Home Economics

The family is the building block of our economy. So why do we make it so hard for today’s families to balance home and work?

By Heather Boushey

Tagged EconomicsFamiliesLaborWomen

American businesses used to have a silent partner. This partner never showed up at a board meeting or made a demand, but was integral to profitability. That partner was the American Wife.

She made sure the American Worker showed up for work well rested (he didn’t have to wake up at 3 a.m. to feed the baby or comfort a child after a nightmare), in clean clothes (that he neither laundered nor stacked neatly in the closet), with a lunch box packed to the brim with cold-cut sandwiches, coffee, and a home-baked cookie. She took care of all the big and small daily emergencies that might distract the American Worker from focusing 100 percent on his job while he was at work. Little Johnny got in a fight on the playground? The American Wife will be right there to talk to the school. Aunt Bea fell and broke her hip? The American Wife can spend the afternoon bringing her groceries and making her dinner. The boss is coming over for dinner? The American Wife already has the pot roast in the oven. Even if she had a job—and a certain percentage of American wives, like my mom, worked and had to work despite suburban cultural expectations—she was still the primary caregiver when work-life conflicts arose. The presumption was that she would be the one at home.

This meant that for decades, the American Wife gave American businesses a big, fat bonus. Her time at home made possible the American Worker’s time at work.

This unspoken yet well-understood business contract is now broken. Moreover, it doesn’t look like we’re going back to it anytime soon. Nor should we. American families look different today. Wives—and women more generally—work outside the home because they need to and because they want to.

Today, the American Wife is a family breadwinner and a contributor to economic growth. Her economic contribution is no longer silent; it shows up in our nation’s gross domestic product. A family with a working woman is not an anomaly, it’s the norm—and has been for some time. Women now bring home at least a quarter of the earnings in more than two-thirds of families with children. In a growing number of households, women bring in half or even more of the earned income. This shift has been good for businesses and the economy.

Working outside the home has provided women with many exciting social and personal opportunities. Yet the picture is not all rosy. Women are not working just to fulfill their dreams and learn new things. Many hold down a job out of sheer economic necessity. Most families would have seen their income drop precipitously over the past few decades if it had not been for women going to work. The increase in women’s employment can be seen as a response to the economic transformations that have left male earnings stagnant for nearly 40 years.

Moreover, the shift from American Wife to Family (co-)Breadwinner has left a gap at home. Who’s caring for the children and teaching them all they need to know? Who’s tending to an aging family member who needs some extra care? Today’s families report feeling insecure and pressed for time, whether they’re high-achieving dual-career couples, low-income single mothers, or the middleclass families in between. The world of work and the needs of families always seem to be in conflict—and it’s been this way for decades.

Today’s families need a new contract with their employers, one that provides stability in a world where we are interacting with the economy in new ways. Let’s step back and look at what set the stage for the current political climate surrounding work-life policies, dig deeper into the benefits of these policies, and figure out how we can help American families meet the needs of both work and home.

The Family Policy We Almost Had

While the tussle over the worker’s time is evergreen, the starting point for today’s debates can be traced to 1971. That year, Congress passed a bill that would have created a network of child care centers, funded nationally but run locally. The program had a budget five times the size of today’s Head Start program, which provides preschool for very low-income children.

For decades, the American Wife gave businesses a big, fat bonus. Her time at home made possible the American Worker’s time at work.

A political argument about the proper role of women in society ensued—and prevented the enactment of this child care program. At the outset, there was every indication that President Nixon would sign the bill into law. In his autobiography, The Good Fight: A Life in Liberal Politics, Walter Mondale, who was at the time a senator from Minnesota leading the fight for the bill, writes about how Secretary of Health, Education, and Welfare Elliot Richardson had “conducted several quiet meetings with [Mondale’s] staff and Representative John Brademas [of Indiana], the lead sponsor in the House, to find common ground.” Richardson went so far as to send Mondale a letter “outlining the administration’s general support to consolidate and coordinate federal child-care programs” and to have Ed Zigler, from the Office of Child Development, testify in support of the legislation in 1969 hearings in front of the Subcommittee on Children and Youth. Nixon himself had come out in favor of child care, saying, “So crucial is the matter of early growth that we must make a national commitment to providing all American children an opportunity for healthful and stimulating development during the first five years of life.”

Washington insiders were thus shocked when, on December 9, 1971, Nixon not only vetoed the bill but repudiated its aims. “We cannot and will not ignore the challenge to do more for America’s children in their all-important early years,” he said. “But our response to this challenge must be a measured, evolutionary, painstakingly considered one, consciously designed to cement the family in its rightful position as the keystone of our civilization” (emphasis added). Nixon went on to say that the proposed law would be “truly a long leap into the dark” for America.

How did Nixon and his team come to believe that a policy that would have helped tens of millions of families would do the very opposite? Nixon’s speechwriter, Pat Buchanan, proudly takes credit for pushing for the veto and, specifically, for encouraging the President to include the scathing statements portraying a federal child care program as anti-family. Buchanan saw an active policy of providing government support for child care as the federal government effectively encouraging women to be workers rather than supposedly traditional stay-at-home moms. (I say “supposedly” because this idealized American Wife never existed in many families.) In his view, the poorest mothers deserved a handout—an act of charity—because they couldn’t afford to pay for private child care. For other families, child care wasn’t so critical to their well-being that the government should step in to help.

The Economics of Work-Life

This political setback established child care as a values issue. And the kind of thinking that torpedoed a promising child care program remains, locking our society in a no-win debate about this and other policies to address work-life conflict. Too often, we are still debating “whether” or “if” women work outside the home, rather than acknowledging that most already do.

I look at the economy as an economist. In order to understand how policy affects the economy, economists, policymakers, and business owners alike have to examine both demand and supply. The tough love crowd has a point: There are some added costs for businesses when implementing work-life policies, as there are with implementing any policy. Yet these work-life reforms will enable workers—most of whom also have care responsibilities—to meet the needs of their families and of the firms they work for in better and more productive ways. There are economic benefits to implementing work-life policies.

We can see how the whole economy works in the figure below, a picture you can find in most standard introductory economics textbooks. The key economic players are households (most of which are families) and firms. Moving clockwise from the top left, we see the four phases of the economic cycle. Families buy goods and services from firms and, in turn, supply firms with workers by selling time. Firms buy people’s labor, or time, to produce goods and services, which they then sell to families, completing the cycle.

The Economic Cycle

Families buy goods and services from businesses. Many economists argue that the economic cycle shown in the figure starts with buying stuff—in other words, demand. Although the other components are important, the initial spark that drives the economic cycle is people who need to buy goods and services to meet basic human needs and to satisfy consumerist desires. The National Income and Product Accounts, produced by the U.S. Bureau of Economic Analysis, divide our nation’s total output (GDP) into four basic categories: consumption, investment, government spending, and net exports. U.S. households (which do the “consuming” in consumption) account for the biggest chunk by far: nearly 70 percent of all spending in the economy.

Next we have selling time, or what economists call “labor supply.” This is how much time families devote to paid employment. In the United States, about 65 percent of the population over 20 years of age is in the labor force, and the typical person works 34.5 hours a week. How much time is sold—that is, how much labor is supplied—is an important piece of our economic cycle because it determines how much stuff families buy. We can see this by simply looking at the economic significance of the added hours of work and rising wages of women. In 2014, economists Eileen Appelbaum, John Schmitt, and I estimated that, between 1979 and 2012, the increase in hours worked by women accounted for 11 percent of the growth in GDP. In today’s dollars, had women not worked more, families would have spent at least $1.7 trillion less on goods and services a year—roughly equivalent to the combined U.S. spending on Social Security, Medicare, and Medicaid in 2012.

Many factors affect how much time people want to sell to employers. For most of us, how much time we sell is based on how much money we need and how well we are able to sort out our work and life responsibilities. Wages aren’t the only thing we consider when we decide how much time to sell to an employer. We look at the whole package—workplace benefits, working conditions, and whether the job is the right fit for our career plan and our life outside of work. Before the barista can fight the traffic to get to the coffee shop to work his shift, he has to find high-quality child care—care he can afford on his wages. If he cannot afford child care, he may not work.

The United States used to have one of the highest rates of labor force participation for both men and women among developed economies. Now we’re falling behind—far behind. The OECD reports that as of 2014, the United States now ranks twenty-first out of 22 developed nations in terms of prime-age men’s labor supply and twentieth among those countries for prime-age women’s labor. In a recent academic paper, Cornell University economists Francine Blau and Lawrence Kahn point to the lack of family-friendly policies as a likely explanation for the relatively low share of women working: “Unlike the United States, most other economically advanced nations have enacted an array of policies designed to facilitate women’s participation in the labor force, and such policies have on average expanded over the past 20 years relative to the United States.”

The lag in men’s participation may be more surprising, but men now report even more conflict between work and family than do women. As women have increased their time at work, men have had to share in the work of the “second shift” at home, a phrase coined in the late 1980s by researchers Arlie Russell Hochschild and Anne Machung. In many families, a man cannot assume that his stay-at-home wife will care for his ailing parents. According to data from the U.S. Department of Labor, men take nearly as much leave as women to care for a seriously ill family member.

Next, let’s turn to the bottom-right quadrant of the figure—buying time—to look at the firm side of the economic cycle. People may seek jobs, but they need employers to hire them. That’s where labor demand comes in. This is how much time and what kind of staffing an employer wants to “purchase.”

Employers bought more than four billion hours of labor per week last year. In general, employers have a lot of leeway to do whatever works for them. Sometimes they hire someone to be on staff full-time and pay a fixed salary no matter how many hours worked. In other cases, they hire by the hour, pulling staff in for short or long shifts depending on their needs. Firms buy time to have the staff to make the stuff. They are looking for the most talented staffers at the lowest price who can work the hours the employer needs at the price they can pay.

Which brings us to the final quadrant: selling stuff. The key to selling goods and services is producing the best product at the lowest price. When selling stuff, it’s hard for businesses to raise prices. What firms do have more control over are their costs. And the cost they typically have the most control over is labor—and how productive that labor is.

If we listened to conservatives, we’d only see one aspect of how the price of time affects selling goods and services. Paying people more—or providing more benefits or more flexibility—is a cost, and that’s the end of the conservative tale. If the pay package becomes more generous—because the minimum wage goes up or employers have to pay people when they stay home with the flu—maybe our coffee shop owner will decide that she can do without that fifth staff person in the morning. But that’s an extreme step. If she did that, the lines at her shop would be much longer than at other shops, and she’d lose customers. More likely, she’ll find another way to get more bang for her buck, probably by trying to get a little bit more out of each of her employees. Further, when every employer has to pay more or provide a new benefit, there’s no competitive disadvantage to any one business. Our coffee shop owner faces the same minimum wage increase as the owner across the street. Maybe they will both raise the price of doughnuts by ten cents. Or maybe they will both find a way to improve productivity. The point is, they face the same costs.

Those are carrots; there are also the sticks. Bosses can be demanding and drive people to work harder and faster. They can deny them paid sick days or insist on mandatory overtime. Sometimes sticks work. But sometimes they’re counterproductive. Sometimes good employees will get fed up and quit. But just because someone stays on the job and shows up to work doesn’t mean they are actually being productive—especially in industries where attention to detail matters. A worker with a cold or who is worrying about a child in the school nurse’s office may not get very much done—and may even make costly mistakes. One study by Walter F. Stewart and his colleagues estimated that in 2002, “lost productive time” due to personal or family health reasons cost U.S. employers at least $226 billion, or about $1,685 or more annually per employee. The better part of this cost—71 percent—was the result of “reduced performance.” The authors also note that for some categories of workers, returning to work before they have fully recovered seems to raise costs because they work at a lower level of productivity for a longer period of time.

Policies that keep good people in their jobs can save firms money. Sociologist Sarah Jane Glynn and I conducted a review of the literature on the cost of job turnover and found that up and down the pay ladder, businesses spend about one-fifth of a worker’s salary to replace that worker. Among jobs that pay $30,000 or less, the typical cost of turnover was about 16 percent of the employee’s annual pay, only slightly below the 19 percent across all jobs paying less than $75,000 a year.

Demand and Supply

Conservatives argue that the economic cycle starts in the bottom-right quadrant: buying time. But this is putting the cart before the horse. Without customers, there is no demand. No one has a reason to invest or hire workers unless they know they can sell what they produce. Listen to Nick Hanauer, founder of the Seattle-based venture capital firm Second Avenue Partners and an original investor in Amazon.com (and Democracy board member), who wrote in a Bloomberg Businessweek column: “[O]nly consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.” Hanauer is just one of a growing number of business leaders who wholeheartedly agree: Families are the real job creators.

Three principles emerge from the analysis so far that should guide our economic policymaking. The first is that the economy is a system in which firms and families matter. While the very purpose of a firm is to engage in the economy, the purpose of families is both economic and non-economic. Families are where we raise children and care for one another. These roles may be subjectively more important to family members than their role in the economy. This situation shapes how work-life policies play an important role in our economy.

A worker with a cold or who is worrying about a child in the school nurse’s office may not get very much doneand may even make costly mistakes.

The second analytic principle is that we need to look at all kinds of costs. Costs and benefits matter, but costs aren’t only what firms pay out of pocket, and benefits aren’t only about money. Costs include all the hidden costs that may be hard to see. A change in policy, for example, may require a shift in managerial style, which in turn may require the added cost of retraining supervisors about new rules. Whereas in the past, middle managers may have been trained to automatically deny requests for leave, now there may need to be a process for allowing it. Benefits may also be hidden. A parent’s flexible work schedule may boost a child’s achievement in school—a benefit that human resources at Dad’s job may not be able to see or savor, but this certainly counts for families and for the economy more generally. Even on the so-called cost side of the ledger, work-life policies often don’t entail out-of-pocket costs for firms. Moreover, many of the hidden costs provide tangible benefits for firms, once we dig a little deeper. Much depends on productivity—how do firms get the most out of their workforce?

Productivity increases sometimes take a while to show up. This brings us to our third principle: Don’t just look at the immediate cost or benefit; look at the long-term effects. Upfront costs might be obvious, but benefits may take a while to show up. A shift in managerial style may entail a one-time cost, but after that, training on how to implement the new policy is just part of the package of supervisor training—nothing special, no added cost. The cost of giving workers flexibility to care for a sick child may entail short-term costs to the firm, but that may mean the child gets well sooner and thus the parent is back at work sooner. Further, if parents are better able to provide care and to earn a living, their children will enter the labor force with higher levels of skills. When we’re thinking about the economy, we have to keep in mind that long-term trends matter just as much as—and sometimes even more than—short-term trends.

Putting it all together, we see that a firm might face a direct cost when a new work-life policy becomes law, but that is not true for the economy overall. After the law passes, the store manager will need to find someone to fill in for a sick worker and perhaps pay two workers, one at home sick and one covering for the sick worker on the sales floor. Yet without the law, many other firms and families have to cope with the reverberations of a sick employee who doesn’t have the right to a paid day off. Imagine that the retail worker has a toddler. The toddler goes to day care sick, making the other children sick. That’s an added cost for other families in the day care center, and the day care center and its employees, who may also fall ill. Alternatively, if the worker stays home and misses a day’s pay, she cannot pay her rent on time. That’s added economic stress for her landlord. Further, a lack of paid sick days is associated with higher turnover and other productivity losses, which aren’t in the long-term interest of our economy. Businesses and their short-term incentives are important, but they are only a piece of the economy.

The lesson is that if you want to sell goods and services, you had better make sure that people can buy them. Whether they will be in a position to do so or not depends on adequate and sustainable selling and buying of time, which is why we have to consider the whole economic cycle, not just one slice of it.

Here, There, Care, and Fair

There are four areas where we need new solutions to the everyday economic problems facing middle-class, working-class, and professional workers. For shorthand, I call them Here (at home), There (at work), Care, and Fair.

The first addresses when the need exists for a worker to be at home. There are days when a worker cannot be at work because he’s sick, his child is sick, or he needs to care for an ailing family member. This doesn’t mean he cannot hold down a job and be productive most of the time. But there will be that odd day when he needs a little time away from work. Or maybe he needs a week to care for his mom when she breaks her hip, or a few weeks to spend with his new baby. Without the security of knowing he will have a job to go back to, he either risks his paycheck or risks not meeting other crucial off-the-job needs. The need to be Here (at home) cannot always fall prey to the need to be There (at work). There are only so many hours in a day.

Especially for those on the middle and the bottom rungs of the income ladder, these kinds of justifiable absences from work must be paid. Otherwise, it’s a nice idea, but not one that is affordable. Two ideas whose time has come are to allow workers to earn paid sick days, or short-term leave for the occasional illness of workers or their children, and paid family and medical leave for at least 12 weeks—for the good times, when the family welcomes a new child, and the not-so-good times, when a seriously ill family member needs care. Only about two-thirds of civilian workers have paid sick days and the overwhelming majority of workers do not have paid family and medical leave. Some employers and some states and cities have taken steps along these lines, but we need national coverage that includes all workers, not just some of us—and everyone needs to know that they can use this leave without fear of retribution. Like our nation’s longstanding rules regarding the minimum wage and workplace safety, paid sick days and paid family leave should be required for all employees and employers, with no exceptions, so that the rules are fair and apply to all businesses and their workers.

The second set of ideas covers what happens when we’re at work. Work hours need to fit our lives. Some people don’t get enough hours and cannot earn enough to pay their bills. Others have to cope with too many hours, or too many hours at the wrong times. Schedules are too often tilted toward the minute-by-minute demands of businesses, with little or no appreciation for the needs of people. To rebalance this relationship, we must address overwork, underwork, and unpredictable schedules when people are There at work.

Some employers have stepped up, offering their employees flexible schedules—be they hours that fit family life, or even telecommuting. The evidence shows this is good for firms and families, by motivating workers to be at their best at a company that cares about them and their families and by reducing turnover. But it may not be in the short-term interest of some individual firms to take these steps, even if it’s in the interest of the economy overall. That’s where policy comes in. We need to strengthen the protections of the New Deal-era Fair Labor Standards Act by limiting overwork for a larger swath of workers, and putting in place greater scheduling predictability for workers up and down the economic ladder. These steps improve conditions for employees when they are There at work and thus boost the productivity of firms and the overall economy.

Then there’s the daily concern of who’s caring for those who need it. Families need high-quality and affordable solutions for caring for children, the elderly, and the sick. One of the toughest choices a family makes is finding the right caregiver for a young or ill family member. We need to ensure affordable, safe, and enriching care for children and elders for every family who needs it. Our future depends on it. Rethinking the 1971 comprehensive child care legislation would be a good place to start, as would building on the work in cities and states today that are offering free or low-cost universal access to pre-kindergarten for all three- and four-year-olds. On the elder care side, crafting better options for aging in-home and long-term palliative care would be an important step forward. Enabling families to provide the best care for their children and elderly relatives delivers intergenerational benefits to both families and our society and economy.

Finally, these work-life systems must be Fair. With both men and women in the workforce, at some point most of us need time off for family. That’s a good thing. It means we’re human. But no one should be discriminated against because they need some flexibility to care for their family. And if only some people have access to work-life policies that help them address conflicts between work and family life—and if even among them, many are afraid to use the policies—then this isn’t a real set of solutions. Solutions must address the challenges up and down the economic spectrum. There are ideas being tested in states and localities, such as prohibiting discrimination because of family responsibilities, that rest on interpretations of existing protections such as the Americans with Disabilities Act, Title VII of the Civil Rights Act (which prohibits racial, ethnic, religious, and gender discrimination in the workplace), and the Pregnancy Discrimination Act.

Like our nation’s rules minimum wage and workplace safety rules, paid sick days and family leave should be required for all.

Fairness also means tailoring and adjusting workplace policies to meet the needs of different breadwinners in different professions with different workplace needs. Job quality, incomes, and access to family-friendly workplace options look different depending on where employees work. Work-life policies will not affect everyone the same way. What works for one worker may not work for another. An option to telecommute may not help a working parent whose home office has been turned into a playroom or the receptionists and line workers who must physically be at work. But better scheduling practices may be especially helpful to all these workers. There are common problems and to be Fair to all employees and employers requires that we find solutions for families up and down the economic ladder that are adhered to by everyone.

These solutions aren’t pie-in-the-sky ideas. Every single one of them has already been put into place somewhere in the United States. In the past decade, more than two dozen states and localities have passed laws giving workers the right to earn paid sick days; four states have passed laws for paid parental leave; two localities have passed laws that give workers the right to ask their employer for a schedule that works for them and their family; many communities have put in place new programs to address the need for care for children and the elderly; and two states have made it illegal to discriminate against those with care responsibilities. These ideas now have a solid track record and policymakers can see the likely effects of reform. These successes also show that Americans are ready—and eager—for reform.

This essay is adapted from Finding Time: The Economics of Work-Life Conflict (2016). Copyright 2016 by Heather Boushey. Used by permission. All rights reserved.

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Heather Boushey is President and CEO of the Washington Center for Equitable Growth and author of Unbound: How Inequality Constricts Our Economy and What We Can Do About It.

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