Sunday, May 01, 2005

You should get paid to stay at home?

Just in time for World Socialists Day (May Day when the "workers of the world unite"), there's a new example of utter economic lunacy:

Stay-At-Home Moms Deserve High Pay, Analysis Shows
The old adage that "a mother's work is never done" remains as true now as ever. Today's stay-at-home Moms are learning what their predecessors always knew -- they'd be making a lot of money doing their job outside the home.

Just in time for Mother's Day, an informal study conducted by Web site Salary.com shows that stay-at-home moms would earn an average of $131,471 annually, including overtime, if they received a paycheck.

A sampling of the 5.4 million stay-at-home mothers were asked to come up with job titles that fit a general description of their daily routines.

The titles -- which reflected the most time-consuming parts of their day -- include day-care center teacher, van driver, housekeeper, cook, chief executive officer, nurse and general maintenance worker, the survey showed.
There's no question that housewives do a lot of hard work. But as I said, the article is about economic lunacy.
Salary.com, which tracks what jobs pay, suggested that the annual base pay for a 40-hour stay-at-home mom's workweek would be $43,461. Mothers would earn an additional $88,009 a year for 60 hours of overtime each week.

"I think I should definitely make that much," said Joanna Butti, who stays at home to care for her twin boys. "It's a hard job."

Coleman said feedback on the figure was mixed. Some felt mothers deserved more, some less. In general, though, many were pleased to see a figure above $100,000.
First, I'm not sure how they're calculating that "overtime." At $43,461 annually for a 40-hour week, that's about $20.89 per hour. Standard overtime is time and a half, so $31.34 per hour, which is $97,780 per year (just for overtime) for 60 hours per week. The article's figure of $88,009 means overtime pay of $28.21 per hour.

Second, we've gone from "What would they make?" to "What do they deserve?"

Presumably these calculations are based on what a professional would earn doing a housewife's duties: cooking, cleaning, chauffeurring. Unquestionably it would cost a lot of money (principally overtime) to hire someone for 14-hour days. But housewives "deserve" a certain level of pay? I've written before that the worker is worthy of his hire. No one "deserves" any level of pay at all: you're worth only what others believe.

Hopefully she's merely wondering what a professional would earn doing her household duties, not that she should really get paid (it almost sounds like she suggests that). I'll merely ask this, then: if they could make money elsewhere, why don't housewives do just that? If they're "CEO" caliber, certainly they could pull high salaries at companies? Well, odds are that they couldn't. Companies wouldn't hire someone to work 100-hour weeks, not for such low-skill tasks as cooking, cleaning and driving the kids around. Those are jobs of extremely low marginal utility, as Don Boudreaux explained: sports stars can get paid a lot because there aren't as many people capable of doing the job. It's the same principle with Fortune 500 CEOs. On the other hand, the occupation of "housewife" is very much necessary to society, and it involves a lot of labor, but there's an abundant supply of people who can do the job. There aren't a relative many who would want to, but there are many who can. With the abundant supply of capable labor, a company wouldn't have to hire someone for 100-hour weeks. It need only hire two full-time workers and one for part-time. (Actually that would be one full-time at 40 hours, and two part-timers at 30 hours each. That way, under a lot of state labor laws, it would have to provide full benefits to only one, not two.)

There's also the fact that family and friends simply do things for each other because of the ties. "Oh, I couldn't think of charging for this" shows that value of the family or friendship is of greater worth than charging them. Look at the computer help that I give to friends, and that others give to me? We give rides to each other, we provide free babysitting to each other, and we often act as amateur psychiatrists. Should we adjust GDP because of all these uncounted economic activities? No, because they're not commerce, per se.

My first several weeks at Morgan Stanley were as an unpaid intern, and I joked with Dr. Ikeda (one of my economic professors, and my internship advisor) that, "A recent study by Tongue and Cheek estimated that GDP would be 1% higher if it counted all the unpaid intern labor." Dr. Ikeda explained that economists for years have sometimes suggested that we should start counting housewife labor as well. Then why not start counting everything? Forgive me for not recalling precisely what Dr. Ikeda said, but it boils down to the fact that these activities aren't official commerce; that's not what GDP is supposed to measure. My own addition is, if we count activities that could have been paid occupations, why not also include time that we bloggers put in? That's silly, of course. We blog (and some pay small fees for the better blog sites, and also domain hosting) because it's of value to us. By definition, we wouldn't be doing those activities if we didn't benefit more than the cost of our time. (I updated this paragraph a little, some things were phrased clumsily.)

Well, happy World Socialists Day. (And happy Easter to those of you on the Orthodox Christian calendar.) I'm afraid I haven't been blogging much in the last few days, formatting and reinstalling my two computers (I'll have to blog about my adventures there). And I also found out on Friday that I have a new job down in Manhattan, starting tomorrow. Yay!

1 Comments:

Blogger Brad Warbiany said...

Perry,
Catallarchy had a good May Day roundup, linking to a bunch of articles talking about how a century of socialism lead to the slaughter of over 100 million people... I highly suggest cruising over there for a read...

Monday, May 02, 2005 6:25:00 PM  

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