Women’s Salaries Take a Nosedive After Having Children — What You Should Know
Written by
Jake Safane
Edited by
Cory Dudak
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Having children comes with all sorts of expenses like daycare and diapers. It also tends to cost women money by way of lower salaries, especially in the U.S.
An analysis by The Economist finds that while men’s salaries stay relatively flat before and after becoming a parent for the first time, women’s salaries decline by around 40% and don’t tick up much even 10 years later.
“Because gender bias — whether it be implicit or explicit — still exists in many workplace cultures, women who leave the workforce for a period of time may find it difficult to reenter the workforce at the same pay grade, said Laurie Bodisch, founder and CEO of Her Wealth Coach. “They experience an income drop which in turn leads to a wider gender pay gap.”
Yet this problem isn’t limited to the US. Even in countries with smaller gender pay gaps, this “child penalty” tends to occur. In Norway, for example, women in heterosexual partnerships experienced a 20% salary decline on average after having children, according to research from USC economist Emily Nix and Martin Eckhoff Andresen, a former senior research economist at Statistics Norway.
Paternity leave did not have much of an impact on closing this gap, the researchers found. However, subsidized child care cuts the “child penalty” by 23%.
While this public policy can have important societal effects, and some within the US Congress have recently been floating ideas for more childcare support, families may be looking for solutions that they can take into their own hands. By looking more closely at current employment situations, women may be able to close some of this gap on their own.
“To reduce the likelihood of this happening to you, be proactive. Make sure you are being paid fairly from the start. Negotiate your salary, know your worth, and show your value in the work you do now,” said Bodisch.
The recent shift toward remote and hybrid work could also be leveraged to reduce the risk of lower salaries post-children.
“Covid forced employers to implement systems for remote work, so use that to your advantage. Draft a plan to ease your way back to a full-time schedule and propose it to your boss,” said Bodisch. “But if that doesn’t happen, perhaps you can continue to enhance your skills through an online course or certification to keep you updated on industry trends.”
Lastly, being proactive with your finances could potentially help. Being able to more easily afford child care could mean getting back into the workforce sooner.
“Get estimates of what daycare costs will be, as well as the other everyday expenses associated with a newborn,” said Bodisch. “In addition, be sure to take advantage of flexible spending accounts or employer-sponsored child care benefits. These accounts can provide tax advantages for those expenses.”
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