the production of services that support individual well-being across the public, private, and nonprofit sectors.

The care economy includes a wide range of people, yet academic and policy discussions often focus on those in formal caregiving roles, such as home health aides, social workers, and child care workers. Over the years, less attention has been paid to unpaid care work, in part because many Americans view caregiving as the responsibility of family members. But caring for loved ones carries financial costs. A significant part of the care economy involves people who leave paid employment, either temporarily or permanently, to meet a loved one’s needs. Unpaid care work is valued at an estimated $1 trillion, with about 65% of it carried out by women.  

The COVID-19 pandemic highlighted gaps in policies addressing the care economy. Federal, state, and local governments have created programs and services to ease pressures on caregivers, but financial burdens remain. On average, working caregivers spend 26% of their income on care-related expenses. A 2021 report by McKinsey found that 45% of respondents who left their jobs cited the need to care for a family member as a factor in their decision, while a similar share said they were considering leaving because of caregiving demands. These challenges illustrate the difficulty many families face in balancing financial pressures, paid employment, and care responsibilities—pressures that are expected to grow in the coming years.

The primary policy response to these challenges has been family leave. The Family and Medical Leave Act of 1993 requires certain employers to provide up to 12 weeks of unpaid leave for caregiving, the birth or adoption of a child, or medical needs. Thirteen states have expanded on the federal law by mandating paid family leave, generally ranging from eight to 12 weeks. Another 10 states have enacted voluntary paid leave programs that encourage employers to offer paid time off.

Despite these efforts—and some reluctance due to the potential costs for employers—family leave policies still fall short of addressing the full range of needs faced by working caregivers. In states without paid family and medical leave, an estimated 11.6 million leaves were needed for dependent and family caregiving and another 13.2 million for self-care. These figures raise an important question: What policy changes could help workers balance their jobs with caregiving responsibilities?

One possible way to address this policy gap is to look at models used in Germany. While the German government plays a larger role in social policy than the United States, some aspects of its care-related policies may offer lessons for reducing the burdens faced by people who must choose between work and caregiving.

The United States has a single policy that covers family and medical leave, while Germany uses a multifaceted approach. Germany has developed several policies to accommodate different types of leave depending on the cause and duration of an absence, allowing for more flexibility based on individual circumstances. Its three-tiered system includes short-term acute care (Kurzzeitige Arbeitsverhinderung), long-term caregiving (Pflegezeit), and family caregiving (Familienpflegezeit). Each policy addresses specific functions and needs.

German care leave policies 

Short-term care leave (Kurzzeitige Arbeitsverhinderung) allows up to 10 days to address urgent family care needs or to arrange long-term care, even if the care recipient does not live in the same household as the caregiver. All employers are required to provide this leave, though it is unpaid. If the care recipient is enrolled in Germany’s care insurance program, the insurer may provide the caregiver with compensation equal to 90% of lost wages.
Long-term care leave (Pflegezeit) is designed for workers who need to care for a close family member for more than 10 days. Employees may take part-time or full-time leave for up to six months, with job protection during that period. While employers are not compensated for this leave, caregivers may apply for an interest-free loan from the Federal Office of Family and Civil Society to help offset lost income. 
Family care leave (Famlienpflegezeit) is similar to long-term care leave but differs in two key ways. It covers not only close relatives in the home but also minors in need of care who live outside the household. It also allows for up to 24 months of leave, with working hours reduced to as few as 15 per week. Like Pflegezeit, it does not provide wage replacement but offers an interest-free loan to help cover living and care costs.

All forms of care leave provide job protection for the caregiver. Family care leave and long-term care leave require medical documentation showing the care recipient’s need. Eligibility also depends on business size: Familienpflegezeit (family care leave) applies to employers with 26 or more employees, while Pflegezeit (long-term care leave) applies to those with 16 or more employees.

Takeaways and policy implication 

Germany has a different system of social services than the United States, and its leave policies do not directly apply to U.S. law. However, certain features of Germany’s approach could inform reforms to family leave policies at the federal or state level. German policies distinguish between the length of leave, the type of care needed, the care recipient, and the financial support provided to caregivers.

In the United States, leave policies are generally broad, covering multiple types of care, childbirth or adoption, and medical leave within a single policy. This approach can limit effectiveness, reduce flexibility for individual care needs, and often fails to provide workers with sufficient time or financial support to provide care.

Adopting elements of the German approach in the United States could involve changes to the Family and Medical Leave Act and state leave policies, which might address the needs of an aging population. Any policy changes may consider clear guidelines for employers and employees that account for the type and severity of care, the length of leave needed, and the relationship between the employee and care recipient.

Compensation is an important part of caregiving, but differences in social benefits and health care systems make it difficult to implement Germany’s state-funded interest-free loans in the United States. Such loans would likely face political obstacles and could create additional financial strain for caregivers.

When revising federal and state family and medical leave policies, access to Social Security, Medicare, and Medicaid benefits for the care recipient should be considered. Government-supported compensation could be linked to the type of leave provided by employers, with greater benefits for employees at companies that do not offer paid leave. State policies could also require employers to provide short-term leave for acute care, similar to Germany’s Kurzzeitige Arbeitsverhinderung, which allows up to 10 days. A potential approach could be a hybrid policy combining private insurance for employees needing leave beyond 10 days with public benefits available once processed.

The need for care will continue as the United States’ population ages, life expectancy rises and the fertility rate declines. Federal and state policymakers will need to develop strategies that help people balance caregiving responsibilities with their careers without facing financial strain. Adapting elements of Germany’s care-leave model could help address some of these challenges and support Americans managing both caregiving and related economic pressures.