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.
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I think that this sort of labor is an excellent candidate for public spending. It is important in many ways and increases the social bond necessary for responsible fiscal spending.
It ties in well with the Fed mandate for full employment and helps keep interest rates low. It’s important to view public spending as being private gains.
employment and interest rates
“It makes much better sense not to offer a support rate at all. In that situation, net public spending will drive the overnight interest rate to zero because the interbank competition cannot eliminate the system-wide surplus (all their transactions net to zero – no net financial assets are destroyed).
So in pursuit of the policy goal of full employment, which we might consider to be a ‘natural’ goal for a collectively-minded society desiring high levels of well-being and inclusion, fiscal policy will have the side effect of driving short-term interest rates to zero.”
You want to create a government program to pay people to feed their kids and do laundry and visit the grandparents and watch the neighbor’s cat and get the mail and mow the lawn and wash the car and pay the bills and the million other things people do outside of a job in the formal economy?
I am curious, in your view, what does shifting economic activity from the informal to the formal economy accomplish? Why do you view paying people money as creating better incentives than people making decisions on their own about the best uses of their time? I would offer the exact opposite perspective, that too many hours are spent in paid employment in our society, not too few.
I am also curious why you focus on net public spending? We have given the private sector, on net, trillions of dollars now in just the 21st century alone, nevermind the trillions more from Reagnomics. The problem we face is distribution within the private sector, not an aggregate lack of transfer from the public sector to the private sector.
I’m definitely not focusing on net public spending which is why I had the emphasis on employment. It’s definitely a distribution problem. The point is that public spending goes into private hands. We can decide if it’s the bankers or people in the bottom 80% or so.
In fact, I’m in favor of a BIG in addition to a JG as I think it is necessary to remove labor from being a commodity. Many people function in these sort of caring capacities and I think a BIG would help enable this.
That’s interesting, that seems to be stepping back a bit from the original comment about directly paying work in the informal economy and the specific use of public spending. I agree public spending goes into private hands.
That’s the problem we confront today. We have put huge quantities of currency units into the outstretched hands of the top 20% or so of the population, especially the top 10%. The cumulative consequences of that systemic inequality are destabilizing our society.
Paying people would enable people to do these things, that they will maybe do anyway but at great cost to self economically. People may spend hours caring for elderly parents, but if they don’t do a full time job on top of that, it will bankrupt them.
what about pets? If a dog chases a stick for half an hour, is that work the dog should be paid for? Or is it a service the dog is providing to its owner in exchange for food?
It gets complicated.
Goldfish swimming around in a bowl. What about them? If you stare at them for 15 minutes wondering about the universe, that’s worth something. Then you give them food. That could be a market clearing equilibrium.
Then you could say to the goldfish “Goldfish, I’m going to lend you 1 million dollars. You can spend it on food, which I’ll provide, but you have to swim around so I can watch you and think about the universe, using that light that flickers in a panoply of orange flashes as a catalyst for imaginative dreamlike contemplation.”
They’d say “OK. We’ll also lend you $1 million dollars and you can pay us to swim around. But you have to feed us too. No forgetting!”
That’s $2 million dollars in debt. It’s amazing how it comes from absolutely nothing. That should tell you something about something and nothing.
Goldfish-Sachs noticed that long ago and now they own all the goldfish bowls as a result.
these are deep thoughts. these are the kind of thoughts you have while staring at fish in a bowl.
the problems start when the goldfish take the money and start spending it on nasty shit instead of food. then they lose it and can’t pay you back. if you take your money and spend it on equally nasty shit, you can’t pay them back either.
they stop swimming and you stop feeding
you may think it doesn’t matter since you owe each other money, you just cancel it out. But it doesn’t work that way in real life.
It’s weird why it doesn’t work that way. But that’s where an economist needs to start, right there. Then they’ll make sense.
If you stop feeding goldfish they merge. Then they become too big to fail. Then it becomes like a Highlander movie – “There Can Be Only One Goldfish”. But I don’t have goldfish, so I don’t know how it ends. Probably not well. hahahaha
This is a great conversation. It is the fundamental critique of what economists and pundits and policy makers have done with GDP and the whole system of growth as measured through the narrow lens of financialized money. It is a rather limited subset of the overall activity of the economy.
I would point out we don’t need more hours spent on the job. We need a better distribution of work and wages so people can spend more time doing things other than going to work in the formal economy. A marginal hour in a caring role in the informal economy is far more productive than a marginal hour on the job at the TSA or the NSA or the DEA or the whole alphabet soup of wasteful, totalitarian spending.
Yes! Yes, yes, yes! Did I mention, I agree?
That the only thing they count as being *real* work and *real* productivity is wage slavery to capitalist (and occasionally very bureaucratic government or non-profit) masters is somehow appropriate for the whole thing isn’t it though? Only slaving for the master *really* counts. That’s not a bug … and that’s perhaps not an oversight, it’s rather a value system and a power relation.
If it is 6s whether I go to work to earn the money to provide for my kid(s) or stay home and do it myself then the value of the work is gained either way. But undervalued always. Unpaid labor must be the model for double-entry accounting when money is spent into the economy rather than loaned into it.
As food stamps are used as an excuse to pay people less and keep capital in the upper echelons of society (see the walton family) a basic income guarantee will just turn us all into slaves. As pointed out previously i believe by lambert, slaves had a basic income guarantee. Jobs guarantee is far superior providing something to both the worker and society, but less to goldman sachs et. al. I think we need to do away with the notion that one’s money can work for you. Tax investment income. As revealed in links yesterday, tax cuts do not pay for themselves.
Sure, just give me a basic job guarantee where I’m allowed to do something artistic, or raise my kids or grow plants or something and I’ll get on board with that idea. I have a feeling though that the basic jobs guarantee will inevitably be for jobs that are tremendously destructive to society and the environment–such as jobs for highway maintenance or fracking, etc.
Anyway, there’s a lot of wishful thinking built into this jawbs idea. Right now, today in America–for example–a basic guaranteed job is well within reach of anyone. All you have to do is walk in to a bank and try to rob it and you’ll be in an orange jump suit picking up trash on the side of the road in short order–all thanks to the magnanimity of the state. I envisage any broader guaranteed jobs program produced in the US these days to bear a striking resemblance to the one that a minority of the population currently enjoys.
indeed, the jobs guarantee to end all jobs guarantees. The food forest seems great but too fresh for immediate value, although now i’ve been exposed to the idea i see fractional versions around, but you’re right, same as BIG the jobs guarantee would be designed as things currently stand to benefit the usual suspects.
“would be designed” … Lack of agency. Designed by whom?
Good question. The agency of course would be the corporate oligarchs who currently run America. That would tend to imply that it’s not a jobs problem we have at the moment, but a political problem. More jobs is the cure for the wrong disease.
good catch thanks, my usual suspects wouldn’t probably design it. It’s in fact being designed by people other than those usual suspects at beacon food forest. Kudos to them for their efforts and i stand corrected. I still haven’t visited beacon food forest in person only virtually, but I know the location, it’s a west facing hillside covered with grass, so horribly underutilized and a great location that they’ve only gotten a relatively small part of, so a great idea in practice that can be expanded but I’m speaking from my own limited lifespan so I couldn’t expect to see maturity in any case so just jealous really. I’ve started now to notice how much some peoples yards are food forests but in the urban environment only so much you can do with small spaces, so more food forests. Also, even on larger lots one person needs help, in a communal situation it’s many hands make light work.
Let’s not forget that the ACA is a tax increase on everyone making more than 16,500 up to those with employer healthcare. Lately i’ve noticed the cadillac tax all over the news for 2018 increases (actually right now the story line is companies are adjusting their plans to reduce their exposure, cost shifting to employees) Who wants to wager that this will become an election issue based on the country’s reluctance to take anything from rich people. The trend I see is more of the same,socialism for the rich and the boot for the remainder. What will happen as we switch from the baby boom pensioners to the current crop of workers who live hand to mouth, not only pensionless but mostly indebted?
We need to get out of the neoliberal trap and there is one presidential candidate who is now doing well in New Hampshire who is tapping into new ways of doing things.
Socialized medicine is a must. The problems with insurance, deductibles, taxes, employee and employer problems related to the current system are crazy.
Pensions can be made simple and based on social security. No need for middlemen or worry of corporate raids or buyouts. The key is to keep public investment high so we have useful jobs.
Education should be seen as a valuable national resource and not another opportunity for bankers and executives.
Taxes give value to money and should be paid proportionately by those who benefit most from this value.
those are good ideas i hope we will somehow be able to achieve them
The Cadillac tax is the perfect illustration of the pure scam that is the ACA and the Obama presidency. The benefits of ACA were front loaded (more people having admittedly imperfect insurance and Medicaid where expanded etc.). That came into effect even before Obama’s reelection. The costs of ACA like the Cadillac tax were back loaded and won’t take effect until he’s out of office. Yes a lot of employees are going to lose good insurance, even insurance that’s just “okay” is going to hit the Cadillac tax if costs keep increasing (the limits weren’t based on medical inflation). So front load all the benefits, back load all the costs. Pure scam. The Obama administration is a snake oil salesman, a carnival barker, Ponzi and Berni Madoff all rolled into one. Will ANYONE (besides the 10%) have good health insurance after 2018?
By the way what happened to the employer mandate? Surely the law applies to corporate persons just as much as it does to flesh and blood people, right?
Then we complain about “The Right” (whatever that means, have some Trump) when we have a mainstream liberalism (which some people think is left) that can’t even see all this stuff that was built into Obamacare.
I think the ACA contains a lot of perverse incentives that will take a while to become apparent
Many people have realized that social supports like food stamps being given to employed people are a subsidy to the businesses that employ them. This realization has become a commonplace in the last couple of years, few would rationally dispute it.
But we should take that realization to its logical conclusion — all of humanity is a subsidy to business. Take away all businesses from humanity, and humanity remains. Take away all human beings from businesses? ~crickets~
It’s rather like music. When the flute plays, there is music. When the flute chooses to be silent, the flute is still there. It might choose to play a ballad, or a jazz tune, or an advertising jingle, but whatever it chooses, it still exists, and remains the source of music.
But our current business economy tries (with fair success) to convince all the flutes of humanity that if they aren’t tootling a business tune, they don’t deserve to exist, and that any time spent playing lullabies or hymns is pure self indulgent waste.
Also a big subsidy to the grocery business and big ag purveyors of simple carbohydrates
That’s why Integral Accounting uses 6 “lenses” to look at things:
Commodity
Custom & Culture
Knowledge
Money
Technology
Well-Being
Attempting to use only the lens of money doesn’t make sense. It’s a weak point of our “civilized” society that it looks at things so one-dimensionally.
I found out about this on the M-CAM website here
“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.”
Uh, those increases in paying for services such as childcare and eating-out/buying-takeout instead of home cooking ARE the measurement of the reduction in unpaid work: things that were formerly provided ‘for free’, now being done on a formal-cash-transaction basis, and thus now appearing in GDP. The stuff that is unmeasured is the intangibles, e.g. the social costs of latchkey kids, erosion of quality of family life, etc. In other words a lot of the warm-fuzzy stuff that factors into the “we’re working harder than ever and now both of us are working, so why aren’t we better off than our parents were?” effect. Much of which is also due to decades of deliberate policies of wage suppression, don’t get me wrong.
Otherwise an excellent piece. Like several otehr readers I would add a strong caveat along the lines of “if it can be measured, it can be taxed”.
And if it erodes revenue-streams to the plutogarchs, it can be outlawed. Or supertaxed into extinction, which has the same effect.