The Value of Care and Nurture Provided by Unpaid Household Work

The National Council for the International Year of the Family has set as a priority the acknowledgement of the economic value of the caring and nurturing provided by unpaid household work. Undoubtedly the value added in the household is as important for our wellbeing as the value added by the work for which we are paid. The problem is that the regular official statistics of work and production deny the value or even the existence of unpaid work. This paper examines what we now know about the place of unpaid household work in the economy, uses internationally comparable survey data to estimate the relative magnitudes of the millions of hours of paid, unpaid and total work, puts a dollar value on Gross Household Produce (the value added by unpaid household work), looks more closely at who provides care and nurture in households, and suggests some urgent issues for statistics and policy that we should begin to tackle in 1994. (Author)

The Council for the International Year of the Family has set as a priority the acknowledgment of the economic value of the caring and nurturing provided by unpaid household work. Undoubtedly the value added in the household is as important for our wellbeing as the value added by the work for which we are paid. The problem is that the regular official statistics of work and production deny the value or even the existence of unpaid work.

This paper examines what we now know about the place of unpaid household work in the economy, uses internationally comparable survey data to estimate the relative magnitudes of the millions of hours of paid, unpaid and total work, puts a dollar value on Gross Household Product (the value added by unpaid household work), looks more closely at who provides care and nurture in households and suggests some urgent issues for statistics and policy that we should begin to tackle in 1994.

The Place of Unpaid Household Work in the Economy

In his perceptive book, The Household Economy, the American writer Scott Burns (1977) observed that ‘the hours of work done outside the money economy rival those done inside and will soon surpass them’ (p.8). Although Burns was writing about the United States, his observation is also true for Australia.

The household economy can be defined as the productive activities conducted by households using household capital and the unpaid labour of their own members to process goods and provide services for their own use. It includes the preparation of food and meals, laundry and house cleaning, child care, shopping, household repairs and maintenance, gardening and other household tasks. The production from the household economy is often called non-market production, but this can be misleading as all the types of goods and services produced can be obtained from the market economy as alternatives to being produced at home. Also, non-market household production is often defined to include voluntary work done for other households or community groups.

Throughout the discussion in this paper, what Burns refers to as the ‘money economy’ I refer to as the ‘market economy’ or as ‘market industries’. Thus the ‘money’ part of the economy includes employment and operations of government enterprises and authorities. For some discussion purposes the public sector, where inputs of labour and capital are purchased but the outputs are not sold, could be separated from the business sector of the market where both inputs and outputs are bought and sold.

The advent of internationally comparable, diary-based household surveys of the uses of time in the 1960s (Szalai 1972) led to the first Australian surveys according to these standards (Cities Commission 1975; ABS 1988, 1993). The result is that we now have estimates of the hours of work done in the Australian household economy at three points in time – 1974, 1987 and 1992.

The work in the household certainly rivals that done in the market. In all three survey years the hours of unpaid work exceed the hours of paid work. The most reliable estimates are from the 1992 national survey of how Australians use their time, covering 48- hour diaries from more than 7000 adults in over 3000 households throughout Australia (ABS 1993). The estimated hours of work outside the money economy in 1992 are 380 million hours per week (mhw).

We can compare this figure with the published estimate of 272 mhw of work by people in paid employment from the regular ABS population surveys which currently cover 29,000 households each month. In 1992 the unpaid work in the Australian household economy was 108 million hours per week (40 per cent) more than the paid work in the market economy of business and government.

A recent study published in OECD Economic Studies indicates a similar parity or excess of unpaid household work over paid work in France, Germany, Norway and the United States in the 1970s (Chadeau 1992). Comparable recent estimates for the late 1980s for five OECD countries show a remarkably similar distribution of time in paid and unpaid work (Ironmonger 1994 forthcoming). These estimates are shown in Table 1. To obtain comparability, the estimates for unpaid work in this Table exclude voluntary work and community participation.

In Australia and in most OECD countries for which we have reliable data, the total volume of work each week is at least twice the work covered by the official ’employment’ statistics.

Total work, paid and unpaid, by Australian adults over the age of 14 years in 1992 was 652 million hours per week. This is an average of 49.2 hours per week comprising 28.7 hours unpaid and only 20.5 hours paid. These are simply the averages for adults of all ages from 15 years upwards, and a wide variation exists between individuals both as to total hours and the split between paid and unpaid.

Figure 1 shows the average hours per week of both unpaid work by age for men and women in Australia in 1992 and the total of all work, paid and unpaid. Although the curves for men and women are very different in the two spheres of work, men still doing more paid work and women more unpaid, the total work curves are almost indistinguishable, rising from less than 30 hours per week (hpw) in the teenages to over 60 hpw in the mid-30s and declining to 40 hpw by the early 60s.

Table 2 shows how the 272 million hours per week of paid work in the Australian market economy in 1992 were distributed across the major market industries. The distribution across the major household industries of the 380 million hours per week of unpaid work in the Australian household economy is shown in Table 3.

It is clear from these data on labour inputs that the three largest industries in the economy are not in the market sector but are in the everyday household activities of (1) preparing meals, (2) cleaning and laundry and (3) shopping. Each of these activities absorbs about 70 mhw of labour time; the three largest market industries require rather less labour: wholesale and retail trade 55 mhw, community services (health and education) 47 mhw and manufacturing 42 mhw.

The Australian time use surveys conducted in 1974, 1987 and 1992, make it possible for us to compare the changes in unpaid work over these intervals of 13 years and five years. Estimates of the hours of paid work are available annually from the 1960s.

Using data from the first internationally comparable survey of time use in Australia (Cities Commission 1975), my revised estimate is that in 1974 there were 249 million hours per week (mhw) of unpaid work undertaken in Australian households (Ironmonger 1989). From the survey of time use in Sydney in 1987 (ABS 1988), I estimate that the hours of unpaid work in Australian households had grown in the 13-year interval to 322 mhw, and from the national survey of time use in 1992, a further growth to 380 mhw. Over 18 years the growth in unpaid work was 131 mhw, almost 53 per cent (2.4 per cent a year).

Figure 2 shows the estimates for the total hours of paid, unpaid and total work in Australia for 1974, 1987 and 1992.

Figure 2 shows the estimates for the total hours of paid, unpaid and total work in Australia for 1974, 1987 and 1992.

Since 1974 the hours of paid work have grown more slowly than unpaid work. The hours of paid work in 1992 were only 53 million hours per week (mhw) more than in 1974, a rise of only 24 per cent for the 18 years (1.2 per cent a year).

The rate of growth of total work was 1.9 per cent a year, which is higher than the rate of growth of the Australian population, but approximately equal to the rate of growth of the adult population (those aged 15 years and over). Throughout the entire period of almost 20 years, unpaid work has been growing in volume at almost twice the rate of paid work.

We are in real difficulty in matching discourse with reality if we continue to refer to paid work as if it were the only work there is. In the last two decades paid work has declined as a proportion and is now only 42 per cent of all work. The official time use surveys in Australia and a number of other countries give a picture of the reality of ‘work’ and ’employment’ different from that obtained by just counting paid jobs in the marketplace. It is time we included unpaid household and voluntary community work in our description of, thinking about and policies for, work, jobs and employment.

Value Added by Households in Production of Goods and Services

What the time use surveys have done is to make visible more than half of all valuable economic activity, the previously invisible unpaid work of the households. The volume of labour time used in the Australian household economy is currently almost 40 per cent greater than all labour used in the formal market economy. This unpaid labour is used in conjunction with household capital to add value to the intermediate inputs of materials and energy purchased by households from the market.

For example, a household may take $10 worth of raw vegetables, meat and other ingredients and with the use of its kitchen equipment turn these into a $30 meal (at restaurant prices). This process of household production adds $20 in value to the original intermediate ingredients. Similarly, if a household uses a few cents worth of detergent and electricity and an hour of so of time to produce clean, pressed clothes, it has added some more value – perhaps another $10 worth (at laundry prices).

Repeated millions of times over each week in the kitchens and laundries of Australian households, this soon adds up to more value added than that of any recognised market industry such as agriculture, mining or manufacturing.

Ironically, the value added in the formal sectors of the market economy is called ‘Gross Domestic Product’ (GDP) which would seem ideal as a name for the value added by households in domestic production. The origin of domestic in GDP lies in the distinction between domestic and foreign to distinguish the value added by all economic units operating within the borders of a country from the value added by all economic units outside those borders in foreign countries.

At this stage it would be perhaps too confusing to attempt to use the term GDP to denote the value added by households. Consequently, I have proposed that the value added from unpaid household work should be called Gross Household Product or GHP (Ironmonger 1993b). And since we refer to the labour market when we refer to paid work, it would be better to refer to the value added from paid work as Gross Market Product (GMP) rather than GDP.

Then we could use the term Gross Economic Product (GEP) for the value added from all work, paid and unpaid. GEP would equal GHP plus GMP.

Putting a Dollar Value on Gross Household Product

When meals are served, clothes cleaned or children cared for within the household, actual money transactions do not take place either as payment for the goods and service outputs or as payment for the labour and capital inputs. Hence, to put a dollar value on GHP we need to ascribe, or impute, dollar values to these inputs and outputs. Ideally, we should obtain quantities and market prices for the outputs and the quantities and market prices for the inputs of energy, materials, labour and capital used.

To do a thorough accounting job of valuing GHP we should not only measure the volume of labour time input and ascribe a value to that; we should measure and value all the other inputs and measure and value the outputs. As more and more improved equipment has been introduced into households, GHP has become more capital intensive with either a saving of labour or a greater volume of output. More of the imputed value of GHP will be ascribed to capital than to labour.

Most estimates of GHP have only valued the labour input and have ignored the contribution from capital. The value added by labour in household production has been estimated in three basic ways, starting from a time use survey of the hours of unpaid work and then adopting either a housekeeper wage, a specialist wage or an opportunity cost approach.

A new method which takes into account the capital inputs has been pioneered in Australia. This involves preparing an input-output table to allocate all unpaid labour and capital and the purchased intermediate inputs to all the activities of the household (Ironmonger and Sonius 1989; Ironmonger 1989a, 1989b and others).

This method has now been followed for Canada (Thoen 1993) and Finland (Vihavainen, forthcoming). Whilst output quantities and prices have not yet been incorporated into this method, it does include both labour and capital components of value added.

The household input-output tables are the satellite accounts for the household economy recommended by the United Nations in the latest revision of the System of National Accounts.

Estimates for 1975-76 and 1986-87

Using this method for Australia for 1975-76 gives a GHP estimate of $36.7 billion, of which labour time was $32.9 billion and capital services $3.8 billion. This compares with a GDP figure for that year of $69.0 (Ironmonger 1989, p.8). These earlier estimates show that value added in households was equal to 53 per cent of the estimate of value added in the formal market sector of the economy.

However, the GDP figures for 1975-76 have been revised considerably upwards since the original calculations were made. For example the ABS Year Book Australia 1989 shows current price GDP for 1975-76 as $76.8 billion with wages salaries and supplements as $42.8 billion. National income was $65.2 billion and household income $62.0 billion in 1975-76 (ABS 1989:756).

Estimates of the value of household work in Australia were also published by the Australian Bureau of Statistics in 1990. The ABS estimates for the total value of household work in 1986-87 ranged from $137.3 billion to $162.8 billion. The wage rates per hour used ranged from $7.92 to $9.09 for replacement cost and $8.68 to $10.64 for opportunity cost (ABS 1990:8-11).

The ABS 1987 estimates ranged from 52 to 62 per cent of GDP ($263.2 billion). We should also note that these estimates of the value of unpaid work exceed the official estimate of $132.6 billion for ‘wages, salaries and supplements’, the national accounts item for the dollar value of ‘paid’ work.

Estimates for 1992

The 1992 household survey of time use in Australia provides the data for a new estimate of the value of household work. From the national accounts data for wages, salaries and supplements and the figure of hours of paid work, we can calculate the average salary, wage and supplement. For 1992 it was $14.25 per hour. The 380.5 million hours per week of unpaid household work (Table 3) valued at $14.25 per hour are worth $283 billion a year. This exceeds by 40 per cent the official value of paid work in 1992 of $201 billion.

To calculate the total value added Gross Household Product (GHP), we need to add the contribution from capital, the services from the use of equipment, vehicles, land and dwellings owned and used by each household for itself. This is estimated at about $58 billion in 1992. It comprises about $25 billion from household equipment and vehicles and $33 billion from owner-occupied housing. Thus GHP in 1992 was about $341 billion.

To avoid double-counting, the $33 billion for owner occupied housing, which has already been included in the estimate of GDP, needs to be deducted from GDP to give a new, lower, estimate of value added in the market sector, Gross Market Product (GMP). In 1992 GMP was $362 billion, $33 billion less than the GDP figure of $395 billion.

Thus we see that the value added by household production, GHP, was almost as much as the value added by market production, GMP. In 1992 both were about $350 billion. In 1992, the total combined value added by the market and the household, what I have called Gross Economic Product (GEP), was $703 billion.

Gross Economic Product is almost twice Gross Market Product; alternately, half of economic production comes from the household and half from the market.

Caring and Nurturing

Commenting on the role of households in providing day-to- day care, Scott Burns (1977) wrote: ‘We give absolutely no economic recognition to the importance of the one single institution responsible for the day-to-day care and maintenance of human beings. The household – the family – is an institution that tends our hearts, minds and bodies. No other institution has such clear or complete charge or such enormous responsibility. At best, every program of social care and welfare is compensation for deficiencies in some households, and there is no institution, public or private, that could be expected to assume even a small portion of the responsibility that belongs to the household.’ (p.13)

On this very broad view, the main function of households is to provide care and nurture to their members. Thus the value added in providing all the meals, clean clothes, rest, recreation and leisure provided in households can be counted as caring and nurturing. To put an economic value on care and nurture, perhaps we could simply say that all Gross Household Product is care and nurture. However, if we look more closely at what we usually mean by care and nurture, perhaps some items included in GHP should be omitted and some other items, such as recreation and sleep, should be included.

According to the Universal English Dictionary, ‘care’, as a noun, means ‘protection, charge, responsible management, direction’; as a verb it means ‘to look after, take charge of, provide for’. ‘Nurture’, as a noun, means ‘nourishment; fostering care, education, training’, and, as a verb, ‘to nourish, foster; breed up, rear; educate, train up’. Hence, ‘caring’ is looking after and providing for someone and ‘nurturing’ is bringing up, educating and training someone.

Though generally thought of as caring and nurturing an ‘other’ person, the concepts can apply to oneself. In relation to the people who are protected and nourished, there is the care and nurture of self, and the care and nurture of others, both child care and adult care’ relatives, elder care, disabled care.

In another dimension, we could classify the types of care and nurture as to whether they were care of the body or of the mind. The physical or bodily category includes meals, exercise, health, washing, and sleep. The mental or spiritual category includes educating, talking, recreation, rest, and sleep.

The details of the surveys of how households spend their time allow us to estimate the time spent on some of these categories of care and nurture

How Much Caring and Nurturing?

Although work is a major category of time use, the time spent in sleeping and leisure are each of comparable magnitudes. All paid and unpaid work absorbed 652 million hours per week in 1992. The time spent in all leisure activities was 627.9 million hours per week and the time spent in sleeping was 771 million hours per week. On a per head basis, work was 49.2 hours per week (hpw), leisure was 47.4 hpw, and sleep was 58 hpw. This works out at about seven hours per day for work, seven hours for leisure and eight hours for sleep. The remaining two hours per day were used in personal care, travel to work and education.

What do time use surveys tell us about the time spent in ‘care and nurture’? The latest ABS survey for 1992 paid special attention to collecting data about the simultaneous use of time on more than one activity. For example, the main activity may have been preparing a meal, but a simultaneous activity could have been caring for a small child.

Table 4 shows not only an estimate for care time recorded as the main activity, but also the total care time spent either as a main activity or as another activity in conjunction with some other main activity. Considering only main activity time, the largest category is care of oneself comprising 136.8 million hours per week. Care of children is next with 48.8 million hours per week and care of other adults is only 16.3 million hours per week.

In 1992, there were 48.8 million hours per week (mhw) in child care as a main activity. With the inclusion of child care carried out whilst doing something else, the figure is multiplied four times to 203.4 mhw, though most of the additional time is in passive minding rather than in physical care, teaching or helping. Some of this minding would be done while undertaking other household work such as meal preparation, cleaning, laundry, or shopping. Accordingly, the use of time in the household, especially with child care time, results in joint products – cared-for children and meals and clean clothes. In time used in market jobs (paid work), it is and less likely that joint products result as each unit of time usually is devoted to just a single product or service.

Care of other adults in 1992 is estimated at 16.3 mhw (main activity) and 17.0 mhw (all activities). This comprises 3.1 mhw of transporting other household members, 4.7 mhw in helping sick and/or disabled adults, and 9.3 mhw in helping other adults.

Self care in 1992 is estimated at 136.8 mhw (main activity) and 140.7 mhw when including time spent in care of oneself whilst also doing some other activity (all activities). This comprises 77.9 mhw (main) or 79.7 mhw (all) in personal hygiene and grooming (washing, showering, bathing, dressing, shaving, getting ready), 11.1 mhw (main) or 12.4 mhw (all) in health care, and 47.7 mhw (main) or 48.7 mhw (all) in personal education activities including time attending courses, doing homework and travel.

Who Provides Care and Nurture?

The data on time spent in personal care show that men devote less time to personal care than women, 5.5 hpw compared with 6.3 hpw. And again for health care, 0.7 hours for men and 0.9 for women. But the average education time for men is greater than that for women, 3.9 hpw compared with 3.4 hpw. However the education time is concentrated at the younger ages where the averages for men and women are almost the same. Aggregating over all self care – personal, health and education – women spend more time per week than men, 10.6 hours compared with 10.0 hours.

Child care is still mainly provided by women, who average 5.7 hours per week in this activity; men average only 1.6 hours per week. In aggregate men provide only 22 per cent of all child care, 10.7 million hours per week of a total 48.1 mhw.

Child care is highly concentrated in the ages from 25 to 39 years, particularly for women aged 30 to 35, where the average time of main activity child care is almost 16 hours per week. For men at these ages the average is four hours per week.

Figure 3 shows the time spent in child care as a main activity by men and women in each five-year age group in Australia in 1992.

Finally, as Table 5 shows, the average time spent in the care and nurture of other adults is provided by men and women in nearly equal amounts, about 1.3 hours per week.

Some Urgent Issues for 1994

As we look ahead to the next ten years, what are the issues about the economic value of household care and nurture that we should start to tackle in 1994?

The over-riding issue is to recognise the value of unpaid work and the role of the household in as many ways possible. Unless we have a commitment to this recognition, our view of how things actually work will continue to be incomplete and therefore biased. A biased view of reality is likely to lead us astray, particularly in areas of public policy.

Statistics

We need to start with the statistics. We need to get the numbers right. At present the regular statistics give a distorted and incomplete view of the reality of the role of the household in providing care, nurture and other services of immense value.

The numbers that need correction include our statistics of hours of work, of employment, of value added, of industries and of occupations. Our official statistical bureaus play a major role in setting our views of the world closer to reality. They must be urged, encouraged and supported with resources to go faster and further in getting the picture right.

We need regular national time accounts to show what is happening to our household work on a continuous basis; we need regular estimates of Gross Household Product to show the value of this, at present largely invisible, output; our employment and occupational statistics need to record the extent of participation in household work and the management of most important industries, the household industries which provide the basic framework of nutrition, rest, recreation, nurture and care for our population.

Setting the statistics more in tune with reality is important. Our present statistical telescopes with which we view work, employment and economic value are faulty. Their design does not allow light to be reflected off the household, where value is added without paying the labour and capital involved. This defect in our measuring instruments means that we see only the market part of the economy. In reality the economy has two parts, a market section and a household section; both are essential for the economy to function effectively.

Policy

At the same time, because the statistics will take a while to correct, we need to start to review several economic and social policy areas which operate through our households. All policy areas need to recognise that unpaid work is valuable. Three priority issues stand out for urgent attention: superannuation, occupational health and safety, and child care.

Superannuation and pensions: We are moving more and more to a system for support of older households through superannuation related to earnings from a market job rather than a universal pension right. This move ignores contributions to value added during working age that are made in the form of unpaid work. Even if overall gender equality in paid and unpaid work were eventually achieved, with half of the paid work were done by women and half of the unpaid work were done by men, it would seem fairer to individuals for adequate public support of living costs in old age to be independent of the amount or proportion of working life spent in paid work.

Occupational health and safety: At present, health and safety regulations, workers compensation for accident and injury and sickness benefits do not apply to unpaid household workers. This is a gross distortion of what is needed. The losses and dislocation to household operation from an accident, injury and sickness are just as real in the industries of the household as they are in industries of the market. All of these policies need to be re-thought in the light of the vital importance of household work and value added revealed by the time use statistics. This review should also cover motor vehicle and traffic accidents which lead to death or injury.

Child care: How should support for the time devoted by households to child caring and nurturing, especially for young children prior to school attendance, be organised? How is the system to be made as fair as possible? The new policy for child care rebates for paid-for child care goes part of the way to recognition of some of the costs of some forms of child care. How far should it be extended to care of ones own young children? Analysis of the value of the time spent by households in caring for their own children shows that these costs are more than five times larger than the costs of meals for children (ironmonger 1994 forthcoming). A thorough examination of the market and non-market costs of child care and nurture is an essential precursor to further discussion of public policy in this vital area.

Conclusion

The way in which we have allowed market measures of work and value to dominate our view of the world is potentially dangerous. We accept these figures without question and we have come close to saying unless goods and services are paid for by cash or credit card they are of no value and hence unworthy of consideration. Every time the ABS issues the national accounts or the employment statistics it says to the world – ‘ignore the household economy, it is of no consequence’.

We need a major change in our view of reality, a major change in what needs to be measured, and a major change in our thinking about the way in which families and households participate in economic activity. They provide as much care, nurture and maintenance directly, and without recompense, to the members of their own and other households as the whole output of the ‘market’ economy. The reality of the huge unpaid contribution of households to economic value needs to be accepted; adopted as a benchmark fact, it would change nearly all of our deliberations about economic and social policy.

Via Australian Institute for Family Studies

References

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