The Hidden Economy of Unpaid Work and Why It Changes the Inequality Story

I just finished reading "When unpaid cooking, cleaning, and child care get a dollar value, income inequality in the US shrinks, but the gap has grown since 1965," written by Leila Gautham, Lecturer in Economics, University of Leeds, and Nancy Folbre, Professor Emerita of Economics, UMass Amherst.

The authors argue that traditional measures of income inequality miss a major part of the economy: unpaid household work such as cooking, cleaning, and childcare. For context, below is an illustration of the growing income inequality gap, excluding unpaid labor.

When economists assign a monetary value to this work and add it to household income, overall inequality in the United States appears smaller than standard income statistics suggest, because lower-income households tend to produce more unpaid work at home.

However, the article explains that this perspective also reveals a different long-term trend. Between 1965 and 2018, inequality widened more than commonly measured when unpaid work is included. Conventional data show the gap between top and bottom households growing by about 40%, but when unpaid household labor is counted, the gap grows by about 66%.

One reason is that unpaid household production has declined over time as families increasingly purchase services such as childcare, prepared food, and cleaning. This decline affects lower-income households the most because unpaid work once represented a larger share of their total economic resources. As paid employment rose, especially among women, the value of unpaid work fell, which widened inequality when measured using this broader "extended income" approach.

The research also highlights the importance of family structure. Single-parent families, particularly those headed by single mothers, experienced large increases in paid income but also sharp declines in unpaid household production. As a result, once unpaid work is accounted for, their economic position relative to married couples has not improved much.

The authors conclude that recognizing unpaid household labor changes how we understand inequality. It shows that domestic work contributes significantly to family well-being and economic output. Still, the long-term shift away from unpaid home production has intensified inequality over the past several decades, when this hidden labor is properly valued.

With that said, the problem is even worse. The authors explored the relationship between income inequality and unpaid labor, not wealth inequality and unpaid labor.

Income inequality and wealth inequality are often used interchangeably, but they describe two different economic realities. Income inequality refers to the differences in how much money people earn each year through wages, salaries, business income, and investments.

Wealth inequality, on the other hand, refers to differences in what people own over time, including assets such as homes, retirement accounts, investments, and savings, after subtracting debts.

According to recent reporting by CBS, Wealth inequality in America just hit its widest gap in more than 3 decades. The top 1% of households owned 31.7% of all U.S. wealth in the third quarter of 2025, the highest share on record since the Federal Reserve began tracking household wealth in 1989.

Why does this matter?

Wealth inequality in the United States is a much larger problem because Citizens United has allowed for folks with unlimited funds to have shadow influence over election funding. And while the cost of the essentials we need to live: health care, childcare, and housing, continue to explode, those problems do not impact big election donors.

The ultra-wealthy actually profit from advocating for policies that worsen the problem, as they benefit from the record-breaking tax cuts for the rich that came from Donald Trump's budget in 2025, while it made life more expensive for the rest of the country.

Research like this reminds us that the economic story we hear most often is incomplete. The value of unpaid labor, the widening gap in both income and wealth, and the policies that shape these outcomes are not accidents. They are the result of decisions made by elected officials and the incentives that influence them.

As voters, we cannot afford to treat economic policy as abstract or distant from our daily lives. The choices made in Washington and in state governments directly shape tax policy, childcare access, healthcare costs, and the financial security of families. Recognizing how these systems work is the first step. The next step is to participate thoughtfully in elections, evaluate policies rather than slogans, and vote with a clear understanding of how those decisions affect families, workers, and the long-term health of our economy.

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