Nothing changes the equation of a family’s economics like the arrival of a child.
There’s no tidy formula to sort the competing realities of childcare costs, career aspirations, and family responsibilities into a comfortable work-life arrangement. It’s messy math, involving hard financials and intangible values. Can you afford to lose income? Can you afford childcare? How much does each parent value their career, and what premium does each partner place on a parent being the child’s primary caregiver?
We’ve yet to find a one-size-fits-all solution, but parents, economists, and experts in work-life balance suggest some guiding principles to help families find arrangements that can accommodate their values and their financial realities.
In the absence of a better system, many dual-career, dual-parent families default to a profit-and-loss model. If the cost of childcare approaches or exceeds the current income of the parent with the smaller salary, either expenses get cut somewhere else or the lower-earning parent swaps out wage-earning for caregiving.
For families who want a parent as the primary caregiver for at least some time, a career time-out may make sense. But if the decision is based purely on economics, it’s worth taking a moment to consider the long view.
In order to demonstrate the financial impact of leaving the workforce to become a caregiver, the Center for American Progress put together an excellent calculator that helps US parents figure out just how much they actually lose by staying at home. The calculations are based on the research of economist Christy Spivey at the University of Texas at Arlington, who used historical survey data to measure the effect of career interruptions. The data is based on US trends, but can offer helpful perspective on the long-term costs of leaving the workforce for parents in other countries as well.
The calculator spits out three numbers: Lost wages, lost wage growth (raises), and lost retirement assets and benefits. Quartz simulated the results for 20 different men and women with incomes between $20,000 and $100,000 and ages 20 to 35. The calculator projects that for both men and women taking five years off work, wages make up less than half of lost earnings. Missed raises and benefits total an even greater amount, particularly for younger workers and men—the groups most likely to get raises.
For example, while lost raises make up about 25% of the loss for a 35-year-old woman earning $40,000 who leaves the market for five years, lost raises account for more than 40% of the losses for a 25-year-old man leaving the workforce for the same amount of time.
From a long-term perspective, it absolutely makes sense to do what it takes to stay in the workforce, even during the years when childcare costs approach or exceed a salary. It’s an investment in long-term earnings and career advancement. But—and this is a big but—like any investment, it’s much harder to make without available capital. In the absence of resources for childcare, there are times when continuing to work after the birth of a child can feel like a privilege unavailable to those without means. It’s one of the great ironies of the work-life balancing act, considering that the choice to stay home is also often considered a privilege for the well-off, and a sign of how complicated each family’s equation is.
We have to think bigger as a society to keep families from being stuck in this trap—more on that in a bit.
Think as a team
Why do men stand to earn more from raises? Because society has long treated caregiving as a woman’s job by default, and compensation for female workers reflects that. A pair of recent papers on the gender wage gap finds that the women earning less than men are almost all mothers.
Interestingly, the motherhood penalty was especially high for college-educated women. Women without college educations catch up to their male educational peers by the time they’re in their mid-40s. Those with college educations never do, suggesting that women with more “choices” are choosing paths that disadvantage them economically.
Some of the discrepancy comes from men selecting higher-paying fields, but most comes from the fact that once in a field, women don’t move up the salary ladder as quickly as men do. Women leave work for family reasons and make lateral moves pay-wise more often than men. Employers in turn pay women less, under the expectation that they will leave the workforce or scale back once they have children—which only makes it more likely that in a heterosexual partnership it will be the female partner who opts out or scales back from work to provide child care.
It’s up to families who want an equitable division of responsibilities and career opportunities to break this cycle.
Raising a child is a family enterprise. Childcare costs should be compared against total family income—not just the mother’s. If the goal is a family that shares responsibilities at home equally, both parents need to take leave so that family duties don’t calcify along gender lines.
“Even if he earns much more, he should take some leave and you should take some leave, because it’s not just economics and it’s not just short term,” said Ariane Hegewisch, program director of employment and earnings at the Institute for Women’s Policy and Research. “If you take all the leave and he takes none, then the gap in earnings widens enormously and the division of labor becomes more petrified, so that you as a woman do all the work at home and he has an advantage in the labor market. “
Think beyond your own family
Every family has to navigate the process of figuring out how to make work and family life fit together. So if everybody’s doing it, why does it feel like such a hectic, lonely scramble to find a solution that works?
“It’s so seen as an individual issue that we just put out heads down and think for ourselves,” said Ellen Galinsky, president of the Families and Work Institute. “The problem is that no one speaks out about it, [so] it stays as a problem that doesn’t get fixed.”
Partnerships between families can alleviate the burden. Nanny-sharing or taking turns watching one another’s kids can help bridge the gap in the early years when childcare costs are high, said Manar S. Morales, founder and CEO of the Diversity and Flexibility Alliance.
The US in particular lacks the public institutions that might make these juggles easier. Just as a public utility grid meets collective energy needs, advocates have suggested that we meet our work and family responsibilities with a public system of subsidized childcare, paid parental leave, and schools that accommodate work schedules.
Ai-Jen Poo of the National Domestic Workers Alliance calls this network the “care grid”; Anne-Marie Slaughter, CEO of the New America think tank, calls it the “infrastructure of care.” In its absence, we too often end up defaulting to short-term solutions and entrenched gender expectations, without questioning if there could be a better way.
When our kids struggle with math, we encourage them to keep trying until they find a solution that works. The arithmetic of family life shouldn’t be any different.