No More Servants

The other day, Arnold Kling asked a sort of interesting question: why hasn't rising inequality resulted in in the much-predicted oligarchy?  Or to put it as he does: with so many unemployed, and income increasing faster among the affluent, why aren't people hiring more servants?

In an economy where some folks are very rich and many folks are unemployed, why are there not more personal servants? Why don't Sergey Brin and Bill Gates have hundreds of people on personal retainer?

Some possible answers (some of them culled from, or inspired by, his comments section.  I encourage you to read it through.)

1.  Various forms of public assistance, and wealthier families, have increased the reservation wage.  A servant in 1900 worked at least 10 hours a day, at least 5.5 days a week, and according to our archives, cost at least $25 a month for a "passable" one.  Many middle class people could probably afford to pay about $500 a month, plus a room and some food, for someone who would take care of all the housework, all the time.  But how many Americans would work for such a sum?  Our house was built in that era, and either they didn't have live-in servants, or the help was sleeping in a pretty gnarly unfinished basement.  You'd have to be fairly desperate to take the equivalent job today, and almost no one is that desperate.

2.  There's a tax wedge.  If servants were more common, the IRS would be more assiduous about auditing for payroll taxes, etc.  (Already a problem for working women with nannies who end up in public service). My mother actually paid taxes for her cleaning lady, and it was not only expensive, but an administrative nightmare--somehow, the numbers never added up right, the paperwork got lost, etc. Taxes reduce the differential between the value of your labor and someone else's, because you don't have to tax you.

3.  Regulatory overhead  See above.  The modern labor regulatory system is set up to deal with corporations, not individuals contracting for informal labor.  Either the work ends up in the gray economy (illegals), or it's contracted out to companies that can amortize the regulatory overhead over a lot of workers (Merry Maids)

4.  Management  Workers have to be managed.  They leave.  (Hance Saki's memorable epigram: "She was a good cook, as cooks go.  And as cooks go, she went.")  They need to be replaced.  Sometimes the replacement doesn't work out.  All of this takes time.  For the mistress of a house in the era before labor-saving appliances, managing servants was undoubtedly more pleasant than scrubbing the coal scuttles. But it was a job.  And many high-paid women in the sub-Gates class have full-time jobs; they don't have the time to take on full time employees.  A large servant class may have presupposed the existence of a large class of women at home.

5.  Labor saving devices  Servants were often standing in for things that machines now do more cheaply, and without stealing the silver.  

6.  Cultural mores We have a much greater affection for personal space than people did in the era of large families and small heating appliances.  Most people don't want anyone else in their personal space.

7. Liability  These days, you're liable for the actions of your employees in a surprisingly wide variety of circumstances.  Safer not to have employees.

8.  Communications, tools, and transportation increased the efficiency of outsourcing  I don't need a gardener; I need to pay a landscaping company to come by once every few weeks and run their high-octane power mower around the lawn.  In effect, we rent servants by the hour, and some of them are mechanical.