Are Mothers Losing Income Equality When They Have Kids?

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The pay gap between men and women is still not close to equal, but there are more signs when it comes to motherhood that the gap is widening even more.

For example, one study showed that for women, incomes drop 30% after giving birth for the first time and never catch up. That’s according to a working paper by Henrik Kleven, Camille Landais and Jakob Egholt Sogaard published by the National Bureau of Economic Research in January 2018. The study used Danish administrative data from 1980-2013. (source: CNBC)

Also called the “motherhood penalty,” women start falling behind men in terms of their rank and their probability of being promoted just after the birth of the first child, the researchers found. About a decade later, women’s earnings plateau around 20% below the level just before becoming a parent. (source: CNBC)

So, is this motherhood penalty something that will continue, and just what can be done to help this increasing problem for families in America?

 While the Danish study showed that mother’s incomes drop by 30% after the birth of their first child and never catches up, another study showed that men’s income actually went up by 20%.  Although roles are changing at home and in corporate America, the odds are that if there is a sick kid at home, the mother will be the one to stay home.

And even though there are new programs such as flexible work schedules and telecommuting, it is a real question about whether you can be promoted in a corporate environment today without being visible.  I’ve seen some clients who have successfully run many direct reports from a remote location where they are not visible, and other clients who tell me without physically being there as the leader, you really can’t spearhead running a division or a branch of a company.

The real horror about this situation is that many expecting mothers won’t even tell their bosses about their upcoming pregnancy.  In 2014, only 12% of women would tell their boss about an upcoming pregnancy whereas, in 2019, 21% of women will not tell their bosses which is a 70% increase from five years ago.  We recently changed our policies at all of our companies, allowing for families to deal with this parental leave by doing fully paid maternity leave for women, and six weeks of paternity leave for men.

Families say that child care is the number one factor that most families consider in the process of deciding a return to work, but certainly closely behind are items such as a flexible work schedule, benefits, and thinking about having one parent stay at home with the kids.

 It’s a challenging question and debate amongst leaders across companies small and large on how to handle these issues.  It’s important that everyone gets a fair shot and equal treatment, let alone equal pay.  Nobody should be punished for something so great as a new child in our world.  Not the moms, the dads, or the company.  But the reality is that every new child adds responsibility for each family both physically and financially.  On this Mother’s Day, I’m truly grateful for my wife who is a great mom, my own mother who was a great role model, and all moms across America.

About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves

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My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

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