The Economic Value of Homemaking
The History of Homemaking
A homemaker is a person whose main activity is to care for a family and home. This is traditionally an unpaid occupation.
In an effort to understand the value of a private homemaker’s unpaid labor, experts have attempted to quantify the dollar value of the job. No one has come up with a perfectly accurate way to do so.
Four different methods of assessing the economic value of homemaking are listed below. Each method has serious drawbacks and disadvantages.
NOTE: Women Work! does not promote one method over another; we have simply gathered the following data for your information.
Opportunity Cost
In economics, the opportunity cost is the value of what someone gives up when they choose to do something else. The opportunity cost, or trade-off, of homemaking is the income the homemaker would have earned if she had been in the paid workforce. If a woman could have earned $20,000 per year as a bookkeeper, but instead was a homemaker for 15 years, the opportunity cost of being a homemaker would be $300,000.
Problems:
If a woman had not become a homemaker, she may have achieved a higher level of education, received promotions, or even changed career paths. There is no way to truly know what her income would have been if she had stayed in the workforce. Women’s work in paid employment is frequently undervalued. They often earn less money than men who hold the same or comparable positions. Using these undervalued wages to determine the value of homemaking undervalues homemaking as well.
Replacement Cost
This method evaluates homemaking by determining how much it would cost to replace a homemaker with paid workers. All of the homemaker’s tasks and the amount of time spent on each are listed in the table on page 1 of this tip sheet. The hourly rate to hire an individual to perform each of these tasks is determined, and the cost is added up.
Problems:
This method does not take into account the premiums that would have to be paid to get a professional to do the task for a small portion of time or to be on call 24 hours a day, 7 days a week.
The cost to hire an individual to complete a particular task could vary greatly. For example, when estimating the value of a mother’s care for her children, should you equate a mother’s care to the time and care given by a typical child care worker or a child development specialist? Depending on which you use, the value of homemaking is very different.
Many jobs done by homemakers are undervalued in the paid economy. Most child care workers, cleaning personnel and food service employees receive very low wages, few benefits and little opportunity for growth and advancement within the field. Valuing homemaking in this way reflects the undervaluing of these tasks.
Replacement Cost
This method evaluates homemaking by determining how much it would cost to replace the homemaker by hiring one individual to complete all of her tasks.
Problems:
As noted before, domestic workers are generally undervalued in our economy. When using these depressed wages to place a value on homemaking, we are undervaluing homemaking. For example, the median hourly earning, as listed in the May 2004 National Occupational Employment and Wage Estimates for the Department of Labor, Bureau of Labor Statistics, for the occupation of Home Health Aide is $8.81. Based on this value, a full-time (40 hours/week) worker earns $18,324 per year (52 weeks/year). This value is below poverty level for the average family of four ($18,850 a year).
http://www.womenwork.org/resources/tipsheets/valuehomemaking.htm
Partnership
In this method, it is assumed that a marriage is an equal economic partnership, that there is an equal division of responsibilities and that all the gains of partnership are shared equally by the partners. When a wife takes on the role of a homemaker, it allows her husband to earn income without being overburdened by family and household responsibilities. Using this method, a homemaker is worth half of her husband=s salary.
Problems:
The wife of a man who earns $20,000 does not necessarily have half of the duties of the wife of a man who earns $40,000. In other words, her value is not dependent on her own productivity, only on that of her husband. This method also assumes the homemaker has a partner.
Quick Tips for Financial Stability
- Pay off debt, contribute as much as possible to retirement funds and keep a hefty emergency fund.
- Get insured.
- Make sure you have retirement savings in your own name.
- Consider working at least part-time once your children are school-age.
Tip sheet last updated 11/05
