Yves here. It’s not hard to notice that there are far more posts on labor issues in anticipation of the Labor Day holiday than I have seen in my history of blogging. It seems to be a zeitgeist indicator, if nothing else, of rising class consciousness.
Nancy Folbre is a professor emerita of economics at the University of Massachusetts-Amherst. She is the author of numerous books—including Who Pays for the Kids? Gender and the Structures of Constraint (1994), The Invisible Heart: Economics and Family Values (2001), and Valuing Children: Rethinking the Economics of the Family (2008)—related to household and caring labor. She is the director of the new Political Economy Research Institute (PERI) Program on Gender and Care Work and the author of the blog Care Talk. This interview originally appeared in the September/October Annual Labor Issue of Dollars & Sense.
Dollars & Sense: You’ve written about the tendency in economics to view household labor (and especially women’s labor) as “unproductive.” Can you explain how this is reflected in conventional macroeconomic measures.
Nancy Folbre: Non-market household services such as meal preparation and childcare are not considered part of what we call “the economy.”This means they literally don’t count as part of Gross Domestic Product, household income, or household consumption.
This is pretty crazy, since we know that these services contribute to our living standards and also to the development of human capabilities. They are all at least partially fungible: time and money may not be perfect substitutes, but there is clearly a trade-off. You can, in principle, pay someone to prepare your meals (as you do in a restaurant), or to look after your kids.
If you or someone else in your household provides these services for no charge (even if they expect something in return, such as a share of household earnings) that leaves more earnings available to buy other things. In fact, you could think of household income after taxes and after needs for domestic services have been met as a more meaningful definition of “disposable income” than the conventional definition, which is simply market income after taxes.
D&S: What is the practical consequence of not measuring household labor and production? Are economic policies and institutions different, especially in their impact on women, than what they would be if household labor were fully reflected in statistics on total employment or output?
NF: One macroeconomic consequence is a tendency to overstate economic growth when activities shift from an arena in which they are unpaid to one in which they are paid (all else equal). When mothers of young children enter paid employment, for instance, they reduce the amount of time they engage in unpaid work, but that reduction goes unmeasured. All that is counted is the increase in earnings that results, along with the increase in expenditures on services such as paid childcare.
As a result, rapid increases in women’s labor force participation, such as those typical in the United States between about 1960 and the mid-1990s, tend to boost the rate of growth of GDP. When women’s labor force participation levels out, as it has in the United States since the mid 1990s, the rate of growth of GDP slows down. At least some part of the difference in growth rates over these two periods simply reflects the increased “countability” of women’s work.
Consideration of the microeconomic consequences helps explain this phenomenon. When households collectively supply more labor hours to the market, their market incomes go up. But they have to use a substantial portion of those incomes to purchase substitutes for services they once provided on their own—spending more money on meals away from home (or pre-prepared foods), and child care. So, the increase in their money incomes overstates the improvement in their genuinely disposable income.
A disturbing example of policy relevance emerges from consideration of the changes in public assistance to single mothers implemented in the United States in 1996, which put increased pressure on these mothers to engage in paid employment. Many studies proclaimed the success because market income in many of these families went up. But much of that market income had to be spent paying for services such as child care, because public provision and subsidies fell short.
D&S: You’ve also written extensively about “caring labor”? What is caring labor? To what extent is this labor (and the output of services associated with it) directly or indirectly captured by conventional measures like GDP?
NF: Everything I’ve discussed above is about quantity. But quality is also important. I define caring labor as labor where the quality of the services provided is likely to be affected by concern for the well-being of the care recipient. Love, affection, and commitment almost always enhance the care of dependents, and this is a big reason why market-provided services are not always perfect substitutes for those provided by family members and friends.
On the other hand, many people— especially women—work in occupations like child care, elder care, education, medicine, or social services where they genuinely care about their clients or “consumers.” The market value of this work is counted as part of Gross Domestic Product and household income. But in many cases, the wage paid is considerably less than the value of the services provided.
Workers in these jobs often give more in the way of quality than they are actually paid for.
D&S: As a practical matter, how could one go about measuring the value of services currently provided by unpaid household labor? In your estimation, how would our picture of economic life change if we did?
NF: It is pretty easy to estimate a lower-bound for the value of unpaid work by counting the number of hours that people spend engaging in it (which in the United States adds up to almost exactly the same total as hours of market work), and multiplying those hours times the hourly wage one would pay for a replacement.
Measures of hours worked in different activities such as meal preparation, child care, cleaning, shopping, and so on are typically based on a nationally representative survey of individuals who report all of their activities on the preceding day. The American Time Use Survey, administered since 2003 on an annual basis as a supplement to the Current Population Survey, provides reliable, high-quality data on time use.
Several studies have used these data to assign a dollar value to non-market work in what is called a “satellite” national income account (because it revolves around, rather than replacing the conventional account). Obviously, including this value in a measure of “extended GDP” makes the economy look bigger. More importantly, it revises estimates of how the economy has grown over time—in a downward direction.
Counting the value of non-market work has an equalizing effect on measures of household income, not because low-income households do a lot more of it, but because most households of similar size and composition do about the same amount. Here again, the trends are more interesting than the levels: since the relative importance of non-market work has declined over time, its equalizing effect has probably also declined.