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Welcome to NerdWallet’s Sensible 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 concerning the gender pay hole — or the distinction in earnings between women and men — however what concerning the “motherhood penalty”? Based on a latest report from the Pew Analysis Heart, 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 Nationwide Girls’s Legislation Heart 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 yr.
On this episode, we discover the monetary hit girls take once they grow to be moms. We converse to consultants who assist us perceive not solely what’s driving the gender pay hole but in addition why it’s so tough for girls to get better financially after they’ve youngsters. We additionally be taught extra about coverage modifications on the federal, state and employer ranges — from pay transparency to paid depart — that may assist to shut the gender pay hole for all girls, not simply moms.
To a big extent, merely having extra data can empower girls to ask for extra when accepting a job provide or negotiating a elevate.
Extra about parenthood, pay fairness and finance on NerdWallet:
Episode transcript
Sean Pyles: Completely happy Mom’s Day, Amanda.
Amanda Barroso: Thanks, Sean. I am sitting right here in my closet the place I file all of the podcasts, and my toddler is true outdoors the door. I am feeling about 20 months pregnant with our second. So for sure, I am feeling very very similar to 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 apart from a scrumptious brunch cooked by my husband and a few household time, I am setting apart a while to talk with you concerning the gender pay hole and the way it widens for girls as soon as they grow 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 stage. We’d like stuff to occur on the state stage. We’d like stuff to occur on the federal stage.
Sean Pyles: Welcome to the NerdWallet Sensible Cash podcast. I am Sean Pyles. I am right here with NerdWallet author Amanda Barroso for a particular Mom’s Day episode concerning the gender pay hole and the motherhood penalty girls face. Welcome again to Sensible Cash, Amanda.
Amanda Barroso: Hey, Sean. I am joyful to be right here with you. The gender pay hole in all probability is not the very first thing that involves thoughts when individuals take into consideration Mom’s Day. They’re in all probability enthusiastic about flowers, brunch, chocolate. However that is one thing that is private to me.
Other than being a mom, I have been enthusiastic about and researching this matter for a very long time. So earlier than I got here to NerdWallet, I obtained my doctorate in girls’s and gender research after which labored in D.C. for about 5 years at nonprofits that researched this challenge. So it has been on my thoughts for some time.
Not too long ago, considered one of my former colleagues on the Pew Analysis Heart revealed a report concerning 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 concerning the gender pay hole, although, is usually girls by no means actually get better from it financially, particularly as soon as they grow 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 perhaps even speak about some options to what can really feel like an insurmountable downside.
Amanda Barroso: That’s the objective, at the least.
Sean Pyles: OK. Nicely, let’s begin with the fundamentals. Are you able to lay out for us what precisely the gender pay hole is?
Amanda Barroso: Certain. So merely put, the gender pay hole is the distinction in earnings between ladies and men. Yearly, researchers are updating their calculations. One supply of knowledge from the Nationwide Girls’s Legislation 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 earnings yearly.
Sean Pyles: $17,000. That is huge, Amanda. I imply, simply take into consideration all {that a} mother may 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 explanation that I needed 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 grow to be fathers on the similar 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 make it possible for 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 grow to be moms. Generally it is as a result of they need to step again or reduce from the office to grow to be main caregivers, and naturally that impacts their general earnings. However for males who grow to be fathers, the information 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, provide them extra hours, extra alternatives, and the fathers can then benefit from that as a result of, shock, they’ve somebody at dwelling taking good care of the youngsters and the house responsibilities.
Sean Pyles: Bought it. I believe there can also be psychological and cultural pressures occurring as properly. Lots 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 day without work and prioritize little one care, that they will be judged harshly and their careers may 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 Legislation Heart — and that is who you heard firstly 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 individuals are simply graduating school, individuals 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 consider 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 have 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 needed to be taught just a little extra about this window of time and what precisely occurs to moms and dads.
Rakesh Kochhar: Essentially the most vital enhance within the pay hole occurs round age 35 to 44. Past that, it just about stays regular, so it would 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 could possibly have one dad or mum reaping the advantages of this hole, whereas the opposite’s pay is struggling.
Amanda Barroso: And that hole by no means closes, whilst girls age. Plus, this information is not even factoring in same-sex households. I imply, one other factor that we also needs to make clear from Rakesh’s work is his analysis exhibits that girls with youngsters at dwelling earn lower than girls with out youngsters at dwelling. And here is the place the fatherhood bonus actually comes into play. Fathers earn greater than different employees typically, together with males with out kids.
Sean Pyles: And I do know there is a ton of knowledge on the market across the pay hole, however I need to zoom out. There are nonetheless lots of people who do not assume the pay hole is properly, actual. Or they imagine that girls merely choose fields with decrease wages, issues like being a trainer 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 totally different jobs. The true which means of occupational segregation takes into consideration how a selected group, so right here we’re speaking about women and men, how they’re overrepresented in a sure job, and that is usually resulting from social forces and pressures or insurance policies that create this division. It is definitely extra than simply women and men simply occur to decide on these separate and distinct fields, proper?
Sean Pyles: Yeah. Nicely, the opposite factor that critics of the gender pay hole dispute is the position of discrimination. Did the consultants that you simply 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, here is the information.”
Jasmine Tucker: We see a wage hole in 94% of occupations. We see a wage hole while you have a look at totally different training ranges and particularly girls of shade gaining increased training, like Black girls and Latinas, they’re nonetheless dropping tens of millions of {dollars} over a profession in comparison with white non-Hispanic males.
Sean Pyles: So Jasmine has the information to again up the wage hole, however what concerning the occupational segregation and discrimination query? Did she or Rakesh speak about that?
Amanda Barroso: So Rakesh was principally like, “Look, occupational segregation is a factor. It’s an plain 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 simpler to measure than the opposite. The simpler one to choose up on is what are the sorts of jobs women and men do, or what are their occupations? And there are distinct variations that proceed to linger. For instance, girls, way more so than males, are represented in training 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 in a different way on the office or throughout the hiring course of itself. Many experiments have revealed it as a probable issue. So there may be 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’s the place does this pay hole come from? There are individuals 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 precise query. Here is what he mentioned.
Rakesh Kochhar: In a survey we did accompanying this report, we discover that girls with kids at dwelling are more likely than males to really feel a substantial amount of stress to concentrate on household wants. So partly a results of these pressures and maybe partly by selection — it is arduous to type out or disentangle these two forces.
What we see is that with the onset of motherhood, when about two-thirds of girls ages 35 to 44 have kids at dwelling, we discover that they have an inclination to retreat from the labor power. Labor power participation decreases, and on the similar 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 enhance the variety of hours they work on common per week they usually grow to be extra energetic within the labor power once they grow 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 enhance occurs most noticeably round ages 35 to 44.
Amanda Barroso: So, as Rakesh mentions, there are vital cultural forces concerned right here, however I needed to listen to just a little 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 consider dads within the office, you are like, “Oh, properly so-and-so simply had a child. We have to put him up for promotion as a result of he is supporting three individuals now as an alternative of two,” no matter.
And I believe that regardless of all of this proof that exhibits that girls are breadwinners of their households, both main or co-breadwinners, there may be this outdated notion that when girls have youngsters, they grow to be much less devoted to their work. And they also have to depart at 4 p.m. to go choose up youngsters. And in order that signifies that they are not devoted to their work, overlook that she’s answering emails or no matter she’s doing late at evening after the youngsters are in mattress. Youngster care is unquestionably enjoying an enormous position right here. If little one care is unaffordable and it is making up massive shares of girls’s earnings, they is perhaps extra prone to depart the labor power.
Amanda Barroso: That time about little one care actually hits dwelling, and it is one thing that we have coated collectively on the podcast earlier than, Sean. The opposite factor that she mentions are caregiving obligations, which when you consider it, they solely multiply with every little one that folks have, proper?
Sean Pyles: And we all know that girls are likely to tackle extra caregiving obligations than males, too. So girls are being paid much less for a similar job and likewise having to shoulder extra work across the dwelling.
Amanda Barroso: Precisely. So that is what I needed to know. Does the impression 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: Prior to now, we did have a look at what occurs to work effort relying on the variety of kids you may have at dwelling. And the extra kids you may have, the higher the variety of hours labored by males or fathers. And the shorter the workweek amongst girls. So having extra kids undoubtedly has extra of an impression on engagement with the workforce on both facet, negatively amongst girls and positively, you may say, amongst males.
Amanda Barroso: So with the start 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 mentioned.
Jasmine Tucker: There are some research that present there’s like a 7% drop in earnings, like per child, that you’ve for girls. However we see the alternative on the subject of males. After they have youngsters, 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 common challenge 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 depart the labor power 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 power as a result of they have been offering unpaid care for his or her kids. And so if any person must take outing of the labor power, who’s it going to be?
Amanda Barroso: Jasmine has a great level right here. The pandemic actually upended the working lives of many moms throughout the U.S. as a result of when you consider it, Sean, a lot of that infrastructure that they relied on to be employees, was simply not accessible. So issues like little one care, in-person education, after-school actions or weekend actions, issues like that that made their working lives attainable have been simply unavailable.
Sean Pyles: Nicely, what’s attention-grabbing is that in latest 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 sluggish climb again up over the previous three or so years. Do you assume 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 depart the labor power, it is actually arduous 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 girls who’ve withdrawn from the labor power. Some can have withdrawn completely, some can have withdrawn just for two, three months or 4 months, and a few could also be for 2, three, 4 years till a toddler 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 girls who’ve completely withdrawn as a result of they determined for no matter purpose to be at dwelling to take care of youngsters till they’re off to varsity, perhaps, or by no means returned to the labor power. So there may be some loss within the potential earnings of girls, their lifetime earnings, that we’re not capable of observe.
Amanda Barroso: Rakesh factors to a blind spot in amassing pay hole information on girls, particularly as they grow to be moms and exit the workforce for a time. And as Jasmine talked about, the pandemic has been particularly arduous on moms’ employment.
Jasmine Tucker: So I believe early within the pandemic, there was plenty of fear about mothers and ladies simply typically leaving the labor power and what that might imply for his or her careers. We noticed 20 million plus jobs simply fully 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 impression it? How is that this going to set girls again?
And so I believe the information from the Census Bureau during the last couple of years, it has been arduous to match it to earlier years. As a result of the labor market appears to be like fully totally different than it did in 2019, which we must think about 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 plenty of the roles that have been misplaced have been low-paid jobs. So who was left proper within the pool of individuals working full time and year-round have been higher-paid employees. So we misplaced all of those girls in low-paid jobs. And in order that appeared to shrink the hole.
Sean Pyles: It looks like each the gender pay hole downside and the motherhood penalty that exacerbate it are actually complicated.
Amanda Barroso: I imply, there’s not a one-size-fits-all resolution. I believe Rakesh put it actually properly.
Rakesh Kochhar: So it is that drilling right down to particular person decisions and cultural pressures and household pressures and office points. It’s extremely heterogeneous; it’s totally various. It’s extremely tough to maybe remove with a sweeping coverage.
Sean Pyles: All proper, properly, 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 stage, household stage, culturally and within the workforce.
Amanda Barroso: I do know it appears bleak, and in plenty of methods, these points are a lot larger than a person mom can remedy on her personal. Belief me, I really feel the burden 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 just a little 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 stage. We’d like stuff to occur on the state stage. We’d like stuff to occur on the federal stage. So we may do issues like move equal pay payments, just like the Paycheck Equity Act on the federal stage. There may be proper now plenty of momentum in state legislatures this yr round pay, wage transparency payments, which is nice as a result of it basically says should you’re posting a job, it’s important to 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 look like among the points listed below are revolving round how managers or HR or individuals in management are enthusiastic about motherhood and fatherhood.
Jasmine Tucker: I believe that there is a lot that employers could be doing. They are often doing inner audits of how a lot are they paying individuals by race and by gender, and what does that seem like? And doing a little course-correction there. I believe that they might be hiring extra girls and specifically girls of shade in C-suite positions and in different management roles, as a result of when you have a office that solely is made up of males and specifically 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 analyzing their very own pay practices appears actually necessary. And I do not need to overlook your level about race, both. I imply, the calculations that you’ve got finished present that Black, Latina and Native girls are making even lower than that general 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 shade. So meaning their complete annual losses are a lot increased.
Jasmine Tucker: Yeah. It is life-changing cash. It might be a down fee for a home; it might be an funding in your training so as to transfer out of your low-paid area to a higher-paid area. It might be financial savings towards a child’s training 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 applied or modified to assist shut the gender pay hole for mothers?
Jasmine Tucker: The unionized office is nice 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 employees’ on a regular basis lives already and located one thing attention-grabbing.
Rakesh Kochhar: After we have a look at Scandinavian international locations, corresponding 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 in a different way to parenthood.
Amanda Barroso: This response to parenthood Rakesh talks about may level to a bunch of issues. I believe a few of it is probably a response to cultural and social pressures that fathers face, enthusiastic about placing in additional hours within the workplace, what which may imply, it would imply seeing your little one much less, added stress. There’s this monetary piece of the fatherhood bonus that looks like 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 folks can push for in their very own workplaces.
Amanda Barroso: I believe you are precisely proper, Sean. Look, OK, let’s take a look at NerdWallet, for instance. The corporate does provide a extremely beneficiant paid depart coverage, round 5 months depart at 100% pay, which not solely signifies that mother and father 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 large, proper? However along with that, all new job advertisements that NerdWallet places out present a wage vary, which signifies 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 advertisements, and 15 states are contemplating related laws, and that is in response to the Heart for American Progress. So I believe that that is a step in the suitable path.
NerdWallet additionally not too long ago began offering workers with the wage bands for his or her job title primarily based 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 overview or negotiations, I simply have just a little extra leverage. I’ve extra data and data that I can work with. I believe these final two issues are large, 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, data is energy.
Sean Pyles: And it simply goes to point out how large an impression one firm’s insurance policies can have on the way in which you’ll be able to construction your life, your loved ones, your capacity to earn cash. And it will get again to the truth that it is just a little unlucky for a lot of employees that they do not have these advantages the place they work. And we must always state that Amanda was not advised by NerdWallet to say any of that. It is only a legit perk that is made a big effect on her capacity to stability 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 be taught from these issues. I believe an enormous 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 NerdWallet, 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. Nicely, Amanda, thanks a lot for approaching the Sensible Cash podcast to assist us discover this actually necessary matter. I recognize it.
Amanda Barroso: I at all times love being right here and speaking about these items with you, Sean, and I’m very a lot trying ahead to having fun with that five-month paid depart and catching you on the flip facet of that.
Sean Pyles: All proper. Nicely, I am anticipating many child photos whilst you’re out.
Amanda Barroso: Completely.
Sean Pyles: And that is all we have now for this episode. Do you may have a cash query of your individual? Flip to the Nerds and name or textual content us your questions at 901-730-6373. That is 901-730-NERD. You can even e mail us at [email protected] Additionally go to nerdwallet.com/podcast for more information on this episode. And keep in mind to observe, price and overview us wherever you are getting this podcast.
Amanda Barroso: This episode was produced by Sean Pyles and myself. Liz Weston helped with modifying. Sheri Gordon helped with fact-checking, Kaely Montanan blended our audio, and an enormous thank-you to the parents on the NerdWallet 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 data is supplied for common academic and leisure functions and will not apply to your particular circumstances.
Amanda Barroso: And with that mentioned, till subsequent time, flip to the Nerds.
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