Welcome to FinanceGrabber’s Good Cash podcast, the place we reply your real-world cash questions.
This episode is devoted to exploring the motherhood pay hole and potential options.
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Our take
You might need heard in regards to the gender pay hole — or the distinction in earnings between women and men — however what in regards to the “motherhood penalty”? Based on a recent report from the Pew Research Center, the gender pay hole grows extra pronounced throughout a time when adults are probably beginning and constructing their households: between ages 35 and 44.
However what does that seem like in actual numbers? Calculations from the National Women’s Law Center present that girls who work full time year-round make 84 cents for each greenback males make. Moms make solely 74 cents for each greenback fathers make, amounting to $17,000 much less per 12 months.
On this episode, we discover the monetary hit girls take once they turn out to be moms. We communicate to consultants who assist us perceive not solely what’s driving the gender pay hole but additionally why it’s so troublesome for girls to get better financially after they’ve children. We additionally study extra about coverage modifications on the federal, state and employer ranges — from pay transparency to paid go away — that may assist to shut the gender pay hole for all girls, not simply moms.
To a big extent, merely having extra information can empower girls to ask for extra when accepting a job supply or negotiating a elevate.
Extra about parenthood, pay fairness and finance on FinanceGrabber:
Episode transcript
Sean Pyles: Pleased Mom’s Day, Amanda.
Amanda Barroso: Thanks, Sean. I am sitting right here in my closet the place I report all of the podcasts, and my toddler is true outdoors the door. I am feeling about 20 months pregnant with our second. So evidently, I am feeling very very like a mom proper now.
Sean Pyles: You might be channeling and embodying Mom’s Day proper now.
Amanda Barroso: Sure. Sure.
Sean Pyles: So how are you celebrating your day?
Amanda Barroso: So other than a scrumptious brunch cooked by my husband and a few household time, I am setting apart a while to talk with you in regards to the gender pay hole and the way it widens for girls as soon as they turn out to be mothers.
Jasmine Tucker: So I believe we actually want a multipronged method to this. We’d like stuff to occur on the employer degree. We’d like stuff to occur on the state degree. We’d like stuff to occur on the federal degree.
Sean Pyles: Welcome to the FinanceGrabber Good Cash podcast. I am Sean Pyles. I am right here with FinanceGrabber author Amanda Barroso for a particular Mom’s Day episode in regards to the gender pay hole and the motherhood penalty girls face. Welcome again to Good Cash, Amanda.
Amanda Barroso: Hey, Sean. I am comfortable to be right here with you. The gender pay hole in all probability is not the very first thing that involves thoughts when folks take into consideration Mom’s Day. They’re in all probability fascinated about flowers, brunch, chocolate. However that is one thing that is private to me.
Apart from being a mom, I have been fascinated about and researching this subject for a very long time. So earlier than I got here to FinanceGrabber, I bought my doctorate in girls’s and gender research after which labored in D.C. for about 5 years at nonprofits that researched this subject. So it has been on my thoughts for some time.
Lately, considered one of my former colleagues on the Pew Analysis Heart printed a report in regards to the simply persistent and enduring nature of the gender pay hole, and it seems that parenthood is a part of what’s made this factor stick round for therefore a few years. The factor in regards to the gender pay hole, although, is often girls by no means actually get better from it financially, particularly as soon as they turn out to be mothers. So the subject is on my thoughts, particularly as I put together to have our second little one in just some months.
Sean Pyles: All proper, so on this episode, you are going to assist us perceive what the gender pay hole actually is, why it is worse for moms and possibly even speak about some options to what can really feel like an insurmountable downside.
Amanda Barroso: That’s the purpose, at the very least.
Sean Pyles: OK. Properly, let’s begin with the fundamentals. Are you able to lay out for us what precisely the gender pay hole is?
Amanda Barroso: Positive. So merely put, the gender pay hole is the distinction in earnings between men and women. Yearly, researchers are updating their calculations. One supply of information from the Nationwide Girls’s Regulation Heart exhibits that girls who work full time and year-round sometimes make 84 cents for each greenback that males make. For mothers, this drops to 74 cents for each greenback that fathers make. This quantities to a $17,000 loss in revenue yearly.
Sean Pyles: $17,000. That is huge, Amanda. I imply, simply take into consideration all {that a} mother might do with that amount of cash.
Amanda Barroso: Completely. I imply, it isn’t pocket change for a Goal run, that is for positive. The rationale that I wished to make this podcast, really, is as a result of it was unclear to me what it’s precisely about motherhood that penalizes girls financially, however then on the flip facet, rewards males who turn out to be fathers on the identical time. In analysis, that is one thing known as the fatherhood bonus. So I am simply pondering, what is going on on right here?
Sean Pyles: OK, so simply to be sure that I am following you, there’s the motherhood penalty, after which there’s additionally the fatherhood bonus. These phrases appear fairly self-explanatory, however are you able to give us a fast definition of every in order that we’re all on the identical web page?
Amanda Barroso: So the motherhood penalty is the earnings hit that girls take once they turn out to be moms. Generally it is as a result of they need to step again or cut back from the office to turn out to be major caregivers, and naturally that impacts their total earnings. However for males who turn out to be fathers, the info exhibits that they get a lift of their earnings, really. And this can be as a result of employers usually tend to see fathers as suppliers, supply them extra hours, extra alternatives, and the fathers can then make the most of that as a result of, shock, they’ve somebody at dwelling taking good care of the children and the housekeeping.
Sean Pyles: Received it. I believe there may additionally be psychological and cultural pressures happening as nicely. A whole lot of dads could really feel prefer it’s necessary to step up and work tougher as soon as they’ve a child, or they’re afraid that in the event that they do attempt to take break day and prioritize little one care, that they’re going to be judged harshly and their careers would possibly undergo.
Amanda Barroso: Completely. So to grasp the origins of the parental pay hole, I talked with Jasmine Tucker — she’s the vice chairman for analysis on the Nationwide Girls’s Regulation Heart — and that is who you heard at first of the episode.
Jasmine Tucker: So what we see within the information is that girls face a wage hole proper as they start their careers, nevertheless it’s smaller. So persons are simply graduating faculty, persons are simply graduating highschool and getting into the workforce. Girls are making 90 cents for each man’s greenback.
Amanda Barroso: So the enjoying area is extra equal when younger males and younger girls are first beginning their careers as a result of, you concentrate on it, they’re each beginning at entry-level positions on the decrease finish of the pay vary. However then one thing begins to occur as they enter their 30s. And that is the place you see that motherhood penalty and the fatherhood bonus emerge that we had been speaking about earlier, Sean.
So to grasp this, I talked to Rakesh Kochhar — he is a senior researcher on the Pew Analysis Heart — and he is the one who wrote the report that I discussed earlier. So I wished to study a little bit extra about this window of time and what precisely occurs to moms and dads.
Rakesh Kochhar: Essentially the most vital improve within the pay hole occurs round age 35 to 44. Past that, it just about stays regular, so it does not rebound again to pre-parenthood days, nevertheless it stays widened. Parenthood widens it, and that widening doesn’t go away.
Sean Pyles: OK. So what Rakesh is saying is that not solely is there a gender pay hole, however that this hole widens between moms and dads between the ages of 35 to 44. So beneath one roof, you can have one father or mother reaping the advantages of this hole, whereas the opposite’s pay is struggling.
Amanda Barroso: And that hole by no means closes, at the same time as girls age. Plus, this information is not even factoring in same-sex households. I imply, one other factor that we must also make clear from Rakesh’s work is his analysis exhibits that girls with children at dwelling earn lower than girls with out children at dwelling. And this is the place the fatherhood bonus actually comes into play. Fathers earn greater than different staff usually, together with males with out youngsters.
Sean Pyles: And I do know there is a ton of information on the market across the pay hole, however I wish to zoom out. There are nonetheless lots of people who do not suppose the pay hole is nicely, actual. Or they imagine that girls merely decide fields with decrease wages, issues like being a instructor or a service job, whereas males occur to decide on jobs with increased incomes energy, like one thing in tech or banking or engineering.
Amanda Barroso: There’s clearly much more at play than women and men simply merely selecting completely different jobs. The true which means of occupational segregation takes under consideration how a specific group, so right here we’re speaking about women and men, how they’re overrepresented in a sure job, and that is usually as a result of social forces and pressures or insurance policies that create this division. It is actually extra than simply women and men simply occur to decide on these separate and distinct fields, proper?
Sean Pyles: Yeah. Properly, the opposite factor that critics of the gender pay hole dispute is the position of discrimination. Did the consultants that you just talked with get into that in any respect?
Amanda Barroso: Yeah. On the query of whether or not the pay hole is actual or not, Jasmine was identical to, “Look, this is the info.”
Jasmine Tucker: We see a wage hole in 94% of occupations. We see a wage hole once you have a look at completely different schooling ranges and particularly girls of colour gaining increased schooling, like Black girls and Latinas, they’re nonetheless dropping hundreds of thousands of {dollars} over a profession in comparison with white non-Hispanic males.
Sean Pyles: So Jasmine has the info to again up the wage hole, however what in regards to the occupational segregation and discrimination query? Did she or Rakesh speak about that?
Amanda Barroso: So Rakesh was mainly like, “Look, occupational segregation is a factor. It’s an simple factor that occurs, however so is discrimination.” However that final piece is just a bit tougher to exactly measure.
Rakesh Kochhar: Sure. So each are components. One, as you famous, is less complicated to measure than the opposite. The better one to select up on is what are the kinds of jobs women and men do, or what are their occupations? And there are distinct variations that proceed to linger. For instance, girls, rather more so than males, are represented in schooling or well being care jobs. Males, then again, are extra probably than girls to be in STEM jobs or in managerial occupations and another occupations. And the variations have narrowed over time. However this narrowing additionally halted across the flip of the century.
The opposite facet of the equation you talked about is discrimination. That’s the place an employer could deal with women and men otherwise on the office or in the course of the hiring course of itself. Many experiments have revealed it as a possible issue. So there’s proof of discrimination, however exactly how a lot and the place it occurs, that is tougher to measure.
Sean Pyles: All proper, I am glad we cleared that up. However what I am questioning about now could be the place does this pay hole come from? There are folks behind the selections to pay a mom one quantity and a father a unique quantity. What’s really driving the gender pay hole?
Amanda Barroso: , Sean, I requested Rakesh that actual query. Here is what he stated.
Rakesh Kochhar: In a survey we did accompanying this report, we discover that girls with youngsters at dwelling are more likely than males to really feel a substantial amount of stress to give attention to household wants. So partly a results of these pressures and maybe partly by alternative — it is exhausting to kind out or disentangle these two forces.
What we see is that with the onset of motherhood, when about two-thirds of ladies ages 35 to 44 have youngsters at dwelling, we discover that they have a tendency to retreat from the labor pressure. Labor pressure participation decreases, and on the identical time, girls are likely to work fewer hours on common per week.
So in impact, what this implies is parenthood impacts the quantity of office expertise girls purchase relative to the office expertise that males are capable of purchase. And males are seen to work tougher as a result of they really improve the variety of hours they work on common per week they usually turn out to be extra lively within the labor pressure once they turn out to be fathers. So partly by a withdrawal on the a part of girls and partly by extra engagement on the a part of males, we see the gender pay hole widen round that point. And this improve occurs most noticeably round ages 35 to 44.
Amanda Barroso: So, as Rakesh mentions, there are vital cultural forces concerned right here, however I wished to listen to a little bit extra from Jasmine about how this performs out, particularly round notions of who’s a breadwinner.
Jasmine Tucker: What I believe is at play are a few issues. So first is outdated notions about who’s caring for households, who is devoted to the work, who wants the cash. And so if you concentrate on dads within the office, you are like, “Oh, nicely so-and-so simply had a child. We have to put him up for promotion as a result of he is supporting three folks now as a substitute of two,” no matter.
And I believe that regardless of all of this proof that exhibits that girls are breadwinners of their households, both major or co-breadwinners, there’s this outdated notion that when girls have children, they turn out to be much less devoted to their work. And they also have to go away at 4 p.m. to go decide up children. And in order that implies that they don’t seem to be devoted to their work, neglect that she’s answering emails or no matter she’s doing late at night time after the children are in mattress. Little one care is certainly enjoying a giant position right here. If little one care is unaffordable and it is making up massive shares of ladies’s earnings, they is perhaps extra more likely to go away the labor pressure.
Amanda Barroso: That time about little one care actually hits dwelling, and it is one thing that we have lined collectively on the podcast earlier than, Sean. The opposite factor that she mentions are caregiving tasks, which when you concentrate on it, they solely multiply with every little one that oldsters have, proper?
Sean Pyles: And we all know that girls are likely to tackle extra caregiving tasks than males, too. So girls are being paid much less for a similar job and in addition having to shoulder extra work across the dwelling.
Amanda Barroso: Precisely. So that is what I wished to know. Does the affect of the gender pay hole then intensify with each little one? Here is what they needed to say. Let’s hear from Rakesh first.
Rakesh Kochhar: Up to now, we did have a look at what occurs to work effort relying on the variety of youngsters you’ve at dwelling. And the extra youngsters you’ve, the higher the variety of hours labored by males or fathers. And the shorter the workweek amongst girls. So having extra youngsters positively has extra of an affect on engagement with the workforce on both facet, negatively amongst girls and positively, you would possibly say, amongst males.
Amanda Barroso: So with the delivery of every little one, moms are withdrawing from the office for one purpose or one other, whereas fathers are placing in additional time. However what does this imply for precise earnings? Here is what Jasmine stated.
Jasmine Tucker: There are some research that present there’s like a 7% drop in earnings, like per child, that you’ve got for girls. However we see the alternative relating to males. After they have children, their earnings are likely to go up. And so I believe over time this creates this divide that widens, proper, it simply continues to widen and worsen over time.
Amanda Barroso: So is it only a basic subject with the imbalance of division of labor? So girls are those who’re assumed to be doing the caregiving. So that they’re those leaving work early, after which it snowballs from there.
Jasmine Tucker: All of it reinforces one another. We noticed this within the pandemic. We noticed extra girls go away the labor pressure than we noticed males, and we noticed girls out for longer durations of time. So we all know that early days, in 2020 and 2021, we noticed plenty of girls stay out of the labor pressure as a result of they had been offering unpaid care for his or her youngsters. And so if anyone must take day trip of the labor pressure, who’s it going to be?
Amanda Barroso: Jasmine has a superb level right here. The pandemic actually upended the working lives of many moms throughout the U.S. as a result of when you concentrate on it, Sean, a lot of that infrastructure that they relied on to be staff, was simply not out there. So issues like little one care, in-person education, after-school actions or weekend actions, issues like that that made their working lives doable had been simply unavailable.
Sean Pyles: Properly, what’s fascinating is that in current months, girls have returned to work. In February 2023, the variety of girls within the workforce was increased than earlier than the pandemic, however that was after a steep, sudden drop-off early within the pandemic after which a gradual climb again up over the previous three or so years. Do you suppose that that point away from work would have an effect on their incomes potential?
Amanda Barroso: Precisely. However the factor is, as soon as girls go away the labor pressure, it is actually exhausting for economists to grasp what it means for his or her future earnings, even when they return to work once more at a future time. And that is one thing that Rakesh talks about in his report.
Rakesh Kochhar: Now in our information, we solely observe the earnings of people who find themselves working, who’re employed. And if we have a look at simply employed women and men, we’re not anymore taking a look at girls who’ve withdrawn from the labor pressure. Some may have withdrawn completely, some may have withdrawn just for two, three months or 4 months, and a few could also be for 2, three, 4 years till a baby goes to kindergarten or elementary faculty. So there’s going to be a various diploma of losses felt by girls.
And what we don’t observe is that this loss in potential earnings: What might need been the earnings of a lady who took, say, 5 years off from work? We additionally have no idea what might need been the earnings of ladies who’ve completely withdrawn as a result of they determined for no matter purpose to be at dwelling to take care of children till they’re off to school, possibly, or by no means returned to the labor pressure. So there’s some loss within the potential earnings of ladies, their lifetime earnings, that we’re not capable of observe.
Amanda Barroso: Rakesh factors to a blind spot in gathering pay hole information on girls, particularly as they turn out to be moms and exit the workforce for a time. And as Jasmine talked about, the pandemic has been particularly exhausting on moms’ employment.
Jasmine Tucker: So I believe early within the pandemic, there was a number of fear about mothers and ladies simply typically leaving the labor pressure and what that will imply for his or her careers. We noticed 20 million plus jobs simply utterly gone in two months time, from February to April 2020. And I believe initially within the early days of the pandemic, there was, I believe, a extremely scary second of what is going on to occur to the wage hole? How is that this going to affect it? How is that this going to set girls again?
And so I believe the info from the Census Bureau over the past couple of years, it has been exhausting to check it to earlier years. As a result of the labor market seems utterly completely different than it did in 2019, which we must take into account pre-pandemic.
So what we have now seen since 2020 is a few closure within the wage hole. And a part of that’s as a result of we noticed a number of the roles that had been misplaced had been low-paid jobs. So who was left proper within the pool of individuals working full time and year-round had been higher-paid staff. So we misplaced all of those girls in low-paid jobs. And in order that appeared to shrink the hole.
Sean Pyles: It looks as if each the gender pay hole downside and the motherhood penalty that exacerbate it are actually advanced.
Amanda Barroso: I imply, there’s not a one-size-fits-all answer. I believe Rakesh put it actually properly.
Rakesh Kochhar: So it is that drilling right down to particular person selections and cultural pressures and household pressures and office points. It’s extremely heterogeneous; it’s totally numerous. It’s extremely troublesome to maybe get rid of with a sweeping coverage.
Sean Pyles: All proper, nicely, that does appear a tall order, however I additionally see a glimmer of hope in Rakesh’s reply. There are a variety of various areas we are able to mine for options on a person degree, household degree, culturally and within the workforce.
Amanda Barroso: I do know it appears bleak, and in a number of methods, these points are a lot greater than a person mom can resolve on her personal. Belief me, I really feel the load of this. I am a mother, I’m anticipating one other one, and I clearly care about my earnings. However you are proper; there are some issues and a few ways in which we are able to transfer ahead and proceed to make progress in closing the hole from others. So I dug into this a little bit bit with Jasmine.
Jasmine Tucker: So I believe we actually want a multipronged method to this. We’d like stuff to occur on the employer degree. We’d like stuff to occur on the state degree. We’d like stuff to occur on the federal degree. So we might do issues like cross equal pay payments, just like the Paycheck Equity Act on the federal degree. There may be proper now a number of momentum in state legislatures this 12 months round pay, wage transparency payments, which is nice as a result of it primarily says when you’re posting a job, you must present a spread within the salaries. The information exhibits that girls underestimate the wage and males ask for the moon, which contributes to this.
Amanda Barroso: So what are some issues that employers could be doing? It does seem to be among the points listed below are revolving round how managers or HR or folks in management are fascinated about motherhood and fatherhood.
Jasmine Tucker: I believe that there is a lot that employers could be doing. They are often doing inside audits of how a lot are they paying folks by race and by gender, and what does that seem like? And doing a little course-correction there. I believe that they could possibly be hiring extra girls and particularly girls of colour in C-suite positions and in different management roles, as a result of if in case you have a office that solely is made up of males and particularly white males, I do not see how these workplaces are going to be family-friendly or really meet the wants of mothers in that office.
Amanda Barroso: Your earlier level about employers inspecting their very own pay practices appears actually necessary. And I do not wish to overlook your level about race, both. I imply, the calculations that you have performed present that Black, Latina and Native girls are making even lower than that total 84 cents per greenback determine that we talked about earlier. Based on your information, Black girls make 67 cents for each greenback, and Latina and Native girls make 57 cents. And once more, that is in contrast with white non-Hispanic males. And that is simply the general quantity, not the quantity for mothers of colour. So which means their complete annual losses are a lot increased.
Jasmine Tucker: Yeah. It is life-changing cash. It could possibly be a down cost for a home; it could possibly be an funding in your schooling with the intention to transfer out of your low-paid area to a higher-paid area. It could possibly be financial savings towards a child’s schooling fund. There, I believe, are so many wealth-building alternatives that girls and mothers are lacking out on as a result of they’re being paid much less.
Amanda Barroso: What different insurance policies could be carried out or modified to assist shut the gender pay hole for mothers?
Jasmine Tucker: The unionized office is sweet for girls. We see wages go up; we see wage gaps lower.
Amanda Barroso: Workplaces adopting family-friendly insurance policies alone will not repair the pay hole, although. Rakesh even factors to different European international locations the place these insurance policies are a part of staff’ on a regular basis lives already and located one thing fascinating.
Rakesh Kochhar: Once we have a look at Scandinavian international locations, akin to Denmark, the place family-friendly insurance policies are commonplace, you continue to see that parenthood drives a rise within the wage hole as a result of women and men react otherwise to parenthood.
Amanda Barroso: This response to parenthood Rakesh talks about might level to a bunch of issues. I believe a few of it is probably a response to cultural and social pressures that fathers face, fascinated about placing in additional hours within the workplace, what that may imply, it would imply seeing your little one much less, added stress. There’s this monetary piece of the fatherhood bonus that looks as if a optimistic one, however nonetheless there are prices.
Sean Pyles: So we have talked about potential options on the state and federal ranges, however there need to be issues that oldsters can push for in their very own workplaces.
Amanda Barroso: I believe you are precisely proper, Sean. Look, OK, let us take a look at FinanceGrabber, for instance. The corporate does supply a extremely beneficiant paid go away coverage, round 5 months go away at 100% pay, which not solely implies that dad and mom can bond and care for his or her new child, however additionally they do not need to dig into financial savings to cowl time away from work. I imply financially, that is big, proper? However along with that, all new job adverts that FinanceGrabber places out present a wage vary, which implies that potential candidates have a leg up. So once they get requested that dreaded query that we have all been requested in a job interview, “What’s your required wage?”, they’ve some data to work with, proper? They don’t seem to be pulling a quantity out of the air.
In order of March 9, really eight states have made wage transparency a requirement on job adverts, and 15 states are contemplating related laws, and that is in keeping with the Heart for American Progress. So I believe that that is a step in the fitting path.
FinanceGrabber additionally not too long ago began offering staff with the wage bands for his or her job title based mostly on their title and site. So I can log in and see the place I fall in that pay band, and when it comes time for evaluate or negotiations, I simply have a little bit extra leverage. I’ve extra data and information that I can work with. I believe these final two issues are big, particularly for girls. So research have proven girls are likely to undervalue themselves. They ask for much less in negotiations or once they’re beginning a brand new job. And on this case, I believe for girls, information is energy.
Sean Pyles: And it simply goes to indicate how large an affect one firm’s insurance policies can have on the best way you possibly can construction your life, your loved ones, your means to earn cash. And it will get again to the truth that it is a little bit unlucky for a lot of staff that they do not have these advantages the place they work. And we should always state that Amanda was not advised by FinanceGrabber to say any of that. It is only a legit perk that is made a huge impact on her means to steadiness motherhood and having a profession. Is that proper?
Amanda Barroso: That is completely proper. However the factor is, there are templates for this. There are corporations who’re using a few of these insurance policies and measures, and we are able to study from these issues. I believe a giant factor is simply speaking about cash, speaking about these insurance policies. You hear that your buddy or your neighbor that they work at a spot like FinanceGrabber, nice. Let’s work out how they’re doing it so I can carry that again to my employer and see what I could make occur for myself and my colleagues.
Sean Pyles: Precisely. Properly, Amanda, thanks a lot for approaching the Good Cash podcast to assist us discover this actually necessary subject. I admire it.
Amanda Barroso: I at all times love being right here and speaking about this stuff with you, Sean, and I’m very a lot wanting ahead to having fun with that five-month paid go away and catching you on the flip facet of that.
Sean Pyles: All proper. Properly, I am anticipating many child photos when you’re out.
Amanda Barroso: Completely.
Sean Pyles: And that is all we have now for this episode. Do you’ve a cash query of your personal? Flip to the Nerds and name or textual content us your questions at 901-730-6373. That is 901-730-NERD. You can too e-mail us at [email protected] Additionally go to nerdwallet.com/podcast for more information on this episode. And keep in mind to comply with, price and evaluate us wherever you are getting this podcast.
Amanda Barroso: This episode was produced by Sean Pyles and myself. Liz Weston helped with enhancing. Sheri Gordon helped with fact-checking, Kaely Montanan blended our audio, and a giant thank-you to the oldsters on the FinanceGrabber copy desk as at all times for his or her assist.
Sean Pyles: Here is our transient disclaimer. We’re not monetary or funding advisors. This nerdy information is supplied for basic instructional and leisure functions and should not apply to your particular circumstances.
Amanda Barroso: And with that stated, till subsequent time, flip to the Nerds.