3.3 VALUING UNPAID CARE WORK TIME
3.3.1 Approaches to valuing unpaid care work
The unit of measurement in the market is monetary, while for unpaid household activities it is non-market time. Time spent undertaking household activities needs to be given a monetary value in order to have a common unit of measurement between the market and the household, and to make analysis of the interactions between the two possible (Goldschmidt-Clermont, 1982).
This is the process of valuing unpaid work. Despite the imperfections of applying value to unpaid work, different methods have been developed to assign a monetary value to this type of work.
A distinction can be made between input- and output-related methods. Output-related methods calculate the value of what is produced. Input-related methods calculate what goes into producing
it by imputing value to labour time spent on unpaid care work. An hourly ‘wage’ is assigned to the time spent (Beneria, 1992). Output-related methods are generally believed to be superior to input-related methods because they focus on what is actually produced and not on the means by which a good or service is produced. However, most studies and standard national accounts use the costs of the inputs to production to value household production (Budlender & Brathaug, 2002), mainly because it is easier to impute value to labour time spent in unpaid care work (Beneria, 1992).
According to Beneria, the two methods differ in terms of their usefulness. For example, if a person has to walk longer to fetch water, input-related accounting will show an increase in time input while there is no increase in output. From the perspective of accounting for women’s work, it is important to illustrate that the effort required to fetch the same amount of water has been intensified, even if output has not. In this way an input-related method can be regarded as superior. This could be why Folbre (2006) suggests that “we need better measures of the inputs into care, rather than merely capturing some of the outputs of care in terms of improved health and education in the Human Development Index” (author’s emphasis). Since an explicit aim of this study is to make visible all aspects of women’s work, particularly those that are frequently invisible, input-related rather than output-related methods are adopted.
Beneria (1992) and Budlender (2002) together define four input-related methods by which the time measurement of unpaid care work can be converted into money measures, and, apart from where otherwise stated, the information cited below is taken from this work. The four methods are presented here in terms of a range of values likely to fluctuate from low to high. Part of the work of this thesis is to choose the most appropriate of the methods for the South African context.
The average earnings method: The average earnings in the economy as a whole is estimated and assigned to each hour of unpaid work. The mean is estimated separately for males and females. The average earnings method lowers the overall estimated value of unpaid work, since
women generally perform more unpaid work than men, and the average female wage is usually lower than the average male wage.
The opportunity cost method: The normal wage or income from paid work that the person would be doing if they were employed is taken as the value of the opportunity cost. Joshi (1992, p. 110) describes how unpaid work caring for others “competes for the time and energy a person might otherwise devote to earning their own cash in paid work”. The opportunity cost method generally gives the highest values of all the methods, and gives the widest range of estimates for a particular amount of time spent on care, depending on the skills and the opportunity wage of the individual performing it. This method is based on questionable logic, since a meal produced by a doctor, for example, will be imputed a higher value than an identical meal prepared by an
unskilled worker, even though the unskilled worker may be a better cook.
The generalist method: The mean wage of workers performing similar work to the unpaid work is used. For instance, for housework the wage of a paid domestic worker could be used, and for care of an ill person, the wage of a nursing assistant could be used. The generalist method usually gives the lowest values of all the methods, since domestic workers are generally at the low end of the wage hierarchy.
The specialist method: This method focuses on the activity and not on the person who
undertakes the activity. For each activity the wage earned by paid workers, whose functions and circumstances match the unpaid care work undertaken, is used. For instance, time spent on cooking activities could be valued at the wage of a paid chef, while time spent on cleaning
activities could be valued at the wage of a paid cleaner. The specialist method generates estimates that are relatively high, and is more indicative of the market value of household production.
Crucially, Jönsson et al. (2006) note that the method chosen to value unpaid work can have a considerable impact on the results, with the results varying widely depending on the method used. Overall, Budlender (2002) notes that the differences between the values from the various approaches will be large where there are substantial inequalities in wages and salaries in the
economy, as is the case in South Africa. Moreover, estimating the different values will provide upper and lower bounds on the true market replacement cost of unpaid care provision (Fast &
Frederick, 1999, p. 2).
Budlender (2008) points to a helpful distinction between the four input-related methods. The average earnings and opportunity cost methods are useful if the aim is to work out what the caregiver would have earned if she/he were working instead of providing unpaid care. It therefore makes sense to sex disaggregate when using this approach. However, if the aim is to estimate the value of care provision for the cared-for, the focus will be on estimating what the cared-for would have paid to purchase in such care services. In this case the generalist and specialist approaches would be useful and sex disaggregation does not make sense.
Zick and Bryant (1983) referring to a developed country context, note that most of the work on valuing unpaid work has been done using the equivalent of the generalist and the specialist methods. Both methods estimate the price a household would hypothetically pay for services that are usually performed by its members, but there are problems with this approach. Firstly, it excludes the management component of unpaid work. If the household were to hire a market substitute to do the work, someone would have to supervise the person doing the work. Secondly, the fact that households are not observed to be purchasing these services suggests that families perceive that they can peform the task at a lower cost and that market substitutes are not perfect substitutes for this work. Thirdly, most individuals do not work at any one household activity full-time. If higher full-time rather than lower part-time wage rates are used the approach will overstate the value of unpaid work time to the household.
The opportunity cost method is an appropriate method to use if the concern is with the personal financial sacrifices which women make when caring. Moreover in a full employment economy, there is an obvious trade-off for a working aged adult between wage employment and providing unpaid care work, and here costing the value of unpaid care work in terms of the wage foregone is appropriate. However in the South African context this method is problematic since, as highlighted in section 2.5, a large percentage of individuals who are doing unpaid care work are
unemployed or not economically active. It could therefore be argued that a person who was previously and is now unemployed should have an opportunity cost of zero. Yet there are unlikely to be no opportunity costs to providing unpaid care work, and instead it is likely that there are opportunity costs to other activities – such as household chores or leisure – rather than to actual employment. Alternately it could be put forward that where there is a high probability of not getting a job, the wage must be discounted appropriately – that is, the wage the person would have earned in a full employment economy should be discounted by the percentage chance of getting work.
There are further challenges involved with applying the opportunity cost method. Firstly, the approach uses the wage that the person would earn if they were working in their paid job, and therefore uses different wages for the same activity when the work is performed by different people. Secondly, for people who are unemployed and therefore do not have a usual wage, and for those working in subsistence agriculture where there is no wage, there is the problem of what wage to use for these groups. A possible solution is as follows: for the unemployed, estimates could be based on level of education and skill level, and for those working in subsistence agriculture an unskilled manual labourer or a farm labourer wage could be used.
Ultimately, all of the input-related methods apply a market wage in their calculations. Zick and Bryant (1983) recommend that only the gross wage should be used in these calculations, and not a wage from which the wage earner’s costs or expenses have been subtracted. However, while this applies to the generalist and specialist methods, where the cost of buying in the care worker’s time is important, it is not relevant to the average earnings and opportunity cost methods, which focus on the wage that is foregone by the family caregiver. Therefore, for the first two methods the gross wage is used, while for the second two methods the net wage is applied.