It's not the wolf at the door that's driving women to work harder

Why do mothers go out to work? Why are more women doing paid work than ever before? And why are more of those women working full-time? At a time when so many are struggling with the cost of living, it’s easy to conclude that more women are having to work more hours just to keep up. But I think that sells women short.

Worse, it’s a fundamental misreading of perhaps the greatest social change of our age: the economic emancipation of women.

I don’t doubt that women are just as concerned about the cost of living as men, maybe more so if they’re in charge of the family budget. Nor do I doubt that, if you ask a woman why she’s been doing more paid work lately, the cost of living’s likely to be mentioned.

But things are not always as they seem. For instance, when people complain about the cost of living, their focus is on rising prices. But prices rise almost continuously. What matters more is whether wages are rising as fast as prices are – or, preferably, a little faster.

It’s true that the prices for goods and services have risen at a much faster rate than normal over the past two years or so. But the real problem is that wages – which usually do keep up – have been falling behind since the start of the pandemic. Yet people are far more conscious of the rising prices than of the weak wage growth.

Another distinction that’s clearer to economists than to normal people is between the cost of living and the standard of living. When people have trouble maintaining the same standard of living as their friends – a comparable car, comparable house, comparable private school – they would often rather blame the cost of living than their need to keep up with the Joneses.

No, what’s driving the change in women’s lives – causing them to behave very differently from their grandmothers – isn’t the cost of living, it’s education. And with education has come aspiration. Aspiration to put their learning to work, to have a career as well as a family, and to be treated equally with men.

I think it all started sometime in the 1960s when, for some unknown reason, the parents of the rich world accepted that their daughters were just as entitled to a good education as their sons. Everything flows from that fateful change in social attitudes and behaviour. What father today would dream of telling his daughter that, being a girl, she didn’t need an education?

The trouble for boys is that girls do education better. It’s now several decades since the number of girls going to university first exceeded the number of boys.

That being so, the figures for two-income families should come as little surprise. The latest report from the federal government’s Australian Institute of Family Studies, Employment patterns and trends for families with children, finds that in 2022, both parents were employed in 71 per cent of couple families with children under 15. This is up from 56 per cent in 2000, and 40 per cent in 1979.

Within those couple families, the proportion with both parents working full-time was 31 per cent in 2021, up from 22 per cent 12 years earlier. The proportion with one parent working full-time and the other part-time is unchanged at 36 per cent.

Only 4 per cent of these families involved fathers who weren’t working and mothers who were. (Which leaves the young men in my immediate family looking good.)

But there’s something else you need to understand. In the days when there weren’t many two-income families, this gave them a distinct advantage in the housing market. They could afford a better house than their peers.

Once most young home-buying couples have two incomes, however, their greater purchasing power gets built into the prices of the kind of houses they buy, so that what began as an advantage turns into a requirement.

Now it’s the couples who choose not to have both partners working who’ll have trouble affording a home comparable to those of other couples. They’ll have to accept a lower standard of living.

Similarly, it’s a misconception to say, as some do, that you need to have both parents working to afford a family. No, you just have to accept a lower standard of living.

I’ve long suspected that the rise of the two-income family helps explain the growing practice of sending kids to private schools. Two incomes make this easier to afford – though this, too, gets built into the size of the fees the schools can get away with charging.

There’s no reason a mother – or a father – who chooses to have a career should feel guilty about it. But I suspect some double-income couples find it easier to justify if they can say that the extra money is buying their kids a better education.

Sorry, a mountain of evidence says that, once you allow for the parents’ socio-economic status, private schools don’t add to students’ academic performance. Buyer beware.

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Treasury's advice now back in favour with the government

The Coalition’s practice of sacking a bunch of government department heads whenever it gets back to office is clearly calculated to discourage bureaucrats from giving frank advice. Fortunately for us, the Albanese government is not as arrogant.

In my experience, weak managers surround themselves with yes-persons, so their brains – and, as they see it, their authority – aren’t challenged.

Strong managers want frank advice from their experts, so they’re less likely to stuff up. They’re confident of their ability to sift through conflicting advice and pick the best way forward.

This Liberal policy of frightening bureaucrats into keeping their opinions to themselves began when they returned to power in 1996 under John Howard. It was repeated when Tony Abbott got back in 2013, sacking then Treasury secretary Dr Martin Parkinson and various other Treasury-related department heads (narrowly missing Treasury’s incumbent, Dr Steven Kennedy).

Their crime, it seemed, was that they actually believed in the Rudd-Gillard government’s policy of using an emissions trading scheme to limit carbon emissions. Guilty as charged. Like almost all economists, Treasury accepted the scientists’ advice on the science, and believed the best tools for fighting climate change were economic instruments such as “putting a price on carbon”. Labor’s Department of Climate Change was staffed manly by Treasury people.

But the Libs’ peak disdain for the public service came under Scott Morrison who, upon attaining the top job, told the bureaucrats he wanted no advice from them, just diligent implementation of the policy decisions made by Cabinet.

What gave this bunch of not-so-super men (and the odd woman) the arrogance to believe they could govern wisely without the bureaucrats’ policy advice? Mainly, their ability to fall back on the small army of taxpayer-funded, but unaccountable ministerial staffers, mainly youngsters with political ambitions and the willingness to interpose themselves between the minister and the department.

These young punks, who think they outrank the most senior public servants, are generally big on politics, but weak on policy. Which, you’d have to say, was the Coalition cabinet’s “revealed preference”.

The apotheosis of this decadence was revealed in evidence to the robo-debt royal commission last week. Advice sought from an outside law firm, which found that the government’s cost-cutting scheme was unlawful, was paid for but not passed up the line to the minister – presumably because the bureaucrats judged it would not be welcome.

But in a little-noticed part of a recent speech by Treasurer Jim Chalmers, he left no doubt that, under Labor, Treasury’s advice would be sought, and used to improve the government’s decisions. What’s more, Treasury’s ability to convey its views to the public would be enhanced.

Chalmers noted that, even after the government had dealt with the inflation challenge, “we will have to manage a budget weighed down by persistent structural spending pressures”. Doing this required new thinking and deeper thinking, he said.

“It requires us rebuilding the evidence base for policymaking. Because, to get better, more-forward-looking economic policies, we need better, more-forward-looking policy foundations.”

Chalmers revealed six ways in which he will be “rebuilding the evidence base for policymaking”. One was “putting Treasury back at the centre of climate modelling again”, to build on “the new approach to climate risks, costs and opportunities” revealed in last month’s budget papers.

Second, Treasury’s annual statement on “tax expenditures” would be made “more accessible, more useful analysis of what tax concessions are costing the budget” and their effect on the distribution of income between high and low earners.

Economists have long believed that such “tax expenditures” are equivalent to actual government spending in their effect on the budget balance, and should be subject to just as much critical reassessment as actual spending.

But the Libs didn’t agree. Since taxes are evil, anything you do to reduce them must be a good thing, even if the concessions go to some (usually higher-earning) taxpayers and not others. They sought to play down the tax expenditure statement – which hugely annoys the interest groups receiving concessions on such things as superannuation savings, and the 50 per cent discount on taxing capital gains – by renaming it the “tax benchmark and variations statement”. Not anymore.

The third, even more significant change will be the appointment of an “evaluator-general” to regularly and publicly examine the effectiveness of government spending programs. Many programs don’t do much to achieve their stated objectives, but ministers and their department heads are notoriously reluctant to have them rigorously examined, for fear of embarrassment.

But, as first proposed by economist Dr Nicholas Gruen, such a person and their agency would have similar powers and independence to those of the much-feared Auditor-General. This should work, provided governments couldn’t do what Morrison did to the Auditor-General: cut his funding.

The appointment of an evaluator-general is official Labor policy, and has been championed by the assistant assistant treasurer, Dr Andrew Leigh, whose outstanding economic expertise is negated by his failure to align with any Labor faction.

No doubt Leigh will be keen for the evaluator to make use of the latest in evidence-based decision-making, randomised controlled trials.

The point is that one thing Treasury (and the Finance department) should be hugely knowledgeable about – but aren’t – is what policies work, and what policies don’t. An evaluator-general will fill this vacuum.

Fourth, Treasury will work with Finance Minister and Minister for Women Katy Gallagher to “ensure gender considerations are at the core of our work”, building on last month’s “gender-responsive budgeting”.

Fifth, Treasury will produce Australia’s first “national wellbeing statement” next year, which will be “a hard-headed way to gauge progress by recognising that a robust and resilient economy relies on robust and resilient people and communities”.

And finally, Chalmers will step up production of the Intergenerational Report from five-yearly to three-yearly, in the middle year of each parliamentary term. He promises the document will be “depoliticised”.

It’s true that former treasurer Joe Hockey trashed this exercise by turning it into a blatant attack on his Labor predecessors. It was hard to take subsequent reports seriously, especially when they imposed an artificial cap on tax collections over the next 40 years, while letting government spending run wild.

We need the report to be a much more balanced assessment of future budgetary challenges, not just a Treasury tract on the supposed evils of runaway government spending. We need more acknowledgement of the possible effects of climate change on the budget over the next 40 years – a start to which was made in last month’s budget.

And it would be nice if the report lived up to its name by having much more to say about intergenerational equity issues and trends, such as the effect of ever-rising house prices, and the longer-term consequences of the way the Howard government kept stacking the odds in favour of the old at the expense of the young, particularly favouring the self-proclaimed “self-funded retirees” (who never mention the huge superannuation tax concessions they’ve been given, nor that many of them also get a part-pension).

So, well done, Jim. With better advice and a better “evidence base”, now all Labor needs is the courage to stand up to a few powerful interest groups, including those industries that get the relevant union to plead their case in the new-look Canberra.

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Election: a win for the punters against the party professionals

Listening to Anthony Albanese’s victory speech on Saturday night – promising to be a better, more inclusive leader than his predecessor, to help the needy as well as the party heartland, to work hard fixing as many of our problems as humanly possible – my inner accountant came out. Yes, but how will you pay for it all?

If ever there was a case of oppositions not winning elections but governments losing them, this is it. Much more than usually, this election result was voters rejecting not so much the Liberal Party and its policies, but the party’s leader and his divisive, often disrespectful way of conducting himself and his preoccupation with clinging to a fossil-mining past rather than striving for a future as a renewable energy super-power.

What motivated all those people – particularly women – in the most prosperous parts of Sydney and Melbourne to break the habit of a lifetime and vote for a teal independent rather than the Liberal member they had no special gripe against?

It was their overwhelming desire to see and hear no more from the most un-Christlike Christian they could imagine. A bulldozer, indeed. It’s significant that the people they voted for were well-educated, successful businesswomen. Female equality was also a big motivation for the Liberal revolt.

So too, Scott Morrison’s puzzling resistance to the obvious need for a federal anti-corruption commission “with teeth”. If he had nothing to fear, what was his problem?

But it wasn’t just the teals. What about the resurgence in the Greens’ vote, and all the Liberal and Labor voters in Brisbane who switched to the Greens? It’s obvious from the two separate revolts against both major parties that the need for more urgent action against climate change was the election’s single biggest issue.

This despite the majors’ desire to avoid talking about climate change – which the media meekly accepted. It’s significant that both the Greens and the teals were promising much earlier and bigger reductions in emissions. Albanese ignores this message at his peril.

The one issue the majors were happy to debate was the cost of living. So, with the media’s willing acceptance, this became the central issue of the campaign. The great cost-of-living election, with the Reserve Bank making a guest appearance.

Really? Where’s the evidence of that being a key influence on the result? Well, I guess it’s the main reason Labor – the party promising to increase wages – did take a number of seats away from the Libs, in the way the two-party textbook says elections should work.

But we’ve yet to see whether Labor won enough of those seats to form a majority government.

The notion that minority government is a recipe for instability bordering on chaos is a self-serving lie spread by the two majors.

Look at the record – federal and state – and you find that the deals the majors have done to guarantee “confidence and supply” not only achieve stability, they allow the crossbenchers to achieve valuable reforms – often to do with transparency and accountability – that neither of the majors fancies.

With the Gillard minority government, the main gain was a tax on carbon – which, had it survived the depredations of Tony Abbott, would have left us much better-placed today.

We seem to have moved to a non-praying prime minister, but if I were Albanese I’d be praying to be left in a position where I had to let the Greens or the teals impose on me a much more adequate policy on climate change – consistent with the electorate’s now-revealed preference.

This election is no ringing endorsement of Labor, Albo and his small-target policies. The new government has won with an amazingly low primary vote. Timid Labor was not the nation’s first preference.

The election is a step-change in the public’s long-running move away from the two-party system. It was the voters’ message to the Lib-Lab duopoly: “Stuff you and your how-to-vote cards, I’m doing it my way.” If Labor thinks it’s just the Libs with a problem, it’s not thinking.

Albanese’s other problem is that his small-target strategy involved tying one hand behind his back. What he thought he had to do to win government is the opposite to what he now must do to prove himself worth re-electing.

He has inherited a big budget deficit and massive public debt, and will be under great pressure to get that deficit down.

How? He’s promised to deliver the Liberals’ hugely expensive and unfair tax cut in 2024, while promising no tax increases. By cutting spending on health, education, welfare and the NDIS? They’re the things he’s promised to spend more on.

You want to do something about unaffordable homeownership? That requires increasing the tax on home-owners and investors. Where’s Harry Houdini when you need him?

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Politics and economics have aligned to permit a ripper budget

Sometimes I think the smartest thing a nation can do to improve its economic fortunes is elect a leader who’s lucky. The miracle-working Scott Morrison, for instance.

This may be a controversial idea in these days of heightened political tribalism, when one tribe is tempted to hope the other tribe really stuffs up the economy and so gets thrown out. What does a wrecked economy matter if your tribe’s back in power?

Morrison was not only lucky to win the 2019 election, there’s been as much luck as good management in his success in suppressing the virus and the way the economy’s bounced back from the coronacession. (Of course, it may be blasphemous of me to attribute his success to luck if, in truth, he’s getting preferential treatment from above.)

Anyway, it’s “providential” – as my sainted mother preferred to say – that the politics and the economics are almost perfectly aligned for Treasurer Josh Frydenberg’s budget next week.

Politically, Morrison must make an adequate response to the royal commission’s expensive proposals for fixing our aged care disaster. And must make recompense for last October’s all-macho budget by making the economic security of women a preoccupation of this one.

Economically, he must lock in the stimulus-driven rebound from the recession by “continuing to prioritise job creation” and driving the rate of unemployment down towards 4.5 per cent or less.

What’s providential is that both aged care and childcare are “industries” largely reliant on federal government funding and regulation, as well as having predominantly female customers and employing huge numbers of women.

The Australia Institute’s Matt Grudnoff has calculated that, if the government were to spend about $3 billion in each of five industries, this would directly create 22,000 additional jobs in universities, 23,000 jobs in the creative arts, 27,000 jobs in healthcare, 38,000 in aged care and 52,000 in childcare.

If ever there was an issue of particular importance to women, it’s aged care. Women outnumber men two to one among those in aged care institutions. Daughters take more responsibility than sons for the wellbeing of their elderly parents. And those working in aged care are mainly women.

The royal commission concluded the government needed to spend a further $10 billion a year to rectify aged care’s serious faults, though the money would need to be accompanied by much tighter regulation, to ensure most of it didn’t end up in the coffers of for-profit providers and big charities syphoning off taxpayers’ funds for other purposes.

With that proviso, most of the new money would end up in the hands of a bigger, better-qualified and better-paid female workforce. The Grattan Institute’s Dr Stephen Duckett estimates that at least 70,000 more jobs would be created.

If you ask the women’s movement – and female economists – to nominate a single measure that would do most to improve the economic welfare of women they nominate the prohibitive cost of childcare.

They’re right. And right to argue the issue is as much about improving the efficiency of our economy as about giving women a fair deal.

Going back even before the days when most girls left school at year 9 and women gave up their jobs when they married, the institutions of our labour market were designed to accommodate the needs of men, not women.

These days, girls are better educated than boys, but we still have a long way to go to renovate our arrangements to give women equal opportunity to exploit their training in the paid workforce – to the benefit of both themselves and their families, and the rest of us.

Wasting the talent of half the population ain’t smart. The key is to eliminate the disadvantage suffered by the sex that does the child-bearing and (still) most of the child-minding. And the key to that is to transfer the cost of childcare from the family to the whole community via the government’s budget.

This government is sticking to the legislated third stage of its tax cuts which, from July 2024, and at a cost of about $17 billion a year, will deliver huge savings to high income-earners, most of whom are old and male (like me).

We’re assured – mainly by rich old men – that this tax relief will do wonders to induce them to work harder and longer. But, as the tax economist Professor Patricia Apps has been arguing for decades, there’s little empirical evidence to support this oft-repeated claim.

Rather, the evidence says that the people whose willingness to work is most affected by tax rates and means-tested benefits are “secondary earners” – most of whom are married women.

There is much evidence that it’s the high cost of childcare that does most to discourage the mothers of young children from returning to paid work, or from progressing from part-time to full-time work.

If the huge cost of the looming tax cuts helps discourage Morrison from spending as much as he should to fix aged care and the work-discouraging cost of childcare, we’ll know his conversion to Male Champion of Change has some way to go.

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Budget is blokey because Morrison's 'core values' make it so

I'm sorry to have to agree, but Grattan Institute boss Danielle Wood is right to say this is a "blokey" budget. As are those who add it's a blokey budget from a blokey government.

Scott Morrison is offended by the charge, but the trouble is, the blokier you are, the harder it is to see what's blokey and what's not. Women see it sticking out, but blokes often can't.

The simple truth is that, over the centuries, what economists call the "institutional arrangements" that make up the economy have been designed by men, for the convenience of men. This was fine when the great majority of the paid (note that word) work was done by men, but not so fine now women are better educated than men and make up 47 per cent of the paid workforce.

It's because the blokiness of the way we've always managed the economy is so deeply ingrained in the way we've always thought about the economy that so many men can't see it. Outsiders can; insiders can't. To steal a phrase from the feminists of my youth, it's now the men who need the "consciousness raising".

(Of course, it's nothing new that people can see their own point of view – and their own vested interest – far better than they can see other people's.)

The first place a bias in favour of men is hidden is the division we make between the production of "goods" (by the agriculture, mining, manufacturing, utilities and construction industries) and the production of "services" by every other industry.

Kevin Rudd's declaration that he didn't want to be prime minister of a country that didn't "make things", and Morrison's similar noises recently, are manifestations of the truth that, in general, jobs in the goods sector are held in higher esteem than those that involve performing services.

Would it surprise you to learn that 79 per cent of the jobs in the goods sector are held by men whereas, in the almost four-times bigger services sector, 54 per cent of the jobs are held by women?

Would it surprise you that jobs held by men tend to be more senior and higher-paid than jobs held by women? Even within the services sector – which, of course, includes a lot of highly paid occupations, such as prime ministers and premiers, managers, doctors, dentists and lawyers.

Over the past 50 years, almost all the net growth in jobs has been in the service industries. This is because the production of goods has become increasingly "capital-intensive" (more of the work is done by machines), whereas the services sector is, by its nature, labour-intensive.

It's no accident that most of these extra service sector jobs have been filled by women, returning to the workforce or never really leaving it. Much of this growth has been in what the National Foundation for Australian Women's latest Gender Lens on the Budget report calls the "caring professions" – nursing, childcare, aged care and disabled care.

Would it surprise you that caring jobs are done mainly by women and tend to be low-status and low-paid? Surely it's obvious that being in charge of an expensive machine is a far more responsible role than being in charge of children, the elderly, the sick or disabled?

Although the coronacession is unusual in having its greatest effect on service industries, the budget sticks to the standard script of directing most stimulus to the goods sector: construction, energy, manufacturing and road and rail projects.

The concession to encourage more business investment in equipment favours capital-intensive goods industries over service industries. The tax cuts will go more to men than to women, especially after the middle-income tax offset is withdrawn next financial year.

But there's where the budget aims its stimulus and where it doesn't. No economic modelling should be taken as gospel truth, but modelling by Matt Grudnoff, of the Australia Institute, finds that bringing forward stage two of the government's tax plan will create only between 13,400 and 23,300 jobs – depending on how much of the cut is saved or is spent on imports.

By contrast, Grudnoff estimates that splitting the same $13 billion evenly between service industries – universities, childcare, healthcare, aged care and the creative arts – would create almost 162,000 jobs.

Modelling commissioned by the women's foundation from Dr Janine Dixon, of Victoria University, has found that redirecting government spending from infrastructure to the provision of greater care for children, the aged or the disabled would yield significantly greater benefit to the economy and jobs.

So why did Morrison and his Treasurer choose not to spend more on services sector jobs? Because this didn't fit with the "core values" that guided their choice of stimulus measures: "lower taxes and containing the size of government".

Although these days most of the heavily female-performed childcare, healthcare, aged care and disabled care has been contracted out to the community and private sectors, its cost is heavily subsidised by the taxpayer.

I bet it's never crossed Morrison's mind that his commitment to Smaller Government is biased against women and the further growth of female employment.

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How Morrison could reward mothers hit hard by the recession

This recession is different in many ways. One is that it has hit female workers harder than male workers. So a good test of the adequacy of Scott Morrison and Josh Frydenberg’s mini-budget on Thursday will be how much it focuses on the needs of women.

Past recessions have hit men a lot harder than women because they’ve been concentrated in male-dominated industries such as manufacturing and construction. In this coronacession, manufacturing and construction have largely been able to continue working while the lockdown has closed female-dominated service industries such as accommodation and food services, retail, arts and recreation.

Recessions always hit part-time and casual workers harder, and these categories too include more women than men. Similarly, recessions always hit the lower-paid harder, and women are generally paid less than men. The imbalance did reduce a lot in June, however, as some service industries have been able to resume trading.

There’s evidence that a higher proportion of employed women than men have been able to work from home, making it even more likely that, when schools have been closed, women have done more of the home schooling. It’s also likely that some women have chosen to work fewer hours so as to mind kids at home.

But the case for the needs of women being front-of-mind in the government’s budgetary response to the recession rests on more than gender fairness. In recessions, governments use their budgets not just to help those who lose their jobs and to bolster the economy at a time when even those who’ve kept their jobs are limiting their spending, but also to give the economy a positive boost. To get things moving again.

Morrison has already started talking about the need for reforms to the structure of the economy to encourage faster growth in the years ahead. (The unmentionable truth is that, in the months before the arrival of the virus, the economy had lost momentum and was growing only slowly. Ending the recession to return to that status quo is not an exciting prospect.)


If Morrison decides to bring forward either or both of the second and third stages of the tax cuts he promised in last year’s budget (presently legislated to take effect in July 2022 and July 2024), it’s a safe bet he’ll justify that not just as giving the economy an immediate boost but also improving incentives for people to work and invest in coming years.

It’s a nice idea. But it’s a nicer idea from the perspective of a well-paid male. From the perspective of less well-paid females, not so much. When the cuts are fully implemented, the income tax I and others on the top tax rate pay will have been cut by 6 cents in every dollar of earnings. Will this motivate me and other high income-earners to work a lot harder than we already do? Oh gosh yes. Please believe that.

By contrast, the total saving for most women working part-time or in typical jobs done by females will be no more than about 1 cent in the dollar. That will motivate no one.

When well-paid men think about reform, their thoughts go immediately to the enticing idea of paying less income tax. They see the world from their point of view and are quick to tell you that any women earning as much as they do will get the same tax cuts they get. Sorry, gender doesn’t apply to the tax scales.

Except that it does when you add in our means-tested social benefits system. As female tax economists have been trying to tell male econocrats and politicians for ages, the one really significant disincentive to working in our tax-and-transfer system applies to mothers (and the occasional house husband) who want to go from working part-time to working full-time.

Naturally, every extra hour they work is taxed. But because eligibility for the family benefit is based on the combined income of couples, they soon find that each extra dollar of wages cuts back the amount of family benefit.

Professor Miranda Stewart, of the University of Melbourne, calculates that “second earners” wanting to work more days a week face an effective marginal tax rate of roughly 90 cents in the dollar. Add the extra cost of childcare and working more days will often leave mothers actually out of pocket. That doesn’t affect incentives?

If Morrison really wanted to change the structure of the economy in a way that, once the recession was behind us, would encourage faster economic growth, he’d drop his tax cuts for high earners and use this opportunity to remove a barrier to women putting their ever-higher levels of education to work in paid employment.

If that’s all too hard, he could do much good for women simply by making permanent his now-abandoned emergency measure of making childcare free. Too expensive? It would cost a lot less than his tax cuts for high (mainly male) income-earners.

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Women are making themselves at home in the workforce

In the world of paid work, women still have a lot to complain about: unequal pay and promotion, still-inadequate childcare, and a tax and benefit system that discourages “secondary earners” from working more.

All true. But don’t let this conceal from your notice the success women are having at flooding into the long male-dominated workforce and slowly reshaping it to their needs.

In my never-humble opinion, for as long as girls continue making themselves better educated than boys, it’s only a matter of time before women are calling the shots.

Reserve Bank deputy governor Dr Guy Debelle highlighted women’s growing role in the labour market in a speech he gave last week.

You’ve no doubt heard the government boasting about how strongly the number of jobs has grown on its watch. It’s true. The rest of the economy hasn’t been doing well – wages, the standard of living, for instance – but employment has been growing at the disproportionately strong annual rate of about 2.5 per cent over much of the past three years. As a consequence, a near-record 62.6 per cent of all Australians aged 15 and over have a paid job.

But here’s what the pollies never mention, but Debelle noted: women accounted for two-thirds of the additional jobs in the past year.

This means the rate at which working-age females are participating in the labour force is now at its highest. So with female participation continuing to grow strongly over the decades, while male participation has fallen back, the gap between male and female participation is the narrowest it’s been.

Similarly, if you look just at the gender of those with jobs, women’s share is now above 47 per cent. Similar trends are occurring in all the advanced economies, of course.

Debelle says “changing societal norms and rising educational attainment have contributed to more women moving into ... employment outside the home. Female participation has also been influenced by the increasing flexibility of working-time arrangements, the availability and cost of childcare and policies such as parental leave.”

True. There was a time when most employers thought in terms of full-time workers and not much else – an attitude reinforced by the male-dominated unions. The increasing use of part-time employment has greatly added to the “flexibility” with which employers can deploy labour within their businesses, and no doubt helped to make them more profitable.

But the fact remains that the advent of part-time employment has been a boon, first, to women seeking a career as well as motherhood, then to full-time university students seeking income while they study, and now to many older workers seeking a mid-point between the extremes of full-time work and retirement. So the dread “flexibility” can benefit workers as well as bosses.

Debelle says that the participation rate of mothers with dependent children has kept increasing, rising by 10 percentage points since the early 2000s to 73 per cent. Over the past decade, the rise has been most pronounced for mothers with children aged up to 4.

Of those returning to work within two years after the birth of a child, an increasing majority are citing “financial reasons” as their main reason for doing so. Others returning to work cite “social interaction” or to “maintain career and skills” as their main reason.

Financial reasons could be capturing a number of considerations, according to Debelle, including low growth in wages, the rise in household debt or childcare costs.

Research suggests the cost and quality of childcare does have a significant effect on the willingness of women to do paid work, he says. According to the HILDA survey – of household income and labour dynamics in Australia – the share of households using (more expensive) formal childcare for young children has increased notably over the past decade.

Even so, access to childcare places and financial assistance with childcare costs remain “very important” issues for mothers not back at work.

Debelle says the rise in the level of mortgage debt owed by households in recent decades has “broadly coincided” with the increase in women’s rate of participation in the labour force. But which one’s causing what?

Are debt levels higher because more households have two incomes and so can afford to borrow more? (If so, that would suggest the increase in second incomes is helping to push up house prices.)

Or does the need to borrow more to afford the higher prices drive women’s decisions to go back to work? Maybe the low growth in wages in recent years has caused couples to have more debt than they anticipated and thus needing to work more to pay it down.

What little research evidence there is has usually found it’s the higher debt levels that lead to more women going back to work, but the evidence isn’t strong.

Looking beyond the continuing increase in participation by the mothers of young children and the ever-growing workplace role of prime-aged women – 25 to 54 years – of which it is part, women also account for a big part of the swing from early to later retirement.

Do you realise that 60 per cent of women aged 55 to 64 are taking part in the labour force? That compares with 20 per cent or so before the turn of the century. And the rising participation by women 65 and over isn’t all that much less than for men. Times change.

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Positions vacant: economists (women preferred)

Never in the field of economic conflict was so much analytical effort devoted to so few... as in Reserve Bank governor Philip Lowe’s one-man crusade to save the economics profession.

This latter-day Lord Kitchener wants more young Australians studying economics at high school and university, then enlisting as economists in the holy war against economic inefficiency.

His message: Your country needs you. Opportunity cost is being flouted on every hand, yet we have just 3000 professional economists fighting the tide of economic illiteracy.

Young women, in particular, should look at themselves in the mirror and ask the hard question: what good reason have I not to become an economist? Why should I squander my life on any lesser calling than the orderly regulation of mammon?

And let’s have no weak excuses that you know nothing about being an economist – what kind of people they are, what they do, where they work, how hard it is to find a job. Not forgetting a question that could cross the mind of someone with the right stuff to be a dismal scientist: how well does it pay?

Field marshal Lowe has had his people working night and day scouring data bases far and wide to answer all such questions. Rochelle Guttmann (ably assisted by James Bishop, a mere male) does so in the subtly titled paper, Does It Pay to Study Economics? taken from my rapidly dwindling pile of unused reports, seasonally adjusted from 2018.

According to the 2016 census, fewer than 3000 people work as economists, even though there are 73,000 people with post-school qualifications in economics. What’s worse, only about two-thirds of people working as economists actually hold a qualification in economics.

But this is misleading. It’s not nearly that bad. For a start, the 3000 excludes about 2000 academic economists, who are classed as university lecturers. More significantly, to be classed as holding a qualification in economics, you must have that word in the name of your degree.

This is silly. In the day, the title of your degree said as much about which uni you went to as about the subject you majored in. Economics majors at Melbourne or UNSW walked away with a BCom, whereas accounting majors at Sydney got a BEc.

Little wonder people holding an “economics” degree are more likely to work as an accountant than as an economist. And you can forget the notion that a third of working economists are unqualified academically.

Returning to the recruiting drive, the authors make two observations about the huge disparity between those having done an economics degree and those getting a job as an economist.

First, it probably shows it’s hard for someone with an economics degree to actually get a job as an economist (ie, S > D). But it probably also shows that an economics degree is generalist in nature and provides a breadth of skills that allows you to work in a broader range of jobs compared to other degrees.

Get this: “80 per cent of economics graduates work in high-skilled white-collar occupations”.

More than a third of economists (narrowly defined) work in public administration, well over a quarter in private-sector professional services and about 15 per cent in financial services. But people with economics degrees work in a broader range of occupations and industries than people with degrees in most other fields.

Whether you’re talking economists or people with economics degrees, more than 60 per cent of them are men. Lowe believes – as does his teenage daughter, apparently – this disparity must be corrected. (The daughters of powerful men are far more influential than is commonly understood.)

Now to the question no economist would regard as sordid. Figures from the Australian Tax Office say economists have hourly earnings that put them in the top 3 per cent of earnings by occupation.

Graduates with economics degrees typically have higher full-time earnings than other graduates. They’re comparable with STEM (science, technology, engineering and maths) degrees, and higher than for business and other social science degrees.

Guttmann and her male sidekick say the labour market tends to pay the highest wages to people with the skills, abilities and knowledge that are in shortest supply [relative to employers’ demand].

So which skills make economists well-paid? Apart from their knowledge of economics, economists have skill in maths that’s way above the average for other skilled occupations, and above-average analytical skill, for reasoning and problem solving (which is what brings the big bucks).

Looking for the catch? You’ve found it. If you’re weak on maths, you might be happier as a journo.

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Tax reform is pushed by rich males, for rich males

I know it’s a shocking thing for an economics writer to confess, but I’ve lost my faith in the Search for the Golden Tax System. I no longer believe that reforming our tax system is the magic key to improving the nation’s economic and social wellbeing.

As we start to review the modest achievements of the Abbott-Turnbull-Morrison government over the past five years, business people, economists and accountants are lamenting its lack of progress on tax reform.

It raised expectations of sorely needed reform, then wilted at the first hint of political difficulty. The Rudd-Gillard-Rudd government did little better in its six years.

So, the zealots are telling us, the tax system remains unreformed, a millstone around our economy whose threat to our future becomes ever-more urgent. Every so often, one of the big four firms of chartered accountants comes up with its own plan to fix everything.

Sorry, not buying. It’s true our tax system is far from ideal, but if after decades of trying we’re still no closer to nirvana, it’s doubtful we ever will be.

Meanwhile, other aspects of the economy just as important to our present and future wellbeing, and just as in need of “reform”, languish while we obsess about taxes.

Such as? Education and training. Health. Cities with long commute times. “Sorry, we’ll get on to it as soon as we’ve increased the GST.”

The never-ending quest for tax reform is being promoted partly by econocrats, tax economists and tax accountants who specialise in the topic and have little to contribute on other issues.

But the biggest push is coming from rich white males in big business. Their goal is to “reform” the tax system so that they and their company pay less and others pay more. No matter how long it takes, they won’t “move on” until they’ve got what they want.

She didn’t put it this way, but the truth that tax “reform” has long been pushed by well-off men for their own benefit – and at the expense of less well-paid women – was demonstrated in a paper given at a tax conference last week by one of our leading tax economists, Professor Patricia Apps, of the University of Sydney Law School.

She showed how the Productivity Commission’s recent report finding there’d been no increase in inequality in recent decades rested on lumping couples’ incomes together, ignoring the difference in contributions by each partner and, in particularly, assuming that “home produced goods and services” - such as childcare, cooking or cleaning - make no contribution to the family’s standard of living, so can be ignored when they have to be bought in because both partners are working.

To be fair, the commission did its analysis the way it’s usually done. But that’s because such analysis is mainly done by men, to whom it never occurs to take account of home production.

Apps used samples of more than 2400 households from the official household expenditure surveys in 2004 and 2016 to divide their income between that contributed by the “primary earner” (mainly male) and the “secondary earner” (mainly female). Primary earners were aged between 20 and 60.

She found that over 12 years, the incomes of primary earners’ in the bottom decile (group of 10 per cent) rose by 53 per cent, increasing to a 78 per cent rise for those in the eighth decile and 124 per cent for the top decile. Look like rising inequality to you?

Then she estimated the income tax those primary earners paid, after adjusting for inflation. Comparing the last year with the first, those in the bottom decile got a real tax saving of $1450 a year, whereas those in the top decile got a saving of $12,340 a year.

So, high income earners benefited most. But get this: after the bottom decile the tax saving fell to a low of $200 for the fifth decile and $370 for the sixth. It then started rising slowly until it leapt for the top decile.

See what’s happened? Very low income earners have done OK, earners at the very top have done brilliantly, and people around the middle have got peanuts. Guess where the (mainly female) secondary earners are likely to be congregated?

Of course, the high income-earners keep telling us their tax rates need to be cut to encourage them to work harder. But Apps has calculated the workers’ “labour supply elasticity”. In effect, she finds it’s very elastic (price-sensitive) for part-timers, but quite inelastic for full-timers, particularly those who’re highly paid.

Looking at primary earners in the top decile, she found that, despite their huge pay rise over the 12 years, and their generous tax cuts, the average number of hours they were working was virtually unchanged.

The various tax changes we’ve had – which aren’t nearly enough to satisfy the tax reformers – have favoured (mainly male) high income-earners, without any sign it’s made them work more.

The people whose decisions about whether to leave the home to do paid work, or to move from part-time to full-time, are those most likely to be affected by the tax they have to pay, but are no better off and probably worse off.

No prize for guessing these are mainly women with children. All this is long known by true tax experts – but just as long ignored. Tax reform is a game for well-off men on the make. Wake me when the women take over.

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