Department of Mum and Dad
Analysis by Keith Rankin.
On 12 August, the national-led government announced a new policy program to impose more sanctions on New Zealand’s beneficiaries, meaning people of working age (18-64) whose primary income is a government benefit. (Refer RNZ Government further increases sanctions for beneficiaries, 12 August 2024.)
This policy direction is intended to discourage people from seeking income support from the sovereign state, and therefore income and income support from private sources.
(The official narrative is that a significant number of beneficiaries are ‘workshy’, and are not pulling their weight as wealth-creators for Aotearoa. But the first thing this government did was to reinforce monetary policy in ways to make sure there is enough unemployment in the labour market to ensure that rising wages are not ‘inflationary’. Aotearoa New Zealand is currently in recession; seasonally-adjusted GDP peaked in the third quarter of 2022.)
The principal private source of income support for young adults is the Department of Mum and Dad. (The second most important source of private income support is charity; the third most important source is begging and other forms of recipient-initiated money transfers.)
This is not new. It was the same before the welfare state became a thing; indeed, it extended before 1938 (and increasingly today) to the Department of Aunty and Uncle. The welfare state in New Zealand – essentially 1938 to 1984 – reached its zenith during the Prime Ministership of Robert Muldoon. Pushing people towards Mum and Dad as providers of adult income support is not new in recent times; it was about 1990 that the definition of the age of a child, for the purpose of student allowances, extended to anyone under 25.
People aged 18-29 (and older)
New Zealanders in this age cohort are increasingly likely to be living ‘at home’. In many cases the Department of Mum and Dad has stepped in, giving as much as a 100% subsidy with respect to their adult-children’s living costs. With state accommodation subsidies rapidly diminishing in real terms, this leniency by parental landlords reinforces other incentives for young adults to live in their parents’ homes. And it creates decreasing incentives for adult children – at least middle-class adult children – to even bother with MSD (the Ministry of Social Development which administers a large proportion of benefits in New Zealand).
Is home-dependency a desirable situation: for adult children; for parents of adult children; for the wider socio-economy?
Underclass / Lower Working Class Family Economy, in the context of Modern Class Categories
In Aotearoa New Zealand and other western capitalist countries, traditional labels for socio-economic classes are probably out of date.
This is my preferred categorisations:
- Upper Class: the ‘one-percenters’.
- Upper Middle-Class: the ‘ten-percenter’ ‘bourgeoisie‘; professionals such as managers and lawyers, the ‘political class’, many who would consider themselves politically left-wing and classed in modern statistics as ‘labour’ (albeit high-salary recipients). Their employers, where private sector, might be Upper Class or recipients of government contracts. This class includes small business people with university qualifications supporting practitioner businesses, such as community doctors and dentists. The bulk of ‘the elite’. The Upper Middle Class tend to have a fiscally conservative ‘mercantilist’ mindset, meaning that they see the economic purpose of life as ‘making money’ (or protecting the government’s coin), whether to hoard (miserliness; sovereign wealth) or to accumulate money as a precursor to future spending. They think a lot about ‘nest eggs’, and are smugly ‘financially literate’.
- Lower Middle-Class: successful small and medium businesspeople (‘petit-bourgeoisie‘) and free-lancers; entrepreneurs, ‘tradies’ including builders, successful actors and most professional sports-people, farmers. (The lower middle class, in New Zealand, includes many immigrants.) They are vulnerable to extended recessions. Advantaged lower middle-class people have upper middle class or upper working class partners to soften the cushion of income uncertainty and variability. There are opportunities for upward mobility into upper class.
- Upper Working-Class: skilled salaried people such as technicians, teachers, hospital clinicians, secretaries, librarians; military; have some security of tenure. (The upper working class includes many immigrants.) Some upward mobility to upper middle class, though such mobility has costs as well as benefits; management-type jobs are sometimes what David Graeber called “bullshit jobs”. Vulnerable to extended recessions, though many are less vulnerable than the lower middle class. Consequence of extended unemployment is downward mobility.
- Lower Working-Class: the ‘precariat’, employed most of the time, albeit with uncertain hours and minimal security of tenure; includes stable casual work. They tend to lack formal vocational qualifications. Subject to downward mobility in tough times; may experience upward mobility in good times.
- Underclass: intermittent wage workers, unstable casual work; self-employed without capital (eg sex-workers); long-term working-age non-labour-force (including people in this category for ‘mental health’ reasons); extra-legal entrepreneurs and workers, beggars. Some members of the underclass live ‘at home’ with middle-class parents.
We should also note that those who ‘punch above their weight’ as bearers of children, as creators of the next generation – in 2020s’ Aotearoa – are immigrants and the underclass.
An important feature of both immigrant and underclass life is that the teenage and young adult children contribute to the family economy. (For a good understanding of how the family economy works, look for a good social history of the 1930s’ Great Depression. When I was writing my MA thesis on this topic, I was contacted by an older resident of Holloway Road in Wellington – a lower working class precinct – who told me that that one street had many unemployed single young people who were not seeking help from government agencies because of the terms and conditions which came with such help. Essentially, they were both getting some help from Mum and Dad – for example, free board – while also eking money by undertaking precarious forms of insecure employment and underclass self-employment.)
An important sign of the distressed family economy in contemporary Aotearoa is the significantly increased level of abstinence from secondary school participation. Another part of that family economy is for young individuals to secure a stable fulltime income stream as their contribution to the family economy.
In the idealised form of family economy which prevailed as reality from 1938 to 1984, ‘Dad’ would have a well-paid job that could support a wife and three children. Mum would also be employed once the youngest child was of school age, often returning to a profession such as teaching or nursing.
In the 1985-to-today era, the income of ‘Mum’ became a necessity, not a ‘nice to have’. What then would happen when Mum’s necessary income was lost through unemployment? She never qualified for an MSD benefit; she was expected to get a benefit from the Department of Dad. (Mum and Dad also probably incurred debt, often at high interest rates; for example, payday loans.)
If the Department of Dad could not support a family without a Mum-income, then, when there was no Mum-income, other family members – especially teenagers – would stand up to meet the challenge. This was particularly relevant to lower-working-class families; and increasingly to the increasing numbers of underclass families. Teenagers would leave secondary school as soon as they could; if not sooner.
One way to meet the challenge was to become a beneficiary; maybe a NEET (not in employment, education or training) though there are many near-NEETs who earn around $80 per week in addition to their benefits, or possibly to get a student allowance by pretending to be a tertiary student. For lower-working-class families, the benefits paid to young adult family members had the advantage of not being stood down if another family member became employed. MSD benefits provide a more reliable income contribution than a precarious low-wage job for which hours vary from week to week.
The new welfare policy of the National Government is likely to unravel this lower-class family subsistence economy for which some degree of benefit income is necessary to keep the lights on or the debt-collector from the door. This wider social process of unravelling could turn ugly. And, as we have already seen this month in the United Kingdom, we could start seeing pogroms against immigrants and their families.
Spouses aged 55-64 (mostly women) younger than their partners
I start here by noting that, since ‘marriage equality’, the word ‘partner’ seems to have been used less. Nevertheless, in law and in modern custom, the words ‘spouse’ and ‘partner’ may include people who are not in formal civil unions such as ‘marriage’.
The real ‘squeezed middle’ are married women aged 55-64. Generally, they do not qualify for an unemployment benefit if they are made redundant. Those under 65 with partners over 65 used to have the right to New Zealand Superannuation at a slightly lower level than the full amount. One of the first things the Labour Government did, in 2020, was to repudiate that right. While the spouses of retired people may apply for an unemployment benefit, it’s not automatic. Indeed, retired husbands will get a bigger pension if their income-less wives leave them!
Such women may be providing ‘senior-services’, including palliative services, to their parents. They are often the chief executives of the Department of Mum and Dad, dispensing unemployment benefits and rental subsidies to some of their adult children. They may be significant providers of care to grandchildren. Their older partners may have health issues (older husbands are nearer, on average, to death than the spousal age difference would indicate, because male life expectancies are lower); and on this account the wives may be taking the lead in setting up ‘give-a-little’ pages. These women are also the people who once were the principal principals of the voluntary (ie charity) sector; a sector with reduced capacity yet facing ‘skyrocketing’ demands.
They may have health issues themselves; the numbers of 60-year-old women dying are increasing markedly, in part because such women are in increasing competition for jobs and healthcare resources with each other. (I understand that there is an upsurge in Canada of women in their sixties, along with other demographic groups, who are taking advantage of that country’s liberal ‘assisted dying’ provisions.)
Those who do qualify for a benefit following redundancy may face significant standdowns (eg because of receipt of redundancy pay), or because the labour market is increasingly unkind to older job-seekers. The MSD will be requiring substantial commitments of time towards (often futile) job-seeking, and therefore less time on providing multi-generational family care.
Older married women performing traditional roles have not been well looked after by this government nor its recent predecessors, despite there having been many recent Ministers of the Crown who would be widely accepted as feminists. I am sure that the present Ministers of Finance and Social Development would both consider themselves to be modern feminists.
Conclusion
We need an enabling public income support system; not the present disabling system which increasingly incentivises ‘moral hazard’ behaviours, such as adult children preferring to receive their benefits from the Department of Mum and Dad, and increased financial stress, time poverty, and health burnout being perpetrated upon Mum (and Dad).
Tomorrow I will propose a simple affordable solution which better fits centre-right than centre-left philosophies.
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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.
