The value of the homemaker and why she should be involved in the national accounts

Jessica attended the 2017 United Nations Commission on the Status of Women 61st Session as a Global Voices National Scholar. She is a reporter for the Australian Financial Review.

Abstract

Sometimes she’s a cook, sometimes she’s a housekeeper. Heck, these days she’s probably both a chauffeur and a mechanic. Regardless of which way you spin it, a lot of work goes on running a household and in a shocking twist, the Real Housewives of Melbourne has been found to include inaccuracies.

As economists the world over grapple with the task of measuring digital output and confront the genuinely flawed methodology of gross domestic product, I’d like to argue it is a perfect time to begin fulfilling our global obligation to measure the staggering amount of unpaid work that goes on in the homes.

This is crucial, not only so we can develop effective and appropriate childcare, tax and industrial relations policy, but also to empower and acknowledge that the domestic roles of women haven’t changed, regardless of how much workforce participation has improved. Instead of alleviating and spreading the tasks of running a household, which does indeed constitute economic output, we have simply added it to a woman’s full-time workload. And rather than celebrate and appreciate the role of homemakers in our society, we risk depressing and devaluing one of the most valuable contributors.

This paper looks at the current flaws in GDP, using the internet as an example; it then explains how to measure unpaid domestic work and then looks at the widespread benefits of acknowledging this often invisible societal powerhouse.

Policy Recommendations

  • Conduct a current nationwide “time budget” survey, with targeted and detailed questions, which will provide data on how much time stay-at-home mothers and housewives spend on individual household tasks.

  • Use this data to develop an economic model (Gross Household Product) that ascribes an appropriate value to these tasks using existing market transactions, relative to the geo- location of the participants. This value can be used in conjunction with other full-time, part- time and freelance economic activity to provide a more accurate picture of the overall productive economy.

  • Enter a line into the national accounts, that acknowledges that non-priced labour takes place throughout Australia.

  • Include unpaid household labour values in the national GDP print, when it is updated to include measures of the digital economy (for convenience!).

  • Actively begin to change public discourse surrounding housewives and the crucial role they play in raising children and running households.

    The new economy and the flaws in GDP

    The advent of the internet has revolutionised economies and people’s lives. Thanks to a powerful network of electrons and screens, we can summon clothes from Japan, persevere through a Harvard MBA and run entire businesses from our living rooms, making us theoretically more productive than ever before.

    But notably, the internet has forever altered the labour market and the way we measure output and productivity.

The “gross domestic product” figure is an indicator used to gauge the health of a country’s economy. It represents the total dollar value for all goods and services produced over a time period. Australia’s GDP reading at the time of writing is US$1.56 trillion, and the International Monetary Fund expects this figure to increase by 2.7 per cent in 2017 (IMF, 2016).

Often the media and analysts quote the GDP figure as a concrete, immovable reflection of an economy, but the truth is it’s more ambiguous than that. “GDP is instead a fuzzy reflection of the economy,” writes chief economist John Mauldin in Forbes Magazine (2014). “It’s derived from a model that is continually readjusted in a well-intentioned effort to understand the scope of the economy.”

In her book, “GDP: A brief but affectionate history”, Diane Coyle points out: “GDP is the way we measure and compare how well or badly countries are doing. But this is not a question of measuring a natural phenomenon like land mass or average temperature to varying degrees of accuracy. GDP is a made-up entity.” (2014)

Economists have long contended with the flaws in this model, as it doesn’t account for the billions of dollars generated in illegal parts of the economy, like drug dealing or theft, domestic housework and makes no adjustment for leisure time. Bizarrely, in Australia, GDP also includes government spending. Given the government only makes money from taxation and borrowing and selling national assets, many argue these economic acts are being counted twice (Coyle, 2014).

The arrival of the internet has forced us to acknowledge just how little the GDP figure actually captures of our modern economies. Where once we could easily measure how many cars were manufactured, how much time was spent in labour and how much another party paid for them, now we have to contend with instant global transactions, mass copying and sharing of products for zero price and thousands of jobs conducted in various jurisdictions around the world. The contemporary economic debate revolves around how to measure this.

Australians unpaid household work

The whole point of economics is to explain the allocation of scarce resources. Failing to capture the productivity of something just because it has zero cost paints a false picture of society: thousands of people are producing music at a cost, though scant revenue is collected, hence the global piracy debate. But those productive industries are discounted from the “official” economic figure. The same may be said for women’s domestic work: thousands of housewives and mothers are operating as cooks, nannies and chauffeurs, but are seemingly producing nothing of value to the economy.

At its heart, economics will inevitably fail if it ignores the deep imbalances between men and women which underpin this labour allocation. As Yale professor Jessie Bernard points out, housework is part of the great infrastructure on which the entire economy and government rests. “If women did not supply the services of taking care of the living arrangements of work, and future workers, industry would have to do so.” (Bernard, 1982)

Around the world, women spend two to ten times more time on unpaid care work than men (OECD, Ferrant). In Australia, despite women comprising of 46.2 per cent of all employees, they still perform 65 per cent more housework than men (ABS, 2016). However, the last time the Australian Bureau of Statistics measured how much unpaid labour went on in the home was in 2006 and the bureau points out: “While women were assuming a greater role in the workplace, they did not compensate by reducing work around the home.”

There is a common misconception that, unlike standard paid work, domestic work is too difficult to measure. But unlike the internet economy, where no model has been definitively developed to measure the onslaught of new productivity, it is possible to measure unpaid domestic work.

How to measure

Domestic work refers to all unpaid services provided within a household for its members, including care of persons, housework and voluntary community work (Chadeau, 1992). These are considered “work” because theoretically, someone could pay a third person to perform them.

Time budget survey

Time budget surveys are the most widely accepted way to recognise the invisible contribution of unpaid work (Bean, 2016). A time budget survey is a diary filled out by participants over a specific period.

Every fifteen minutes the participant records their main activity, whether it was a laborious or a leisure activity. To distinguish between activities, the “third party criterion” was generally applied (Hill, 1979). This criterion replaces the hours worked with a housekeeper wage, a specialist wage or an opportunity cost approach. For example, how much time and labour goes into cleaning a house can be measured by how much a professional cleaner charges per hour. Or a household may take $10 worth of raw vegetables, meat and other ingredients and, using kitchen equipment, turn these into a $30 meal (using a restaurant price). This household production process adds $20 in value to the original ingredients. The same can be said for laundry, where a few cents of detergent, electricity and an hour of time produces clean clothes, worth about $10 at laundry prices. “Repeated millions of times over each week in the kitchens and laundries of Australian households, this soon adds up to more value added than that of any recognised market industry such as agriculture, mining or manufacturing,” writes Dr Duncan Ironmonger, an economist from the University of Melbourne. Economists largely consider cooking and cleaning as productive, since someone else could be hired to perform these tasks. But watching television or sleeping are (unfortunately) relegated to “leisure” activities.

Gross Household Product

As we come to terms with the fallibility of current GDP, we don’t have to cast far to find other models that accurately show us how households and the broader economy operate. In 1992 Dr Ironmonger from the University of Melbourne, actually developed a model that would capture the value of domestic labour and published it on behalf of the Australian Institute of Family Studies.

Rather than include the value in the nominal GDP figure, because he argued it was already too confusing and arbitrary, Dr Ironmonger suggested keeping unpaid labour separate and entitled his formula Gross Household Product or GHP. He developed an “input-output table”: populated using the data gathered from time budget surveys in 1992, adding the contribution from capital, technological services and equipment and dwelling values, and the results are quite staggering. From the 380.5 million hours per week of unpaid household work in 1992, Dr Ironmonger found GHP was about $341 billion. 1996 was the last time the ABS used time-budget surveys to collect data on the domestic household economy and in 1997 released a paper showing unpaid household work accounted for almost half (48 %) of Australia’s GDP (ABS, 1997).

This is a staggering contribution and I argue it is time to conduct time-budget surveys again, align these two methods of measurement and come up with a concrete figure.

Psychology of acknowledgement: The recognition deficit

Measuring the amount of unpaid domestic work is just good economic practice, but in order to empower women to make their own choices, whether that be to stay at home with the kids or to enter the workforce, we need to actively legitimise homemaking and acknowledge its economic contribution.

The existing social structure in Australia would invariably collapse if people were to shirk their responsibilities in the home. Regardless of how much personal fulfilment is found in the workforce, if citizens are unable to come back to or grow from an efficient, healthy household, our creative and commercial endeavours would ultimately diminish.

"The great and over-shadowing peril of a boy's life is not, as many suppose, his bad companions, or his bad books, or his bad habits; it is the peril of homelessness," wrote Professor Francis G. Peabody in 1907. "I do not mean merely homelessness, having no bed or room which can be called one's own, but that homelessness which may exist even in luxurious houses—the isolation of the boy's soul, the lack of anyone to listen to him, the loss of roots to hold him to his place and make him grow."

As we've discovered, entrenched (and exasperating) gender norms view homemaking as a female prerogative and women from different regions, socio-economic classes and cultures spend an inordinate amount of time meeting these domestic and reproductive expectations. But it is how society and policy makers acknowledge this work that will either expand the capabilities and choices of women and men, or confine women to the traditional roles associated with femininity and motherhood (Razavi, 2007). "We suggest that the verification of an identity produces feelings of competency and worth, increasing self-esteem," writes Alicia Cast and Peter Burke in their paper entitled "A Theory of Self Esteem" (2002).

According to identity theory, if a group of people verify someone's identity, be that as a teacher, a firefighter, a rubbish collector or a belly dancer, that person experiences a lift in self-esteem which in turn boosts their productivity and their willingness to contribute (Cast and Burke, 2002). For example, if you're a rubbish collector but the government and other professionals ignore your role in society for whatever reason, you'll do a worse job and your self-esteem will dramatically diminish. However, if society announces the importance of that role, regardless of how minutely it contributes, your self-esteem will rise and you'll probably do a better job, which benefits everyone.

This is largely an obvious concept, but looking at the way society is structured now, we tend to "verify" roles that have an economic value. If you're making money and buying things, we tend to acknowledge your contribution more than if you aren't. The present government has failed to measure the economic importance of art schools throughout the country, and come 2017, students undertaking courses in creative fields including dance, performing arts, hundreds of others, will no longer be eligible to access existing student loans. Will this failure to acknowledge the importance of creative professions in our society lead to a systemic decline in creativity?

Throughout the business world, the "recognition deficit" is identified as the single biggest problem with staff retention (Harvard Business Review, 2016). "Recognition isn’t just about implementing employee programs to check them off a list; it’s about bringing out the best in people and improving your company’s bottom line," writes David Novak.

Presently, little is done in Australian policy to actively verify the identity of the housewife. Much has, rightly, been made of establishing opportunities and frameworks to encourage women in the workforce, but very rarely do we celebrate the choice to stay in the home and almost nothing has been done to legitimise this role; disappointingly the Real Housewives of Melbourne has some inaccuracies.

Because this role is not acknowledged in the national accounts, homemakers are unable to point to their solid contribution to society. Mothers who have left the workforce for long periods of time feel this acutely. When they attempt to re-enter the workforce after running a household and bringing up their children, very often an employer sees this "resume gap" as a negative. Despite the skills required to maintain a harmonious household, society often views an uninterrupted stretch of motherhood as a "lack of experience", forcing women to choose either to stay in the workforce or settle for lower-skilled roles.

Conclusion

I understand the constant battle to have things recognised in the national GDP figure. And rather than deconstruct the current economic program, I suggest developing a new, current data set using the time-budget surveys to get a better understanding of non-market labour productivity gains.

By understanding the lives of Australian women better – (whether they be the mother who also runs an Etsy store from her Sydney home or the woman who manages a fully staffed homestead on a Longreach cattle station) – we can develop a sophisticated understanding of each person’s output. Just because they are not getting paid an hourly rate, doesn’t mean they’re not in the labour market.

By ascribing a value to the work women do, be in market-priced or non-market, I believe we can empower women to value and see their own domestic lives as critical for the overall prosperity of the nation.

References

ABS (1997), “Unpaid Work and the Australian Economy”, Australian Bureau of Statistics, Canberra

ABS (2007), Year Book Australia 2007, Australian Bureau of Statistics, Canberra

Bean, C. (2016) “Independent Review of UK Economic Statistics”. Retrieved from

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507081/2904936 _Bean_Review_Web_Accessible.pdf

Bernard, J. (1982). “The Future of Marriage”. Yale University Press.
Chadeau, A. (1992). “What is households non-market production worth?” OECD Economic

Studies. Retrieved from: https://www.oecd.org/eco/outlook/34252981.pdf

Coyle, D. (2014) “GDP: A Brief But Affectionate History”. Princeton University Press.

Ferrant, G., Pesando, L. and Nowacka, K (2014). “Unpaid Care Work: The missing link in the analysis of gender gaps in labour outcomes”. Organisation for Economic Co-operation and Development. Retrieved from: https://www.oecd.org/dev/development-gender/Unpaid_care_work.pdf

Hill, T.P. (1979) “Do-it-yourself and GDP: The Review of Income and Wealth”. Retrieved from:

http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4991.1979.tb00075.x/abstract

Ironmonger, D. (2001). “Household Production and the Household Economy”. University of Melbourne. Retrieved from: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0009/805995/759.pdf

Margunn, B. McKay, A. (2014). “Counting on Marilyn Waring: New Advances in Feminist Economics”. Demeter Press.

Mauldin, J. (2016) “GDP Is More Of A Fuzzy Reflection Of The Economy”, Forbes Magazine August 2016. Retrieved from http://www.forbes.com/sites/johnmauldin/2016/08/31/gdp-is-more-of-a- fuzzy-reflection-of-the-economy/2/#16d00ee34d1f

Waring, M. (1988). “If Women Counted”. Harper & Row.