MNI: New US Consumption Gauge To Include Unpaid Work, Housing

The U.S. Bureau of Labor Statistics will incorporate estimates of the value of unpaid household work and home ownership into a new measure of consumption, aiming for a more comprehensive view of living standards at a time when policymakers are increasingly concerned with addressing inequality, BLS senior economist Thesia Garner told MNI.

A consumption gauge of wellbeing would take account not only of households' income, but also their net worth, and their use not only of debt and assets, but of time. It would assign an income stream to home and auto ownership, likely boosting some elderly households' relative standing in depth of poverty distributions, said Garner, who is spearheading a statistical prototype to be presented at the American Economic Association meeting in January.

"During a period like Covid, it's more and more evident there's a lot of production going on within homes -- fewer people eating out and a lot of child development centers closed, that means more child care at home," Garner said. But at the BLS "we still don't have a consumption measure, we're only producing expenditures."

Poverty has traditionally been defined in terms of income, but consumption is believed to be a better measure of how people actually live, said Garner, whose team plans to finalize the theoretical approach and calculation of the new annual statistic by fiscal year 2023.

NON-CASH BENEFITS

Education expenditures would be excluded from the calculation, largely based on existing survey data from BLS, because it is considered an investment. But some health care spending, like health insurance premiums, may need to be factored in, with specific values assigned to people who use public insurance.

Household production makes up a quarter of the value of goods and services for a typical household but is unaccounted for in official measures of wellbeing, said Ajit Zacharias, a senior scholar at the Levy Institute of Bard College, which has been enlisted by the BLS for its expertise in how to value home production, or time dedicated to necessary but unpaid child care or household chores.

"Unpaid care services have positive social benefits. But because that's not something anybody pays for, it's not internalized into any cost," said Zacharias. "I hope with the BLS trying to quantify it in this way, more public attention will be paid to how important this is and how it sustains living standards."

A Levy Institute study a decade ago, based on its measurements of unpaid household activities, found that investing in early childhood education would have better returns in job creation and labor market disparity than investing in infrastructure construction, he said.