Earlier this month, the Trump Administration moved to allow stay-at-home parents to collect childcare subsidies that had previously been earmarked for working parents. Essentially, instead of working parents receiving a subsidy to pay for external childcare so they can continue working, this change would allow parents to pay themselves to provide their own childcare.
In this blog, I don’t intend to talk about this policy proposal specifically. Instead, I want to look at the underlying economic question: how do we value work that happens outside of the labor market?
How do we value non-market activity
The interesting concept at the core of this policy is the idea that people can and regularly do create social value outside of a traditional labor market setting. This can be challenging because the labor market is one of our best ways to compensate people for creating additional social value.
When people create social value outside of the labor market, it often goes uncompensated. Things like volunteering or caring for children at home increase social welfare even though nobody gets formally paid.
This also creates a measurement problem. If a family pays someone to provide childcare, that service counts toward Gross Domestic Product. If a parent provides that care themselves without payment, it generally does not. The Bureau of Economic Analysis produces separate estimates of household production to help account for this missing activity.
Non-market activity is also one of the components of the Genuine Progress Indicator, an alternative economic measure to Gross Domestic Product. Including unpaid work helps us understand economic activity that market transactions alone do not capture.
Putting a dollar amount on unpaid work
One approach to monetizing nonmarket work is to ask what it would cost to hire someone to perform the same task. Economists call this the replacement cost approach. For childcare, we might use the compensation of a childcare worker to estimate the value of a parent’s time. BEA uses a similar approach, drawing on domestic workers’ wages to value unpaid household work.
According to Independent Sector, the estimated national value of volunteer time was $36.14 per hour in 2025. That provides a useful benchmark for describing unpaid contributions, although it does not mean that every volunteer activity produces exactly $36.14 in benefits each hour.
Another approach is opportunity cost: what someone gives up to spend time on unpaid work. Forgone earnings are one way to estimate this. However, replacement cost and opportunity cost answer different questions. One estimates the cost of hiring a substitute while the other estimates the value of the alternative use of someone’s time. Both are used in household production research.
Imagine two parents providing similar care, one of whom could earn considerably more in the labor market. Their forgone earnings would differ, even if the care they provide is equally valuable. This is why the choice of valuation method matters.
How this might work in practice
There is an interesting parallel here with how we regulate electricity distribution. Distribution networks act as natural monopolies where competition isn’t really feasible. Having several companies build competing sets of wires to the same homes can be more expensive than having one network. That limits the role competition can play in setting prices. Utility regulators work within this constraint.
Under cost-of-service regulation, regulators assess costs and set allowed revenues, including an opportunity to earn a reasonable return on investment. In essence, the regulation attempts to replicate what we might expect the efficient outcomes to be in a competitive market.
While this is not directly applicable to the case of trying to pay non-market labor (particularly stay-at-home parents), it does suggest that it may be possible for the public sector to step in and through regulation approximate what the outcomes of a competitive market might look like.
One reason policymakers should consider pursuing something like this is if they believe that the social value provided by non-market labor is more valuable than the opportunity cost of lost labor market activity. If staying at home and providing high quality childcare is more valuable than one person working some other job, then it may be in the public interest to create a system that compensates that parent for choosing not to work in the traditional labor market.
