My mother, a fiercely strong and independent woman, made what was, for her, a surprising choice to become a stay-at-home mom to raise me (and the younger sister who showed up later). In another previously unpredicted turn, our family moved overseas, making it even harder for my mother to return to the workforce later. For nearly 21 years, my mother sacrificed her career and her earning potential to raise two daughters.
Now, in my mid-20s, I've watched my peers struggle with the question of whether or not to have children. Those who decide to pursue the path to dirty diapers, sleepless nights and unconditional love seem to fall into two groups: those who blindly hope they'll be able to make ends meet; and those who begin crafting idyllic budgets around their fictional child.
What Price Motherhood?
The decision to have children or not is incredibly personal. While one choice provides a host of obvious emotional and intangible rewards (and the possibility of having someone other than paid staff to care for you in your twilight years), the other has distinct financial advantages.
Those financial disadvantages for mothers involve more than just the costs of raising a child -- both parents take those on. But women in particular need to consider the income, retirement savings and Social Security benefits they sacrifice by electing to walk away from the workforce. Even mothers who return to work relatively rapidly tend to suffer financial setbacks often referred to as the "motherhood penalty*."
The monetary losses start from the moment the labor contractions set in.
Bringing new life into the world warrants legally mandated paid leave in most developed nations -- except the United States, where employers aren't required to provide it. How much compensation women are entitled to while out on maternity leave varies by country: It could be as little as 50 percent of their normal wages. But that's far more than the disturbing zero required of American companies.
"Only about half of all first-time moms in the United States are able to take any paid leave after childbirth; and just a fifth of working women with young children receive leave with full pay," according to WorkingMother.com's evaluation of National Partnership for Women & Families' Census data.
Over the years, studies have shown mothers earning less, facing more workplace discrimination and receiving fewer opportunities than women without children. In fact, this issue may be more pressing than that of the general pay gap between men and women.
Women who leave the workforce entirely sacrifice their salaries for a job that pays in cuddles, kisses, temper tantrums and heart-melting moments. But you can't pay the bills in a child's laughter, your daughter's first steps or when your teenage son says, "I love you" for no reason. Even though motherly tasks require dedication, multitasking, high-level communication skills, the ability to prioritize and handle expenses, employers still don't see the work as proof of ability.
The role of a mother (working or stay-at-home) demands an incredible amount of effort; it's every bit as much of a job as any 9-to-5 occupation, but employers still discriminate against mothers. "Employed mothers are hit with a 5 percent wage penalty per child, on average," according to a study conducted by Cornell University sociologists and published in the American Journal of Sociology.
Social Security Benefits
It isn't just salary that women walk away from when they leave the workforce to raise children. Their eligibility to earn Social Security benefits suddenly comes to a screeching halt. Women who fail to put in a total of 10 years of work will not be able to collect Social Security retirement benefits, according to the Social Security Administration's 2014 pamphlet on earning credits (though there are some exceptions).
But more important than just qualifying for Social Security is how your benefit is calculated. To quote the SSA:
Working for fewer years, working at lower wages, bringing home a lower aggregate amount over your lifetime -- all of these factors cut into the size of the benefit checks mothers can expect when they retire from the work force.
Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or "indexed" to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.
Of course, some millennial women may not be taking the potential reduction in their Social Security benefits as seriously, because they expect the entitlement program will likley have been restructured by the time their generation faces retirement. As the Social Security Administration notes on its website,
"Your estimated benefits are based on current law. The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 cents for each dollar of scheduled benefits."
But regardless of how the system is reformed (or isn't), the reduction to a mother's benefits should still be viewed as a loss.
Other Retirement Savings Plans
Social Security may be nothing to depend on -- at least not at current levels -- but most workers today can use an employer's 401(k) -- or similar retirement plan -- to prepare for the future.
A woman who leaves the workforce to become a mother loses the benefit of her employer-matched retirement plan, and without any taxable income; she can't contribute to an IRA.
Mothers who stay in the workforce still won't reap the same benefits from an employer-matched retirement plan as their childless counterparts. A 5 percent reduction in salary (per child) would translate to a lower amount to contribute and (because it's based on a percentage of salary) a lower employer match.
And of course, those who forgo children don't have to prioritize the needs of a child over retirement plans. There won't be any debate about saving for retirement versus paying for braces, private schools or college.
Ultimately, It Doesn't Really Come Down to the Money
I'm thankful to have been raised by a mother who could play dress-up with me, heal my scrapes, and attend all of my activities growing up. My mother sacrificed career advancement to raise me, and I'll always be incredibly grateful to her. She, like most women who become mothers, will always claim it was the right decision and one she's never regretted (except probably, for a brief period during my teen years). The numbers may indicate that it's financially better for women to resist their biological urges, but on this Mother's Day, I thank my own Mom and everyone else's who didn't.
*For the sake of this article, in discussing the "motherhood penalty" or the possibility of being "mommy tracked," we are referring to women who are college educated with higher-income careers.