Income hit for mums

30 May, 2018
Income hit for mums

There is evidence of a gendered response to parenthood, according to new research from AUT and public policy think tank Motu. Women experience a number of negative labour market outcomes upon becoming mothers, while this is not the case for men.

The Ministry for Women-funded research, which analysed up to 15 years of employment and earnings data from parents who had their first child in 2005, found becoming a mum is associated with a 4.4% decrease in hourly wages on average. Importantly, the longer women were off work the larger the wage drop.

Co-author and Director of the New Zealand Work Research Institute at AUT, Professor Gail Pacheco, says the study provides empirical evidence that length of time out of the labour market is associated with very different outcomes for women.

“If mothers are out of the labour market for more than a year, then the average decrease in hourly wages rises to 8.3%.”

Earlier research on the gender pay gap, which is now below 10%, showed that a large proportion can’t be explained by observable characteristics such as age, education, occupation or industry; or differences in productivity. But in line with international evidence, this study finds the gender pay gap in New Zealand is bigger among parents than people without children.

Hours of work for women also drop substantially after they have children, down from just under 40 hours a week to a median of 27 whereas fathers’ employment and work hours barely change, says Professor Pacheco.

“Again, length of time out of employment is related to different outcomes, we find that women who return in the first six months drop to a median of 30 hours, whereas those who return after a year, drop to a median of 22 hours.”

There is also evidence that women on lower incomes prior to parenthood are less likely to go back to work at all, with approximately half not in paid work 10 years after their first baby.

Educational attainment also plays a part. While only 45% of women with no qualifications are back working a decade after becoming a mum, nearly 70% of those with a bachelor’s degree are employed by that time.

Ministry for Women policy director Margaret Retter says each family will make decisions about parenthood, employment and childcare based on their own situation and preferences.

“It could make a difference to women’s careers if fathers dropped three hours a week and women worked 30 hours. It could build a family’s economic resilience and allow more shared parenting.

“Employers can support women taking career breaks, especially those wanting to transition back to the workforce, if and when they choose to do that. Employers can have a role, through human resource policies, keeping in touch while on leave, and ensuring they have flexible work hours available for all staff. They can ensure flexible hours are also available to fathers,” says Ms Retter.

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