I only know one economist joke. A plane carrying economists plummets towards the ground after its engines fail. In a quiet cabin, an economist pipes up: “in my model the demand for parachutes just peaked, and the market will increase supply”.
This caricature of economists — withdrawn, unemotional and overly trusting in simplistic models — has at least a grain of truth. But reality is, as always, much more interesting. Today I’d like to acknowledge National Volunteer Week by considering what economics has to say about volunteer work and what might change in a more-automated future.
Karl Marx in the 19th Century and John Maynard Keynes in the 20th both wondered what we’d do with our spare time once machines produced all the goods society needed. Marx thought people would pursue artisanal production – less efficient than factory production but more intrinsically satisfying for the worker. Keynes thought we’d all work fewer hours and increase our leisure time. Well, you can’t volunteer without some spare non-work time, but I would argue that volunteering is distinct from both artisan production and leisure.
How do today’s economists think about volunteering? Do they think about it at all? Reflecting another caricature, don’t economists just think about money? Quite frankly, it would be a very boring discipline if that was the case.
My (informal) definition of economics is the study of the decisions people make – individually and collectively – to create, maintain and improve things that they value. Money, or more specifically market transactions, will never be a comprehensive measure of what people care about. But market transactions are useful to economists as they allow us to observe people’s choices and trade-offs. How people choose to spend their time supplies a similarly useful observation of what people care about. And volunteering is one way that people choose to spend their time1.
I can think of four ways in which an economist might think about volunteering.
Model 1: A job with zero wage but positive net rewards
Faced with a decision between two jobs, where job A pays a normal wage and job B pays zero, which one do you choose? It’s a trickier question than it appears. An economist would encourage people to choose the job with the greatest net rewards, accounting for costs as well as benefits. The wage is only part of this calculation. If on-the-job benefits of unpaid work (e.g., training, experience, camaraderie or advancing a cause) or on-the-job costs of paid work (e.g., commuting costs, unpleasant work environment, boredom or poor advancement prospects) are sufficiently large, then job B may come out tops! (Though clearly, job B is not a sustainable choice for those without other sources of income.)
From the host organisation’s perspective, accepting volunteer labour allows it to further its mission. It can achieve things that might not be possible if it paid the going price for all its labour.
Model 2: Volunteering as a substitute for leisure time
Volunteers are not necessarily looking for a job. Many already have one. In their calculations, the time they spend volunteering is leisure time, not work time. The relationship between volunteer and host organisation has expectations on both sides, which we can think of as an implicit (or sometimes explicit) contract.
The volunteer might expect some mix of positive experiences, such as:
- the immediate pleasures of cuddling a kea, breathing fresh Fiordland air or helping someone in need;
- an economically valuable experience – networking, mentoring, job-relevant learning, etc.;
- a “moral” payoff – in the different positives people find in acts of virtuous service; or
- a communal experience – the positives of doing stuff with others who share a concern or mission.
The host organisation in return gets the fruits of the volunteer’s labour. And it will have expectations of its volunteers. They might expect, for example:
- the volunteer projects a positive example of the organisation’s values;
- the volunteer will keep themselves and others safe;
- the volunteer is competent to undertake the tasks assigned; or
- the volunteer turns up when they say they will.
Volunteering, for the volunteer, can be a complement to paid work. For many host organisations, volunteers are a complement to their paid workforce.
Volunteering can have benefits for a volunteer’s regular employer. Some pay staff for days spent volunteering for other organisations. Employers, recognising that there are other things that are important in the employer–employee relationship than just money, might allow time off for volunteering because:
- it demonstrates values the employer believes important;
- staff who backfill for an absent volunteer may also feel that they are contributing to something worthwhile; and
- offering flexibility for volunteering is a way of recognising and keeping a valuable employee.
Model 3: Volunteering as a substitute for paid employment
In this model volunteering directly substitutes for regular work arrangements. The employer gains through lower labour costs, and the volunteer “gives away” their time without proper financial compensation. Moreover, an available supply of volunteers may depress wages or reduce opportunities for regular workers.
In this view, volunteering presents an opportunity for unscrupulous employers to exploit those with weak bargaining power, for example young people wanting experience as interns.
Government regulates internships, trying to ensure that interns are not exploited and do not displace paid workers. This regulation has the effect, intended or otherwise, of diminishing the value of an internship to both the host organisation and the intern.
Others see volunteering as an opportunity for government to avoid paying realistic prices for the services that volunteer-using non-for-profits provide to the community. The Productivity Commission considered this issue in its more effective social services inquiry.
Model 4: Donating time rather than money
People support a bewildering variety of causes. Some organisations are tightly coupled to causes. If you care specifically about kea conservation, you can donate directly to the Kea Conservation Trust. However, not every cause has a corresponding not-for-profit. Your donation to an organisation with a wide mission will help that organisation but may not advance the specific cause that motivates you. Donating time to a specific project can get around this problem.
Some people are richer in time than money, so it makes sense for them to donate their time.
Not-for-profits prefer not to pay people in governance positions, as this can create conflict of interest problems. They need volunteers for such positions. Other reasons to donate time include that the organisation pursuing the cause is for-profit or part of government. In both cases this muddies accountability for monetary donations.
Volunteering and training
Skills gained through volunteering may be valued by everyone: volunteers and the organisations they volunteer for, current and prospective employers, and the politicians handing out QSMs. Yet some government policies seem not to value volunteering.
For example, the Industry Training Act defines training as something for people “employed in an industry”. This effectively excludes most volunteers2 from access to public funding, unless they are “volunteering… under an arrangement… in the nature of employment” – which doesn’t really sound much like volunteering!
The Government’s current review of vocational education and training is likely to lead to legislative changes. So, it is an appropriate time to consider a definition of training that better matches how people learn in a range of “work”, including paid employment work and volunteering in their communities.
My experience of volunteering
I’m fortunate to have the financial resources, good health and family situation to support a wide range of volunteer activities. So, I can share my own experience in this blog.
First, when volunteering I often work alongside paid workers. In my experience this is a comfortable arrangement for both, rather than a source of conflict (e.g., “why are you being paid when I’m not?”). For example, I work alongside and at the direction of police officers in search and rescue. I respect them and the job they do – but can honestly say I would not want to be a police officer.
Second, host organisation expectations of paid staff and volunteers differ. Unlike paid staff, volunteers can choose how much time they put in. Knowing this, organisations are more likely to assign unpleasant or dreary tasks to paid staff. A volunteer is in a better position to experience the positives and avoid the negatives than paid staff.
Third, host organisations are very wary of their health and safety responsibilities to volunteers under the Health and Safety at Work Act 2015. This wariness has a significant chilling effect on volunteering. Some organisations in my experience are outwardly welcoming to volunteers but many of their staff prefer to employ contractors, fearful of personal consequences should a volunteer suffer a health and safety incident.
Overall, my experience of volunteering aligns with model 2. I know retired people for whom model 1 applies, and others on school boards etc. where model 4 applies. I have seen little evidence of model 3. Indeed, I personally find its implicit assumption that volunteering is inherently exploitative diminishes my own sense of agency and fails to respect the many wonderful people – paid and unpaid – that I’ve worked alongside.
How might we think about the future of volunteering?
First, the supply of causes that people care about is unlikely to diminish! And government will never be able to fund every cause at the level that the individuals who care the most would like. An ongoing supply of people willing to volunteer seems assured.
Second, in a future of work scenario with fewer paid jobs, volunteering may (a) be more important as a source of reward in people’s lives; and (b) lead to calls to restrict it, lest it substitute for paid work. This inherent conflict will play out in the political sphere.
Third, in a future of work scenario with plentiful work, concerns about negative impacts of volunteering on paid work should diminish.
Fourth, if skills depreciate more quickly in a world with faster technological change, then re-education and re-training will be more important. Volunteering should be a legitimate part of the education and training system. To encourage on-job learning for students engaged in tertiary and vocational education, government should reduce or avoid rules that make volunteering costly for students and host organisations.
Fifth, digital platforms are revolutionising the matching of volunteers to hosts, just as they have in labour and dating markets. Technology may also make it easier to mobilise volunteers, lessening the need for rostered, on-call paid workers.
Sixth, automation will also affect volunteer jobs. Xero or MYOB, for example, might make a volunteer bookkeeper “redundant”.
Seventh, the sometimes uncomfortable and often inconsistent regulatory boundaries between volunteer and paid work, like those between employees and contractors, will continue to challenge regulators. As discussed above, it does matter where these boundaries are set.
Lastly, volunteering enriches my life and the lives of many others. It benefits both the volunteer and wider society. In our haste to identify and address the labour market consequences of technological change, we should not overlook volunteers.
National volunteer week is June 16-22. It “celebrates the collective contribution of the 1.2 million volunteers who enrich Aotearoa New Zealand”.
Some organisations I volunteer for:
- LandSAR Wellington
- Kea Conservation Trust
- Tararua Mountain Race
- Department of Conservation
- Mainland Island Restoration Operation (MIRO)
- Pomona Island Charitable Trust
- Pure Salt Indian Island/Mamaku project
- Coal Island Trust
- When I refer to “volunteering” in this post I emphasise the “voluntary” root of the word, i.e. “done, given or acting of one’s own free will”. I’m not referring to situations where people end up working for zero or low wages through coercion or fraud. Nor am I referring to household production, or to caring for family or relatives. Though all of these have aspects in common with volunteering, they raise ethical and economic issues that I do not address in this post.
- The Government has targeted funding for some types of volunteer training including emergency services. I have received search and rescue training supported by such funding.
- Thanks to John MacCormick for his help with this post. All errors are mine! And further thanks to the Productivity Commission for supporting my volunteering.