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Working moms face wage losses in 'motherhood gap'
Working moms who leave their jobs to have kids and then re-enter to the workforce later can face wage losses of three per cent for each year of absence, according to a new TD Economics Report.
In a report entitled "Career Interrupted -- The Economic Impact of Motherhood," authors Beata Caranci and Pascal Gauthier call this "motherhood gap." They say a three to nine per cent loss in wages occurs every time women exit and re-enter the workforce, and typically persists for three to five years.
"Beyond that period, the wage penalty starts to dissipate, with a lingering penalty amounting to two per cent per year of absence," the report notes. "Specific to our interest, absences related to childcare were found to generate a persistent 3 per cent wage penalty per year of absence."
The authors call the wage gap "unexplained but persistent," and say it can't be explained by the usual factors that drive wages, such as experience, hours worked, occupation, industry, age and the like.
The report found that the persistent wage loss is more severe for women who take frequent exits -- defined as three or more -- than it is for long absences. So a mother of three for example, who took three maternity leaves, could lose more wages than a co-worker who took an extended leave for other reasons, such as for illness or to care for elderly parents.
If women want to see smaller financial penalties of taking time off, the report suggests they should try to build more experience prior to making their temporary exit.
As well, going back to work with the same employer usually lessens the possibility of a wage penalty, as the skills and social networks they used with the company are likely to remain the same when they come back, the report finds.
The report suggests that employers need to take the "motherhood gap" seriously, as demographics change the face of the workforce.
"It is well understood by now that a looming labour force crunch under an aging population will leave Canadian firms with a more shallow pool from which to draw talented workers in the coming decades," the report notes.
The authors suggest employers who want to attract mothers back to the workplace need to be prepared to offer jobs with fair wages and a greater sense of responsibility.
As well, "re-engineering jobs to provide flexible work options is a necessary step and one in which many companies are already incorporating into their cultural DNA," the report says.