Study: Working Women Underestimate the Hidden Costs of Having Children

Study: Working Women Underestimate the Hidden Costs of Having Children

The high monetary costs of having children are well known to working parents and the employers looking to support them. According to US Census data, child care costs skyrocketed by more than 50 percent in inflation-adjusted dollars between 1985 and 2011. These costs have been blamed for holding women back in the workforce by making it challenging for couples to start families without scaling back one of their careers: in the case of heterosexual couples, that usually means the woman’s, as she typically earns less money than her male partner.

Yet a study recently highlighted in the Wall Street Journal suggests that the total costs of motherhood are difficult for many working women to anticipate. “The Mommy Effect: Do Women Anticipate the Employment Effects of Motherhood?” by economists Jessica Pan, Ilyana Kuziemko, Jenny Shen, and Ebonya Washington finds that some women in their childbearing years have “misplaced optimism” about their employment prospects after becoming mothers due to other hard-to-quantify costs associated with having children. As the Journal noted, a recent US government survey found that 64 percent of women with bachelor’s degrees and children under the age of six agreed that “being a parent is harder than I thought it would be”; fewer than 40 percent of similarly situated men agreed.

Beyond the financial costs are the time and emotional “costs” associated with having children that are harder to plan for.

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Why Denmark’s Progressive Policies Aren’t Closing the Gender Gap in Leadership

Why Denmark’s Progressive Policies Aren’t Closing the Gender Gap in Leadership

Like other Scandinavian countries, Denmark has a robust social welfare system that supports gender parity in society and the workplace through benefits like subsidized child care and a generous parental leave entitlement for working mothers and fathers. Yet women still make up a small minority of top-level executives in Denmark’s business community, while Danish women’s earnings still lag well behind those of men performing similar work.

In a recent piece at the Harvard Business Review, Bodil Nordestgaard Ismiris, VP at the Danish Association of Managers and Executives, shed some light on this disconnect and suggested some reasons why Denmark’s progressive institutions have not automatically resulted in gender parity.

One problem is that Danish women suffer a motherhood penalty just like women in other countries: Their earnings drop after the birth of their first child and never recover, whereas fathers’ earnings hold steady. Other scholars have pointed to this paradox in the Scandinavian system, wherein working mothers are offered generous parental leave entitlements, but end up harming their lifetime earning potential by spending lengthy periods of time either out of the workforce or in part-time “mommy track” jobs that pay little and offer no room for advancement.

To help correct this imbalance, Denmark and other Scandinavian countries offer fathers generous parental leave as well. In the case of Denmark, Ismiris explains, new parents get 52 weeks of leave with at least partial pay, which they can divide anyway they like; new mothers are also guaranteed 18 weeks of this at full pay, while fathers are guaranteed two weeks. Despite the law encouraging couples to share parental leave, however, in practice women take the bulk of that leave: 300 days on average, compared to just 30 days among men. That means women are still taking on the majority of household and child care duties—and making greater career sacrifices to do so.

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Why Employers Are Paying More Attention to the US Child Care Crisis

Why Employers Are Paying More Attention to the US Child Care Crisis

The high cost and limited availability of child care is one of the major burdens facing working families today, particularly in the US, but also in the UK and other countries: Parents are spending a sizable chunk of their incomes on child care, making career decisions based on these costs, and sacrificing earnings by pursuing flexible schedules or part-time work in order to make more time to spend with their children.

Unable to afford full-time child care, many mothers (and it’s almost always mothers) are forced to work part-time or drop out of the workforce entirely to take care of their children, especially when they have more than one. Because responsibility for child care still falls predominantly on women, this factor contributes heavily to the gender pay gap.

In the US, a historically tight labor market is driving employers to reckon with this problem, now that they are feeling it more acutely than ever, Jennifer Levitz reports at the Wall Street Journal. Levitz hears from employers around the country that are increasingly concerned about retaining female employees amid a dearth of child care options and have begun to look for ways to expand these options for their employees, including lobbying state governments for legislative solutions. Some coworking spaces have also experimented with child care programs as a benefit for their members.

The gold standard of child care benefits are on-site facilities, such as Patagonia famously offers at its Ventura, California headquarters and its Reno, Nevada distribution center. While these services are expensive to implement, Patagonia maintains that this investment nearly pays for itself between tax incentives, better retention, and lower turnover. From an employee perspective, on-site daycare is the family benefit most preferred by employees all over the globe, according to our research at CEB, now Gartner. This is particularly true in the US, where employees are twice as likely as in other markets to say they would prefer on-site daycare over a 5 percent increase in pay.

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UK Report: Part-Time Work a Major Factor in Motherhood Penalty

UK Report: Part-Time Work a Major Factor in Motherhood Penalty

The latest report on the gender pay gap from the UK’s Institute for Fiscal Studies sheds some new light on precisely how becoming a mother leads women to earn less than men—the so-called “motherhood penalty”—and contributes to the gender pay gap. The BBC highlights the key findings:

The Institute for Fiscal Studies report found by the time a couple’s first child is aged 20, many mothers earn nearly a third less than the fathers. A key factor was women working part-time in motherhood, the report said. …

“The effect of part-time work in shutting down wage progression is especially striking,” the report added. “Whereas, in general, people in paid work see their pay rise year on year as they gain more experience, our new research shows that part-time workers miss out on these gains.” The vast majority of part-time workers were women, especially mothers of young children, the report said.

Other studies, including a previous version of the same IFS report, have identified the motherhood penalty as a major factor (if not indeed the factor) driving the gender pay gap over time. These studies have found that even when women and men start out their careers earning equal salaries, disparities begin to emerge in their late 20s and 30s, coinciding with the years in which women are most likely to have children. Because women are expected to take on the bulk of child care responsibilities, it is mothers who are usually forced to take career breaks or work part-time to make room in their schedules for these obligations, while fathers tend to remain at work.

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Businesses Expand Benefits to Retain Working Mothers

Businesses Expand Benefits to Retain Working Mothers

As more and more companies recognize the need to keep women in the workforce after they become mothers, the most progressive employers have introduced a range of new benefits to cater specifically to the needs of working parents. Quartz’s Jenny Anderson takes a look at the latest report from Working Mother highlighting the 100 US companies with the best benefits for moms and showing the lengths they are going to in order to retain them:

Cutting-edge companies on this front, including Deloitte, IBM, McKinsey, UBS, and Unilever, have delved into the most painful tradeoffs inherent to hard work: kids in need, household management, and family illness. The response includes help for parents whose kids have autism (88% of Working Mother’s top 100 companies offer this type of support), college coaching for teens (63% of the top 100 offer it), letting new moms phase back into work gradually with full pay (70% offer this), and even homework hotlines, which one-quarter of Working Mother’s top 100 offer. …

Working Mother, which has compiled the list for 32 years, picks its best companies based on 400 questions about a range of factors, including leave policies, workforce representation, benefits, childcare, advancement programs, and flexibility policies. … The most competitive companies go deeper, though, focusing on employees’ needs after parental leave, and how to help them stay. More companies are now willing to say, “‘I will pay more, have less in my bottom line, but I will keep employees,’” says [Subha Barry, senior vice president & managing director of Working Mother Media].

Retention is indeed the name of the game here, as the absence of family-friendly policies is a significant driver of attrition among working mothers.

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New Research Pins Gender Pay Gap on Motherhood Penalty

New Research Pins Gender Pay Gap on Motherhood Penalty

Wellesley College economist Sari Kerr is the co-author of two new papers examining the gender pay gap in the US, along with Claudia Goldin of Harvard, Claudia Olivetti of Boston College and Erling Barth of the Institute for Social Research in Oslo. In an interview with Claire Cain Miller at the New York Times, published on Saturday, Kerr discussed what these studies revealed about the prominent role the motherhood penalty appears to play in creating that gap:

The new working paper, which covered the broadest group of people over time, found that between ages 25 and 45, the gender pay gap for college graduates, which starts close to zero, widens by 55 percentage points. For those without college degrees, it widens by 28 percentage points. Much of that happens early in people’s careers, during women’s childbearing years. The American Economic Review paper, which examined people born around 1970, found that almost all of the pay gap for college graduates came from ages 26 to 33. …

Twenty-seven percent of the overall pay gap is from men being more likely to jump to higher-paying firms, the economists found. When married women leave jobs, they are less likely to get a big pay bump as a result. Previous research has found they are more likely to leave without another job lined up; they may move for their husband’s job or take time off with children. But the bulk of the pay gap — 73 percent, they found — is from women not getting raises and promotions at the rate of men within companies.

Kerr and her co-authors are not the first to posit that the motherhood penalty—that is, the loss in earnings and job status women experience as a result of taking on parenting responsibilities—is a key factor, if not the key factor, in the gender pay gap in the long run: A study in the UK last year found the same, while other studies there corroborated Kerr’s findings that women get raises and promotions at slower rates than men do.

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For Home Workers, Getting Interrupted by Kids Is a Fact of Life

Political science professor Robert E. Kelly was clearly flustered last week when his two young children barged into his home office just as he was being interviewed over Skype by the BBC about the political situation in Korea, sending his wife scrambling to get the kids out of the room and rescue his big TV moment. The video of Kelly’s interrupted interview went viral, of course, making him the focus of countless jokes and earning him some mostly good-natured criticism over how he handled the situation. Some suggested a mother would have reacted differently, as in this parody video:

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