Protecting Our Grandchildren: The High Price of Motherhood

David Leonhardt at the New York Times provides a comprehensive look at the price of motherhood. It appears to be pretty high. Despite advances  over the last several decades in equalizing gender roles and pay, women still make roughly 80 cents to every male dollar. That means that a woman doing the exact same job with the exact same training as a male counterpart will earn, say, $8/hour compared to the man's $10/hour. Much of that difference appears to be the result of women's commitment to child bearing and rearing. Despite large gains in gender equality in the US, the wage gap while somewhat narrowed, still persists and women still spend more time in child care and housework than men (and here). This translates into preferences for more time off from paid employment (what economists call "labor force participation) to bear children and a preference for jobs with shorter or more flexible work hours to accommodate the demands of child rearing. 

"But, wait!" you say. Surely the market has valued women's productivity correctly. Women are less productive because they take time out to bear and raise children. For this reason, their skills and knowledge do not keep pace with someone who is continuously gainfully employed. They show up late and leave early to pick the kids up at day care. Clearly this must lower their workplace productivity. They should receive a lower wage.

To which I reply, "Well....that's one way of looking at it and you'll do very well in your graduate studies in economics."

But let's step back and think about this. The wage rates received by individuals (and many of you will rightly dispute that they provide reliable indicators of either absolute or relative productivity) are taken to approximate the value of the incremental product they add to total output. Our national accounting methods value our national output, often expressed as gross domestic product (GDP), by tabulating through various ways the value of all goods and services produced in markets. GDP has long been used as an indicator of a nation's economic growth and well-being.

But what about all that non-market work women are cranking out? The stuff for which they don't get paid? Child care, child birth (production of the future units of economic production for those of you who like to think of children as durable goods)....how about mother's milk that builds bodies and immune systems 40 different ways? None of that shows up in GDP.  The purchased inputs to it will (for example, the food women eat and  the milk they drink to produce milk), but to take inputs as the sole measure of women's non-market productive activities forces us to assume that women add no value to those inputs, either by virtue of their managerial acumen (which will influence the mix and amounts in which they combine them, i.e., their efficiency) or by virtue of differences in production "technology."

Just pretend for a moment that you are an economist and imagine women as owner-managers of little child production and child rearing factories. Remember, the "output" here is healthy, educated kids who grow up to contribute to society, from which we all benefit. The extent to which they are healthy and educated depends greatly on decisions made by parents, but especially by mothers who spend more time with them and have primary responsibility for their prenatal health and development. Mom's matter. In single parent homes, which tend to be headed by mothers, they may matter even more. Much of what they do to produce healthy, educated kids is not captured in GDP because it isn't traded in a market.

Research by Kathleen Garrett and Nancy Cloud suggest that the contribution of women's nonmarket productive output to total societal output (and therefor to a global measure of societal well-being) is considerable, ranging from 21% to over 50% of GDP across 132 countries. None of it is captured by traditional estimates of GDP.

So far, I've been describing "sins of omission," the omission of a large portion of non-market productive endeavor by a single group from our national accounts. There are further distortions induced by the omission. For example, when women move into the labor force and purchase child care in the market in order to enable the move, both their market output and the purchased child care will be captured by traditional estimates of GDP. It looks like GDP has grown, because now child care is being delivered (and paid for) in a market. But has output really grown? After all, the same work effort and output (and perhaps more) was being produced by the woman without compensation  before she entered the labor market. All that has happened is that it has shifted to someone else and is now captured in our national accounting. Has total output really grown by the amount produced by a paid child care worker? Or has it fallen by the net of the amount that was produced by the mother before she entered the labor force, the amount she now produces in the labor force, and the amount that is now produced by a (paid) child care worker?

And there is another possible distortion from the omission of women's unpaid work from our national accounts. The untallied and unmeasured often becomes the unvalued. When non-market work is undervalued or unvalued, the "stuff" that is counted and valued appears that much more valuable. The result will be to shift national output away from non-market activities and their product and toward market-based activities. This was a point made in the Report by the Commission on the Measurement of Economic Performance and Social Progress, authored by Joe Stiglitz, Amartya Sen, and Jean-Paul Fittousi. The result could be an actual decline in national well-being even as traditional indicators such as GDP are rising.

Leonhardt concludes with the hardly reassuring information that as long as women don't have children, they appear to do just as well as men wage and career-wise (assuming they manage to break through the pesky glass ceiling that still leaves women under-represented in board rooms and executive suites).

The irony here, at least from my perspective, is that we're surrounded by men (and some women) obsessing about the welfare of our grandchildren, especially the possibility that we will saddle them with an unbearable tax burden that can only (apparently) be relieved by increasing income inequality and decreasing taxes on the rich. Yet the people most likely to have a profound and lasting positive effect on the parents of those grandchildren and, by virtue of it, a profound and lasting positive effect on the endangered grandchildren, are forced to accept a 20% reduction in market wages, to struggle to find affordable, high quality child care, to be penalized for requiring flexibility in work hours, to (until 2014) face lack of health insurance if they work part-time.

So next time you hear someone arguing for cutting the safety net to protect our grandchildren from an undue tax burden, ask them what they've done lately for the grandmothers of those grandchildren. Ask them why, if we are so worried about our grandchildren, do we undervalue and penalize their mothers and grandmothers in labor markets? Why is the "price" of motherhood in foregone wages so high?

Comments

[Laurent]

Very good article. It points out the inadequacy of the GDP as a measure of wealth, and certainly of well-being, in general very clearly, and how it undervalues everything that's not being directly paid for especially.

[Mike Lawlor, Economics, Wake Forest University]

Dear Maxine,

Very good post. I enjoyed it. I am going to put it on my reading list for introductory economics this semester. It will go well with the discussion in our text by Frank and Bernanke of what is left out of GDP.

Bernanke recently gave a commencement speech that is surprisingly intelligible on a related issue. It can be read at: http://www.federalreserve.gov/newsevents/speech/bernanke20100508a.htm

Economists have long noted the inadequacy of GDP. What has always stymied any further discussion within the profession is the question of whether, or not, there is any better alternative? Do you think there is and, if so, what is it?

[Kristine]

Maxine-
I happened upon your blog some time ago and want to thank you for your insightful articles, especially as a 'girl economist'
While not an economics by degree (I am an urban planner, specializing in demographics and mapping), I appreciate you ability to analyze and discuss economics beyond the GDP and 'growth.' I'll continue to read your work and hope to incorporate some of the concepts in my own analysis of demographics (which I see as economics with people first).
Keep up the great work!

[Tertium Squid]

Societies enrich themselves fabulously when they eliminate the expenses and tediousness of child-raising altogether, and they get a few decades of good living out of it. All available time becomes carefully channeled into monetized endeavors, and the only immediate consequence is that millions of people are spared the burdens of existence.

This is a feature, not a bug.

However, some women don't go along with this program so wholeheartedly, and the whole class is punished as a result.

So far so good, but now what? Your article gets all weird at the end when you inveigh against those that fear the effects of unlimited deficit-spending and savings-dilution that have been so popular the past few years.

Are you saying that the country and the economy will be okay with debt over 100% of GDP so long as there's finally some wage equality and a comprehensive safety net? That one problem will cancel out the other?

[rjs]

also re leonhardt: Does the Labor Market Punish M(O)thers?

http://www.huffingtonpost.com/nanette-fondas/does-the-labor-market-pun_b_673819.html

[Maxine Udall (girl economist)]

Mike, I'm glad the blog will be useful for a class. I think there is or soon will be a better alternative, particularly now that we seem to be more actively seeking one. I hope that the work by Stiglitz, Sen, Fittousi and the commission that I cite above will move us closer to it. BTW, I noticed that the link I provided above to their report was faulty and have corrected it. I'm providing it here as well: http://www.stiglitz-sen-fitoussi.fr/documents/rapport_anglais.pdf. That you are teaching your class to think about limitations of and alternatives to GDP as a measure of wealth and well-being is a giant step in the right direction.

[Peter T]

Maxine

Very nicely put. I came across the same critique of using the "market" as a measure of well-being in Joan Robinson's book Economic Philosophy (1962).

The OECD and national statistics bodies usually put the non-market share of national production at around 30-40% of the total, and the Australian economist Butlin noted that shares in total production in Australia were pretty much constant thirds between market, government and non-market over a long period. I suspect that, if you took "non-market" to cover most government, almost all household, most not-for-profit and a dood deal of internal corporate activity, markets would struggle to cover a even a third in any economy.

Surely this raises a question for economics - if markets are the optimal way to organise production and exchange, how come they are never used to organise more than they do?

[MosesZD]

The source article was rock solid. Your analysis and observations are quite sensible.

Which is usally not the case in these arguments.

[Rob Spear]

If breeding didn't have a cost, population growth would be far higher than it is.

Which is usually considered a bad thing.

[Jeff V]

"To which I reply, "Well....that's one way of looking at it and you'll do very well in your graduate studies in economics.""

Aha... so THAT'S (partially) why I did not do weel in my graduate studies in economics!

(Seriously. Sit in a graduate classroom and try questioning the miraculously perfect effciency of markets.)

- Jeff V

[Morgan]

You're making two arguments that are completely unrelated, in my view. First, that GDP doesn't capture the value provided by unpaid work like raising children.

Then you seem to be arguing that we should increase the "safety net" because... well, it isn't clear to me at all why. Because women with children make less money, on average, it would seem. Maybe you are advocating transfer payments to women for performing child care, which would make up for their lost wages. Maybe much larger child tax credits. Either would be a boon to me.

But keep in mind that my wife and I form an economic unit from any reasonable perspective. To say that she is punished because her wage is lower than it might be if she didn't take primary responsibility for the kids misses the fact that I make more for the same reason. So we as a whole bear the cost of rearing our children, and they are certainly expensive. But it isn't clear to me that compensation is due to us.

[Dan]

Don't forget to count the value of sex in a family. How much higher GDP would have been if men/women were satisfying their sexual needs through the legal market.

And the value of driving to work, and....

Anyway, the issue of optimal amount of support/penalty for childbearing by women with different income is not straightforward, and requires taking a stand on many controversial issues like the degree of inheretability of intelligence, and relationship of intelligence and wages.

[Richard H. Serlin]

Excellent post again.

And it's not just mother's work that is undervalued, it's grandmother's.

We just had our first child 8 months ago, and we are fortunate to live nearby my wife's mother. She only works part-time, so she is able to spend about 35 hours a week at our home helping out with childcare. Obviously this makes an enormous difference.

So much moving and so far in the United States in this generation has some enormous costs, one of which is breaking apart extended families and old friends. Perhaps the advancement of telecom will lead to a lot more being able to work remotely. In most cases it's best for people to work mostly outside of the home, for social interaction, but advanced telecom could allow for remote offices all over, so people don't have to leave the city they grew up in.

[alex]

yes, a lot of these arguments are nice but no one points out that what you value may not be monetary but still "real," spending money on a date is real! saving money for your family is real!
You fail to look at it from an individual perspective that neither the government nor society can be expected to place a value on things, it comes down to you and your values in life, basically you work for it and you vote with your wallet!!
You spend your hard earned $$ on what you find is important!! that may be a date, a college education or saving $$ to raise a family. no one can be responsible on everyones behave in the long run, if you want something you work for it and you pay for it!!!
its more to do with government making promises to everyone that confuses people and distorts the picture, that you have to work hard to get ahead and earn what you want or what you need.
personally if i was a woman, though i'm not, you'd wan't to be financially secure or have someone to provide for you if you have kids(husband, boyfriend, lesbian lover) there no limit to the amount of money someone can spend on a child or on an adults, people will always want more but there aren't limitless resources to go around.
you can't place a value on everything in life thats why empowering the individual is more important, for you to invest in what you see as a virtue.