byFairygodbosson Apr 18, 2016
The Timing of Childbirth on Lifetime Earnings
Photo credit:Creative Commons
It’s one of the great demographic trends of our time: Women are delaying marriage and childbirth in western Europe and the United States. Since 2009, the U.S. Centers for Disease Control and Prevention have observed a pronounced increase in the average age of first-time mothers giving birth. At 2014 the age of first-time mothers in America was 26.3 years old.
There may be many reasons for this shift, but one of the things we hear anecdotally is that children and family obligations are “expensive”. Naturally, children come with extra costs ranging from food and shelter, to healthcare and childcare. However, new research published by Washington University in St. Louis suggests that another cost to having children is the lifetime earnings hit suffered by mothers. There is a large, established body of research showing that childbirth depresses a working mother’s wages for a variety of reasons. In fact, this phenomenon is called the “motherhood penalty” and is a well-known contributing factor to the gender pay gap.
The explanations for a “motherhood penalty” range from the fact that childbearing disrupts formal education and on-the-job training, to personal choices to work for more flexible hours in return for lower wages, as well as employer bias and discrimination. This new research adds to this body knowledge about motherhood and earnings by with data out of Denmark. The data in the study was based on approximately 1.6 million Danish women because Denmark collects socioeconomic and health register data on 100% of the population, making life-time income and childbirth possible to study on such a large scale.
The study concludes that not all mothers suffer a long-term hit to income after having children. Specifically, if a college-educated woman delays childbirth until she’s older than 31, she will go on to achieve life-time earnings greater than women with no children (including those without college degrees). In other words, the hit to lifetime income seems to only affect women who had their first child in their 20’s.
Of course, correlation doesn’t prove causation but Man Yee (Mallory) Leung, PhD, a postdoctoral research associate who worked on the study concludes: “The findings highlight the financial trade-offs women make when considering their fertility and career decisions.”
Some of the study’s other findings:
- Women who first give birth before age 28, regardless of college education, consistently earn less throughout their careers than similarly educated women with no children.
- College-educated women who had children before 25 lose about two full years of average annual salary over their careers; women without college educations in this group lose even more in annual salary over their careers (2.5 years)
- Women who delay their first child until age 37 add about a half year of salary to their lifetime earnings
Deciding when (or whether) to start a family is an incredibly personal decision with no “right” answer. On the other hand, being aware of this data and the overall trade-offs that might exist can be an important part of career planning if you’re a young women who wants to also plan for a family. It may also explain the decision by a growing number of employers to add fertility-related treatments to the list of their employee benefits.