http://moneycentral.msn.com/content/CollegeandFamily/P46800.asp
What's a homemaker worth? The shocking truth The value of a stay-at-home spouse is priceless in many ways, but don't kid yourself: In economic terms, running a household is worth far less than we've been told. By Liz Pulliam Weston We all know that a stay-at-home spouse can be invaluable, and the wide-ranging estimates of the real value of the arrangement reflect that knowledge. Whether the figure is $90,000 or $125,000 or even $500,000, the numbers are meant to show how important is the unpaid work performed by a homemaker. Unfortunately, the statistics are codswallop. The economic value of a stay-at-home spouse is closer to $30,000 a year. Our society doesn't place a high dollar value on a homemaker's work, and those who choose to stay home do so at their own economic peril. No glamorous awards ceremony How I wish this weren't true. If it were up to me, the job of stay-at-home parent would come with retirement and health benefits, annual paid vacations and an award ceremony each spring to rival the Oscars. Since you've yet to elect me Queen of the World, however, we're stuck with the economic system we've got, and it does not work in favor of unpaid domestics. The numbers that purport to show otherwise are flights of the author's fancy. They're typically constructed from the U.S. Bureau of Labor Statistics' average pay figures for a variety of occupations including: Child-care worker, $8.91 an hour Maid, $8.02 an hour Food preparation supervisor, $11.70 an hour Bookkeeper, $11.94 an hour Chauffeur, $8.67 an hour The formula is simple. Figure out how many hours, on average, a homemaker performs each task, multiply those hours by the appropriate wage and come up with an impressive and completely overblown annual figure. Economics and the real world Sometimes they don't even bother to determine working hours. Talk show host and investment adviser Ric Edelman decided that because mothers are constantly on call and perform all these functions, the appropriate figure was one that reflected the hourly rate for each of 17 occupations, performed simultaneously, 24 hours a day, seven days a week. That's how he came up with an annual worth figure of more than $500,000. That's not the way the value of homemaker is determined in the real world, however. The economists who make these calculations -- for wrongful death suits, airplane crash settlements and insurance purposes -- recognize that while homemaking has economic value, it's nowhere near the six-figure range. The reality is that many homemakers don't have the skills of, say, a professional bookkeeper, a licensed chauffeur or a recreational director, says economist Evan Schouten, vice president of the economic consulting firm Charles River Associates in Boston and an expert witness in many wrongful death trials. Painful truth about payouts And families who lose a stay-at-home spouse typically do not rush out to hire 17 professionals to take his or her place, let alone employ them 24/7. They may hire one or two people, usually for 50 hours a week or less, and pay them an hourly wage of $10 to $15. That's why the economic payout is typically less in wrongful death and other lawsuits when the victim is a stay-at-home spouse than when the victim is employed. The lifetime economic value of a female homemaker who dies at age 30 is currently about $300,000, Schouten said, based on statistics from a seminal study in this area, "The Dollar Value of Household Work." Compare that to a 30-year-old who makes the average white-collar wage of $19.86 an hour. "The present value of her lost after-tax compensation," Schouten said, "using conservative assumptions, likely exceeds $1 million." Insurance coverage takes a holiday If you doubt the veracity of all this, just try to buy life or disability insurance on a stay-at-home spouse. If you use the most inflated statistics as a guide, and multiply the annual figure by the 10 years of care until the kids are grown, you could come up with an insurance "need" of $5 million. But unless your insurance agent has extraordinary pull, you're not going to get that coverage. That's because life insurers don't want you taking out policies that have no economic basis. Their theory is that it becomes way too tempting to snuff an overinsured spouse. (Interestingly, a high-income family with can generally justify a larger policy on a work-at-home spouse than a family with lower income, even though neither homemaker makes any money. Insurers presume those wealthier families will pay more for various replacement services, such as employing a nanny rather than using group day care.) Getting disability insurance -- in any amount -- is just as tough. Without an income, disability insurers won't write a policy, no matter how much a family would have to shell out to replace the unpaid services it would lose. And if that weren't enough . . . There are other significant costs to being a homemaker: Employment prospects decline. Your job skills become dated by the day, making it harder for you to re-enter the working world. Yes, raising children and running a household take a variety of skills but no, those skills don't typically translate into high-paying jobs outside the home. Retirement savings stagnate. If you're at home, you're also not contributing to a workplace retirement plan or earning credit toward a pension plan or Social Security. That leaves you economically vulnerable if you ever divorce. Economic vulnerability increases. Two-income families also have a built-in safety net should they encounter layoffs or other economic setbacks. Obviously, there's far more to the decision to stay home than mere economics. Stay-at-home parents provide invaluable services and benefits to their families. Many women think the monetary and economic sacrifices are well worth it, which is one reason why the Bureau of Labor Statistics finds that 40% of mothers with children under 6 stay home. (Overall, 13% of the nation's households include a stay-at-home spouse.) xponent Sucks, Don't It Maru rob _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
