Sunday, May 11, 2008

Pay Equivalents for Home

In celebration (re: exploitation) of Mother's Day, released a calculator of how much pay mothers would get it their home duties received market-level compensation. Try the calculator here. And just to be sure, there is a 'Dad' version too that gives rise to exactly the same results.

And where do such magical figures come from? Well according to the news report:
The eighth annual survey calculated a mom's market value by studying pay levels for 10 job titles with duties that a typical mom performs, ranging from housekeeper and day care center teacher to van driver, psychologist and chief executive officer.

... The biggest driver of a mom's theoretical salary is the amount of overtime pay she'd receive for working more than 40 hours a week. The 18,000 moms surveyed about their typical week reported working 94.4 hours — meaning they'd be spending more than half their working hours on overtime.

Working moms reported an average 54.6 hour "mom work week" besides the hours they spent at paying jobs.

So the methodology is seemingly sound. If you had to replicate the parent's work with outside paid labour, how much would it cost you? Notice that the calculation is the cost of complete outsourcing of parental tasks (save for playing with your children or really quality time). It even includes the overall management component with a CEO function. (I wonder if that includes stock options?). That said, it has all to do with averages and what is more, the average value of work in the house seems to exceed average outside the home earnings which, makes our definitions of national income really dubious.

And so how might you use this information? For one, you could use it to work out whether a parent carrying out these functions should stop and themselves work outside of the the home. Suppose that the annual pay (after tax) from this is w, then you need to also figure out what the increment to your overall utility (re: happiness or satisfaction) would be working outside versus working at home (including all of the satisfaction you get from control in your parenting and the annoyance you get from lack of control in your career and so on). Call this v. Note that v may well be negative implying that all monetary considerations aside you actually prefer working at home to your best option outside of the home.

Then the calculation as to whether you should stay at home is if the figure exceeds v + w. If it does, stay at home. If not, outsource the home stuff and go out. (In principal, if you want to take some leisure time rather than do the home stuff you will need to work out the value of that and substitute it for w.)

What this wont tell you is which parent should do what task? That depends on individual expertise and satisfaction from each task. Good luck sorting that one out using numbers!