The Potential Macroeconomic Effects of the Build Back Better Care Investments

Lenore Palladino and Chirag Lala

Feminist Economics, 2025, vol. 31, issue 2, 224-262

Abstract: There is an urgent need for public investment in care around the globe. This article investigates the potential macroeconomic impacts of investments in home healthcare, childcare, and universal paid leave in the United States as proposed in 2021 as part of the Biden-Harris Administration’s Build Back Better policy reforms. The contribution of this article is to model the effects of public investment in home healthcare and childcare employment alongside public investment in paid leave for the entire workforce. We find that a US$100 billion annual investment in increased compensation for new and current workers and in new employment directly creates 1.4 million care jobs, 2.0 million jobs total, and US$81 billion in new labor income. The modeling draws on a rich international scholarship arguing that care investment should set a floor on wages to ensure a well-paid formal workforce and create a multiplier effect in the broader economy.HIGHLIGHTSIn the US, weak care infrastructure – home healthcare, childcare, and paid leave – has reduced economic growth.Major federal investment in these three care sectors would pay for itself in terms of increased employment and economic activity.Policymakers should consider that investment in care is central to US economic prosperity.

Date: 2025
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DOI: 10.1080/13545701.2024.2446449

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