Cooks fry bacon at U.S. burger chain Five Guys in London. Simon Dawson/Bloomberg/Getty Images

At least one class of American workers is having a much harder time today than a decade ago, than during the Great Depression and than a century ago: servants. The reason for this, surprisingly enough, is outsourcing. Let me explain. Prosperous American families have adopted the same approach to wages for servants as big successful companies, hiring freelance outside contractors for all sorts of functions — from child care and handyman chores to gardening and cleaning work — to reduce costs. Instead of live-in servants, who were common in prosperous U.S. households before World War II, better-off families now outsource the family cook, maid and nanny. It is part of a problem in developed countries around the globe that is getting more attention worldwide than in the U.S. We are falling backward in America, back to the Gilded Age conditions of a century and more ago when a few fortunate souls grew fabulously rich while a quarter of families had to take in boarders to make ends meet. Only back then, elites gave their servants a better deal. Thorstein Veblen, in his classic 1899 book, “The Theory of the Leisure Class,” observed that “the need of vicarious leisure, or conspicuous consumption of service, is a dominant incentive to the keeping of servants.” Nowadays, servants are just as important to elites, except that they are conspicuous in their competition to avoid paying servants decent wages. In 1930, near the start of the Great Depression, 1 in 45 urban American families had live-in servants, economist George Stigler, who later won the Nobel Prize in economics, reported in his 1946 study of servants. In a prescient line relevant to today’s growing chasm between the richest and the rest of society, Stigler noted that “a society with relatively many families at both ends of the income scale would provide both a large supply of servants and a large demand” for them.

Room and board

That is just what the United States has today — a top 10 percent doing well (the top 1/10th of 1 percent exceptionally so), while the bottom third remains desperate for work. But outsourcing has changed circumstances for the worse for those who would do a servant’s work today. Consider the family cook. Many family cooks now work at family restaurants and fast-food joints. This means that instead of having to meet a weekly payroll, families can hire a cook only as needed. A household cook typically earned $10 a week in 1910, century-old books on the etiquette of hiring servants show. That is $235 per week in today’s money, while the federal minimum wage for 40 hours comes to $290 a week. At first blush, that looks like a real raise of $55 a week, or nearly a 25 percent increase in pay. But in fact, the 2013 minimum-wage cook is much worse off than the 1910 cook. Here’s why: The 1910 cook earned tax-free pay, while 2013 cook pays 7.65 percent of his or her income in Social Security taxes as well as income taxes on more than a third of his pay, assuming full-time work every week of the year. For a single person, that’s about $29 of that $55 raise deducted for taxes. Unless he can walk to work, today’s outsourced family cook must cover commuting costs. A monthly transit pass costs $75 in Los Angeles, $95 in Atlanta and $112 in New York City, so bus fare alone runs $17 to $27 a week, eating up a third to almost half of the seeming increase in pay, making the apparent raise pretty much vanish. The 1910 cook got room and board, while the 2013 cook must provide his or her own living space and food. More than half of fast-food workers are on some form of welfare, labor economists at the University of California at Berkeley and the University of Illinois reported in October after analyzing government economic statistics. Data on domestic workers is scant because Congress excludes them from both regular data gathering by the Bureau of Labor Statistics and laws giving workers rights to rest periods and collective bargaining. Nevertheless, what we do know is troubling. These days, 60 percent of domestic workers spend half their income just on housing, and a fifth run out of food each month. A German study found that in New York City, domestic workers’ pay ranges broadly, from an illegal $1.43 to $40 an hour, with a quarter of workers earning less than the legal minimum wage. The U.S. median pay for domestic servants was estimated at $10 an hour.

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