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Podcast

Podcast

Harvard Business School Professors Bill Kerr and Joe Fuller talk to leaders grappling with the forces reshaping the nature of work.
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  • 06 Sep 2018
  • Managing the Future of Work

Ep 12: Why employers should care about care

As demographics change, caregiving responsibilities have become an increasingly integral part of employees' lives. Joe speaks with Care.com CEO Sheila Marcelo about how her experience of being “sandwiched” by care responsibilities led her to found her company. Caregiving benefits, she argues, are not only perks, but are critical to competitiveness for employers and the overall economy. And our current model is broken. Is Care.com the solution?

Joe Fuller: It’s not easy to hold down a full-time job and take care of an aging parent or a young child. Sheila Marcelo learned just how hard it can be. She was working full-time when she had her second son, and she was desperate for help.

Sheila Marcelo: I begged my parents to come from the Philippines to take care of our little guy, Adam. My father was carrying him up the stairs and fell backwards and had a heart attack. And so I found myself at 29 years old working at a technology company, yet struggling to look for child care and senior care, which I soon learned was what we call being part of the “sandwich generation.”

Fuller: Marcelo soon realized she’d stumbled on a major market opportunity. Millions of families across the country are in regular need of qualified caregivers for loved ones. The difficulties families face in finding affordable and qualified caregivers also takes a major toll on employers. Companies lose billions each year because of absenteeism and presenteeism—the phenomenon of a worker being on the job but not being fully productive due to being distracted by family issues.

Marcelo: When care is not working out for families, then that impacts their work, both in terms of showing up at work, but also these days what we call “presenteeism” and overall productivity in the workplace, because it’s hard to concentrate when your loved one isn’t properly cared for.

Fuller: So Sheila Marcelo founded Care.com, a website to help users find caregivers ranging from nannies to nurses through an online marketplace. Today, Care.com matches over 26 million families with caregivers. And now, some companies are including Care.com’s services as part of their benefits packages, because workers can stay focused on their jobs when they are comfortable that their family members’ needs are being met.

Welcome to the Managing the Future of Work podcast. I’m Harvard Business School professor and visiting fellow at the American Enterprise Institute, Joe Fuller. I’m joined by the founder and CEO of Care.com, Sheila Marcelo, to discuss the rising demand for caregiving and the growth of the care economy. Hi, Sheila.

Marcelo: Hi, Joe. Thanks for having me.

Fuller: Sheila, you’re offering a very broad array of services. Maybe you could start off by telling our listeners a bit about that.

Marcelo: Sure! So the way we think about it is providing an “Amazon” for care solution, where it’s everything from childcare, senior care, special needs, pet care, tutoring, housekeeping. We sometimes joke that it’s sort of spanning generations and species at Care.com.

Fuller: So let’s take a look at this through the lens of the future of work. How do you think of care as an employer, and do you have corporate accounts? Do you approach companies about using Care.com for their employees?

Marcelo: Care.com is actually—interesting, Joe—mostly well known as a consumer brand, because we service 26 million families and caregivers. But one of our fastest-growing actual businesses is what we call Care@Work. And it’s solving issues when it comes to absenteeism and overall improving productivity, because one of the key drivers of those two important metrics for companies is actually care. When care is not working out for families, then that impacts their work, both in showing up at work, but also these days in what we call “presenteeism” and overall productivity in the workplace, because it’s hard to concentrate when your loved one isn’t properly cared for. So we decided to actually provide this as an overall benefit. It’s full access to the Care.com website that’s paid for and subsidized by the employer. A very popular one is backup care. So within a few hours, what I typically say to people is that we can send a Murray or a Mary Poppins to relieve a sick nanny, a daycare that’s closed because of the holidays, or [care for] sick Johnny. So we’re able to provide backup care. I was just speaking to an executive of a large airline company who said, “Look, I’ve got to have people show up to staff to even get a plane off the ground, and that’s critical.” So you can imagine—whether it’s consulting, financial services, hospitals, medical care workers—it’s hard for them to actually service so many other people in their jobs if their own families aren’t cared for.

Fuller: Presumably employees have been facing these types of issues since Pharaoh employed people building pyramids. Why is it getting relevant now? Why would a company need to be paying for this, as opposed to people relying on the types of solutions that previous generations did?

Marcelo: I think the demographic trends are changing. I think that, as we get to more full employment, we’re realizing that female participation in the workplace is critical, and [there’s a] growing need of dual-income families to make it all work and juggle work-life-home balance. I also think Millennials have an expectation now. In our surveys, we have found that 80 percent of Millennials have indicated they would actually change their job if there weren’t full benefits around work-life balance for them. And I think that’s becoming important. And then, of course, the rise of senior care. Senior care is one of those under-discussed topics in the workplace that actually causes a lot of stress for families, and it’s just growing, especially for the Boomer population. So I think there’s a demographic shift. I also think there’s increasing awareness of what I call “enlightened leaders” around what they used to think was an individual’s responsibility. But the metrics are coming in—that, if, in fact, they invest in overall work-life balance, that productivity would increase and that there is positive ROI [return on investment], especially when it comes to retention of talent, or when it comes to women not deciding to opt out because they’ve got good care options. And so employers are starting to face the options: They’ve got to provide a huge set of services, whether that’s onsite childcare, whether that’s remote childcare, whether that’s pet care services, senior care access of discounts to hospice care, all of the above, because that impacts overall peace of mind in the workplace.

Fuller: Sheila, I can understand how an airline that’s got a $50 million aircraft sitting at the gate because of a pilot that’s absent or a flight attendant that’s absent due to a care emergency can afford this, and certainly the tech giants that are offering their employees everything from masseuses to free lunch, literally. But what about an ordinary company, a run-of-the-mill company? How do the economics for them work out?

Marcelo: I think that we have to think about care benefits and work-life balance in a broader set of terms, whether that’s providing nursing rooms for mom, flexible work time, enabling remote—with technology now being cheaper and available all the way around, and people can work out of Wi-Fi at coffee shops. I think the sense of a flexible workplace can be achieved by any size of business, depending on—really, mentally—how you’re thinking about serving your employees.

Fuller: So, Sheila, are there any specific industries or companies that you can tell us about in a little more detail about how Care.com is working for them?

Marcelo: Typically, most of our clients want to keep it confidential for competitive reasons, but it’s the typical ones that you think about—health care, because they’ve got to get people to show up …

Fuller: Health care, like hospitals?

Marcelo: Health care like hospitals, universities, consulting firms, financial services. What has really surprised us most recently is that we’re also finding manufacturing, pharma, retailers, because now they’re starting to actually provide care benefits to low-income workers for financial inclusion. And that becomes equally important, because, as a value set of companies expand beyond just their corner offices, they’re realizing that the front line is equally important to make sure that they’re providing them overall benefits so that they can show up to work.

Fuller: Interesting. Let’s kind of reverse it now. We know the unemployment rate is very, very low. We’re seeing some modest-only improvement in workforce participation. We’re seeing people moving from contingent work, from employment agencies, to more full-time work. How is that manifesting itself in terms of your workforce? The caregivers that Care.com connects with users?

Marcelo: I think, at this point, Care.com is still early in its stage of overall penetration in the marketplace. I think we’re in the 5 percent of the 40 million-plus households that we’re going after. And even on the caregiver side, I do see that, in the future, there will be a shortage of supply—especially when you think about the competitive set in the gig economy, where there are a lot of other choices. So one of the key things I really advocate for is how do we create a sustainable employment with regards to caregiving. Because on average today, caregivers are paid $9 an hour. So, of course, we’re going to be competing with barista jobs, we’re competing with them being tellers, which creates career pathways for them. So I do think that we’ve got to come up with a solution; that if we, as a society, want a care infrastructure to care for all of us, we’ve got to think about professionalizing the space and creating pathways for caregivers.

Fuller: Are there licensing or certification issues for caregivers?

Marcelo: You know, it’s been really interesting in studying this space for the last 12 years. It’s very inconsistent and very fragmented. Some of the largest institutions that actually train caregivers—one is SEIU, the union. They do that really well in 11 states—and then the community colleges and a smattering of non-profits to help local services and make sure that we’re addressing the needs, especially when it comes to senior care. But there isn’t really a scalable solution. It’s unlike what Uber and Lyft have access to, which is a gig economy, where we’ve got a DMV across all states that’s certifying—creating—licensing for drivers. We don’t have something similar in the care space, and that is something that we are really looking into. And we’ve launched a non-profit with AARP called the “Care Institute” to really focus around credentialing and professionalizing the care space across the country.

Fuller: And is that just for senior care, or does that extend to all sorts of caregivers?

Marcelo: The Care Institute covers childcare, senior care, as well as special needs care.

Fuller: Interesting. So we touched on licensing, which is obviously a state issue. What’s the role for government in this, if any? Very often, when you hear politicians talk about this, either they’re saying we don’t want to regulate caregivers, we don’t want them unionized. Or another end of the spectrum would be saying that we have to spend much more in terms of social support. What do you see unfolding in that space?

Marcelo: I think government is going to play a very important role overall in the care industry. The way that I view it is: Government plays a role in building roads and bridges, and it is an important infrastructure when we think of transportation to actually drive jobs. There is this codependency between care and work. You need great care to work, and you need to work to pay for great care. And so, if we want overall economic growth in jobs, we have to think about care as an investment in an infrastructure. But Joe, there’s this conundrum. You need affordable, accessible, high-quality care for families, but you also need to pay for great care, which we don’t do today. And so, how do you manage something that provides accessible, affordable care—especially now that care is one of the largest budgetary items for families, next to mortgage and rent? As I stated earlier, we’re paying caregivers $9 an hour. So the way we view it at Care.com is, we started to partner—in public-private partnerships—and we look at what’s happening with roads and bridges and how there’s unique public-private partnerships, where private equity’s coming in. Is there a role for private companies like Care.com to innovate, partner with government, create unitized solutions to products that show sustainable business models? And then, if that’s the case, then work with government around new solutions actually funded into the future. We’re going to be announcing some of those things pretty soon. We are piloting some new initiatives around affordable care product options, as well as professionalizing care. So we’re pretty excited about the role that we’re playing, but it does take a village. We’re not doing this alone. It’s a huge set of partnerships in this fragmented industry.

Fuller: Is there a way to break the cycle, where care workers are really at the lowest end of the wage spectrum?

Marcelo: I think that, if we start thinking about caregivers similar to teachers—and in a weird way, even though Care.com is focused on a technology solution, I think of the traditional “It takes a village” concept—that if, in fact, we pulled our resources together, are there clever solutions that allow technology to match people better and share care? I think that, if there are solutions like that that are very localized in nature and that allow access to children and adults to have socialization while getting affordable care, I think there’s a lot of clever innovative solutions we can come up with.

Fuller: I just know that here at Harvard there are a number of students who are working on subsets of this, trying to figure out how you blend technology and some newly skilled or defined-care type of professionals in a package that can allow a business to be built, maybe businesses you’ll want to buy someday.

Marcelo: Well, the industry is so massive that any innovation in this very fragmented space that happens is absolutely welcome, because it’s a big societal problem that we’re trying to solve.

Fuller: Sheila, the market opportunity you talked about was 40-plus million households, households spending significant double-digit percentages of their incomes on care. So that seems like a big market opportunity. But also, there are very few companies that I can name beyond Care.com that specialize in this space. A lot of private capital doesn’t seem to be flowing into it. Do I have that right? And why is that?

Marcelo: You know, Joe, when I started Care.com, that was a key question from a lot of investors. I think it’s because there was an assumption that this care was a soft issue, it was a private issue to the family, and it was also one that was non-profit, really this solution around this set of issues. And it was local, and community-based, and senior care centers. I decided that, instead of pursuing a solution that was a not-for-profit with a social mission, I thought one of the big things I learned at Harvard Business School is that the efficient use of capital with the right set of technology and a business concept and business model could actually effectively create something of large social impact. So I decided on a for-profit solution, and, of course, everybody thought I was crazy pursuing this industry. But I saw the studies, as you point out, of the economics behind it. So here’s how I think about the case for the care economy. If we think about early childhood development between the ages of zero to five, 90 percent of the brain is developed at the size of an adult brain between that age. And yet, we think about childcare as a menial task, often about physical labor, when in reality, it is about educating our children, and that today we know is one of the linchpins for the competitiveness of our overall economy. The second economic case that I make is what drives overall growth, and economic growth? And in the last 40 years, we know it’s actually female participation in the workplace. So unless you’ve got great care, how do we create the freedom for women to actually pursue work and to actually contribute to overall society in an economic way that’s actually measured in GDP? Because, for the longest time, their work of unpaid care has never been included in GDP. That’s a whole other conversation you and I can have. And the third is, the largest item in our deficit is health care. And if we think about it, what drives that? It’s actually health care costs by aging parents who want to age in place in the home, but we don’t have great care. And, in fact, a lot of health care companies now are realizing that one of the key issues to driving health care costs down is social determinants around aging in place, so that then we can drive readmission rates down, the homes are modified, they’re taking their meds. So, for all of those arguments, whether it’s all the way from educating our children, driving jobs, and driving down health care costs, this is certainly not a soft issue.

Fuller: Sheila, can we talk a little bit about immigration and how immigration policy affects the supply of caregivers? Certainly a lot of people I think have in their mind’s eye that many caregivers are immigrants, whether they’re legal or illegal.

Marcelo: I have this belief, Joe, that care is going to transcend boundaries, and it must. I think if we think about traditionally the most isolationist countries in the world—like Japan or Germany in the early days—they’re actually opening their borders because of the problem, societal problem, that they’re facing with the care crisis. I think that, in the short term, we might have the turmoil that we’re facing, but the reality is that, for years, we allowed migrant farmers to come in and plow our food because we need to eat, and no one wanted to do that job. So if, in fact, we have to care for our elderly so that they can die with dignity and grace, and we’ve got full employment with economic growth and we need caregiving for our families, we’ve got to be open to figuring out how we are going to supply that labor in the future.

Fuller: I’m going to take a little detour if I may, Sheila. You’re a graduate of our school. You’re a CEO of a publicly traded company, a very prominent woman in the Boston business community. Can you just talk a little bit about that journey, about what it’s been like to become a CEO, to go public? And what are the surprises you’ve encountered along the way and a couple of lessons you’ve gained from that experience?

Marcelo: Certainly, Joe, it’s been a fun ride, but a challenging journey along the way. I don’t think I would do it any other way. Certainly, HBS has been an incredible opportunity for me that has opened doors—whether it’s fundraising or access to capital. But as a female entrepreneur, there were always challenges in question, especially with the care business that—often, there was an assumption that it’s a female-focused business. In fact, I was surprised by the difficulty of raising money in the early days. And then later, as we prepared to go public, when I was doing a non-deal road show, I had an analyst tell me once that “you are going to have such difficulty raising money, because 99 percent of the people you are going to be pitching to are mostly men who probably don’t have child care issues, who aren’t facing senior care issues today because many are young analysts punching the numbers into a computer.” And he basically coached me by saying, “Look, you probably need to really focus on eight to 10 quarters of solid consistent profitability, and then people will start to really pay attention to your story.” And he was right. It’s interesting. Is it because I’m a female CEO, or is it because it’s a female-centric business? It certainly has crossed my mind, because there aren’t many companies like Care.com that have been founded and taken it all the way to scale to go public, that in my last earnings call, I’d decided that I was going to add three paragraphs about the social mission of the company. What I’m thankful for is that Larry Fink of BlackRock and Jamie Dimon of JPMorgan Chase now are taking the baton as business leaders and really speaking out about the importance of social mission, that it’s male CEOs’ role-modeling that. It doesn’t necessarily need to take a female CEO—and that’s often, I think, people scratching their heads and that’s the expectation, that we’ll talk about the societal issues. I’m very thankful that that change is happening with large public companies and business leaders carrying that torch, and so I’m very hopeful.

Fuller: Sheila, thank you for joining us today to discuss Care.com and the growth of the care economy more broadly.

Marcelo: Joe, thank you so much for having me. This has been wonderful.

Fuller: Thanks to all of you for joining us.

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