Economics and Homemakers

As some of my readers know, I have been working for the past two years on a book about homemakers. The working title is No One at Home: What America Lost When Her Homemakers Went to Work, but I’m sure a real editor who wants to sell books would hate it.

This is what I think the front cover should look like!

Right now, I’m working on a chapter about how homemaking lost its social value in the second half of the twentieth century. Post-war America essentially stopped valuing the work of the home. Even in the 1950s, when the craft of homemaking seemed to reach a peak, I would argue that it was not valued per se, but turned into a status symbol instead. Thus, you got scenarios where a husband took the train to Manhattan, attended a three martini lunch, thereafter “worked”¹ in a comfortable office, and came home to a wife who had spent the day raising their five kids, and yet was expect to serve him another cocktail, because he had been working, and she had not. No wonder we got second wave feminism. I’d have revolted also.

This lady has been working all day, no matter what 50s TV might indicate!

This devaluation of the work of homemakers has continued into the present day. Two articles for your consideration:

• “Should Parents Stay Home to Raise Kids?”

• How Homemakers Help the Economy

The first article, by Professor Emily Oster, appeared in The Atlantic this summer. Titled “Should Parents Stay Home to Raise Kids?” with the subtitle “And Should the Government Pay for It?,” Oster argues with regard to the first question that there is no evidence that children benefit from parental care, rather than institutional care.² Her answer to the second question is what I want to discuss today. She argues the government should not support families with a stay-at-home parent because moms and dads at home don’t provide any economic benefit to wider society. Oster writes:

When people stay in the workforce after they have children, they pay more taxes. This is true both because of the years parents work while their children are young and also because those years are an investment in higher wages later, meaning more contributions to Social Security, and more retirement savings. This has social value. Having a large tax base, especially as the country ages, is important. Individual work has, therefore, a positive externality.

Oster concludes that the government should not help families that want to have a stay-at-home parent because “the loss of [the non-working parent’s] tax dollars would have a major negative externality.” I generally respect Oster’s work, but this is a strange analysis.

First, Oster’s argument ignores that parents may actually contribute more to the tax base with one parent at home and one parent in the workforce. There are many income benefits families can reap if the breadwinner is able to fully commit to the workforce, and the homemaker is able to fully commit to the family. This can result in the breadwinner earning more solo than the family income if both parents are in the workforce, but less committed to their jobs (because they both have to spend significant time on the daily hands-on care of their kids). Claudia Goldin has written and spoken persuasively about “greedy jobs,” or jobs that pay significantly more because they take up the vast majority of the employee’s time and demand significant flexibility on the part of the employee. For example, say mom works as a corporate attorney for a large law firm: a job that can easily eat up all of her hours between 7am and 8pm, plus numerous weekend hours. It also requires significant travel in which she’s not available to do any hands-on parenting at all. Given mom’s work — for which she is very well paid — the family decides it makes sense for dad to stay home. Without dad at home, mom could not put in the crazy hours necessary for the brass ring of law firm partnership. In the end, the joint family income ends up being much higher than if both mom and dad had stayed in the workforce. Indeed, the Wall Street Journal recently had a superb article about the high-flying corporate moms whose career success is made possible by stay-at-home dads.

Second, Oster’s argument does not take into account that stay-at-home parents may have significant positive externalities besides contributing to the tax base. Moms and dads at home do many important things that are unpaid, including caring for their children (of course!), volunteering in their communities, caring for the elderly, etc. Indeed, at a later point in her article Oster seems to recognize this, noting that stay-at-home moms often provide the volunteer work that support local school systems. (I suspect that Oster mentions the contributions of stay-at-home moms to schools because this is where she personally experiences the “positive externalities” stay-at-home parents create.) She argues that “[p]aying them for this work would be an efficient and reasonable policy choice.” Presumably Oster would also support paying stay-at-home parents for other positive externalities they contribute — there’s nothing unique about the work moms contribute to schools as opposed to the work they do (for example) in caring for the elderly. However, there’s a much more efficient way to support stay-at-home parents besides identifying all the positive externalities they contribute and then figuring out a suitable wage for that work — we could simply support families that want to have a parent at home (just as Oster wants government subsidies for paid childcare). As Oren Cass at Understanding America notes, it doesn’t make sense that: “Hiring people to run the bake sale is the ‘efficient and reasonable’ choice.” Let’s just make it easier for families to have a parent at home instead (if they want).

The second article, How Homemakers Help the Economy, has a really nice summary of the contribution of homemakers to the overall economy in a way that is understandable to non-economists (like myself). It contains my favorite turn of phrase on the topic: “In reality, the stay-at-home mother is already a full-time professional in a $4.7 trillion industry.” As I have written elsewhere, some analyses find that “unpaid caregiving” is worth around 20% of America’s gross national product. When our standard economic metrics were created (like the gross domestic product, gross national product, etc.), they did not take into account the value of unpaid household labor. This does not mean that labor was not valuable, just that it was not captured in a metric. Somehow, however, we have fetishized metrics to such an extent that our society has forgotten what used to be obvious: the work of the home is immensely valuable, even if it’s not part of the GDP.

Thus, putting aside the question of whether or not government should actively support families with a stay-at-home parent, it should not be controversial that homemakers are valuable to a country’s economy. Even if they do not contribute directly to the GDP or the tax base, they are contributing in other ways. To give just one other example, consider the most significant expenditures by the federal government in the pie chart below. Two such expenditures — Social Security and Medicare — are directed towards the care of the elderly. In prior times, however, almost all of that work was done by women at home. Now we no longer value homemakers, and paying for that work takes up 34% of the federal budget.

Source

If you are a parent at home or someone who has benefited from the work of a homemaker I’d like to hear your story of how you think you/they contribute (even if not in terms of providing a tax base!)

1. I am skeptical that anyone is productive after downing three martinis, especially the way they made them in the ‘50s (my dad told me stories!)

2. I am doing a lot of reading right now - thanks to a reader of this Substack with expertise! - trying to understand this question.