Homemaker’s value adds up to big sums

HUMAN CAPITAL:
The skills, abilities, physical health, knowledge, creativity and innovation in a region’s people, as well as a person’s belief in his or her ability to have an effect
on the world.

Homemakers might not think of their worth in terms of dollars and cents.

After all, no one is writing them a paycheck for cooking, cleaning and child care. But there’s a surprising amount of economic value in the work that homemakers do.

“For the homemaker, in general … because he or she is not working, many people don’t value that they’re there,” Bob Weisbeck, a 29-year financial adviser with Modern Woodmen of America in Brookings, S.D., said about determining the level of life insurance needed for a homemaker.

The value of the uncompensated work a homemaker provides to a family has been studied at length in recent years. According to a 2012 estimate by The Mint, a financial resources website, the work of a homemaker in the Midwest totals more than $96,000. Weisbeck said that figure is significantly lower in the Dakotas, but still is not to be overlooked.

“For a homemaker, you don’t have an income there, but what is your value to the family? You figure that at least $20,000 to $25,000 per year if you had to hire day care and have someone come in and clean the house or have a nanny,” he said. “If something happens to that homemaker, we’ve got to replace that income—or that value—somehow.”

Plus, the value of the working spouse can decrease once the stay-at-home parent of young children is gone.

“A lot of times, the homemaker will stay at home just because of the fact that the other spouse will do a lot of traveling,” Weisbeck said. “If that … homemaker is no longer there, (the spouse) might have to change jobs, and maybe … have a reduction in value there, as far as income-earning ability. … Most people don’t even think of that.”

A needs assessment can end up with big numbers, Weisbeck said.

“Most people don’t sit down and ponder, if they died tomorrow, what would happen with everything … until they are faced with that reality or asked the question in a serious way,” he said. “If you show them their human life value—that’s the amount of money they make times the number of years they expect to keep working—it’s not real hard to end up with two, three or four million dollars.”