Wednesday, May 03, 2006

Home Production

When economists think about labor supply, they traditionally emphasize the tradeoff between working and enjoying leisure. Increasingly, however, we have come to appreciate that another part of the story is the tradeoff between working in market production and working in home production. GDP, of course, includes only the value of market production.

Today, Reuters has a story about the home production of American mothers. It begins as follows:

Study: US mothers deserve $134,121 in salary

NEW YORK (Reuters) - A full-time stay-at-home mother would earn $134,121 a year if paid for all her work, an amount similar to a top U.S. ad executive, a marketing director or a judge, according to a study released on Wednesday.

A mother who works outside the home would earn an extra $85,876 annually on top of her actual wages for the work she does at home, according to the study by Waltham, Massachusetts-based compensation experts

To reach the projected pay figures, the survey calculated the earning power of the 10 jobs respondents said most closely comprise a mother's role -- housekeeper, day-care teacher, cook, computer operator, laundry machine operator, janitor, facilities manager, van driver, chief executive and psychologist.

"You can't put a dollar value on it. It's worth a lot more," said Kristen Krauss, 35, as she hurriedly packed her four children, all aged under 8, into a minivan in New York while searching frantically for her keys. "Just look at me."

Employed mothers reported spending on average 44 hours a week at their outside job and 49.8 hours at their home job, while the stay-at-home mother worked 91.6 hours a week, it showed.

An estimated 5.6 million women in the United States are stay-at-home mothers with children under age 15, according to the most recent U.S. Census Bureau data.