economic engagement of mothers - kauffman.org
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ECONOMIC ENGAGEMENT
OF MOTHERS: ENTREPRENEURSHIP,
EMPLOYMENT, AND
THE MOTHERHOOD WAGE PENALTY
Jessica Looze and Sameeksha Desai | DECEMBER 2020
1
Economic Engagement of Mothers: Entrepreneurship, Employment, and the Motherhood Wage Penalty
AUTHORS
Jessica LoozeI and Sameeksha DesaiI
ACKNOWLEDGMENTS Michelle Budig, Tessa Conroy, Alyse Freilich
SPECIAL PRODUCTION THANKSKim Wallace Carlson, Kim Farley, Lacey Graverson, Megan McKeough,
Tim Racer, Kayla Smalley, Shari Wassergord
This is a publication by the Ewing Marion Kauffman Foundation utilizing content and data from multiple sources and external contributors. Every effort has been made to verify the accuracy of the information contained herein, and it is believed to be correct as of the
publication date. Nonetheless, this material is for informational purposes, and you are solely responsible for validating the applicability and accuracy of the information in any use you make of it.
© 2020, Ewing Marion Kauffman Foundation
Suggested citation: Looze, J and Desai, S. (2020) Economic Engagement of Mothers: Entrepreneurship, Employment, and
the Motherhood Wage Penalty, Ewing Marion Kauffman Foundation: Kansas City.
IEwing Marion Kauffman Foundation
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
Table of Contents
Introduction ............................................................................................ 3
The economic role of mothers in their households ........................................ 4
Barriers to mothers’ economic participation ................................................. 4
Thefinancialandnonfinancialcostsofchildcare .............................................. 5
The motherhood wage penalty ................................................................... 5
Whatcontributestothemotherhoodwagepenalty? .......................................... 6
Biasinhiringandpromotion................................................................................ 7
Entrepreneurship and motherhood .............................................................. 7
Whydomothersbecomeentrepreneurs? ........................................................... 8
Whatstopsmotherswhowanttostartabusinessfrom becomingentrepreneurs? .................................................................................... 8
Career and caregiving pathways ................................................................. 9
Policy considerations ............................................................................. 10
Work-familypoliciescanhaveasignificantimpact onentrepreneurship .......................................................................................... 10
Supportingmothersisavitalpartoftherecovery fromtheCOVID-19recession ............................................................................ 10
Paidfamilyleaveforallworkers ........................................................................ 11
Affordable,high-qualitychildcare ..................................................................... 12
Flexibleschedules ............................................................................................. 12
Whatcouldthesepoliciesdoforentrepreneurship? ......................................... 13
References ........................................................................................... 14
Endnotes .............................................................................................. 16
ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
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IntroductionTheeconomicvaluewomenbringtotheirownhouseholdsandtothebroadereconomyiswell-documented.Infact,nearlyalloftheeconomicgainsthathaveoccurredamongmiddleclassfamiliessince1970havecomefromtheincreasedearningsofwomen.1 Mothersmakesubstantialcontributionstothefinancesofmanyfamiliesandhouseholds.In2018,nearlyhalfofthemorethan 30millionfamilieswithchildrenunder18intheUnitedStateshadeitherasinglemotheroramarriedmothercontributingatleast 40%ofacouple’sjointearnings.2
Nearly all of the economic gains that have occurred among middle class families since 1970 have come from the increased earnings of women.
Mothers’unpaidworkisalsocrucialtotheirhouseholdsandtheeconomy.Mothersspendmoretimethanfathers“orchestratingfamilylife,”includingcaringforchildren,transportingthemtoschoolandotheractivities,anddoinghousework.3Whileitisdifficulttodeterminethemonetaryvalueofunpaidhouseholdwork,estimatessuggestthatincorporatingthevalueofnonmarketworkwouldraisenominalGDPbysomewherebetween30%and40%.4
Despitetheimportanceofmothers’economiccontributions,thebroadereconomyfailstosupportmothersinavarietyofways. Thewell-beingofchildrenisnotonlyimportantforfamilies,butalsothefutureoftheeconomy.Yetthecostsofraisingchildrenfalllargelyonfamilies—anddisproportionatelyonmothers.Inadditiontothelackofsupportforcombiningcareerswithcaregiving,mothersfaceamotherhood wage penalty,whichaccountsformuchofthegenderwagegap.5Evenentrepreneurship,aneconomicactivitythatcanpotentiallyoffermoreautonomyandflexibility,ismademoredifficultformothersbychildcarechallengesandbarrierstoentrepreneurshipforwomenmorebroadly.
Whyismotherhoodundervaluedandunsupportedeconomically?Howdoesmotherhood,andthemanychallengesthataccompanyit,shapewomen’sdecisionsabouttheircareerchoicesandabouttheirpursuitofentrepreneurshipinparticular?Whatdoesentrepreneurshipsupportmeanforentrepreneurswhoaremothers?Andhowcanwesupportmothers’accesstoopportunitiestoengageintheeconomy—andeasetheiraccesstoopportunitythroughentrepreneurship?
Thisreporttakesuptherelationshipamongmotherhood,caregiving,thepersistentwagepenaltyitcarriesforwomen,employment,andentrepreneurship.Wediscussthemotherhoodwagepenalty,andseveralofthefactorsproposedtohelpexplainit.Wealsodiscussengagementinentrepreneurshipamongmothers,andspecificallyhowchildrenshapewomen’sdecisionsabout—andopportunitiesfor—businessownership.Wepayparticularattentiontotheimplicationsofthefluiditybetweenentrepreneurshipandwageandsalarywork,asindividualsmoveinandoutofthesetypesofworkthroughouttheirlives.Thetypesofconstraintsmothersfaceandsupportstheyreceivecanhaveaprofoundeffectonthesetransitions.Finally,weendwitharoadmapforsupportivepoliciesthatenablemotherstoengageinmeaningfulwork,providefortheirfamilies,andcontributetothebroadereconomy.Thesepoliciesmustbeacentralfeatureofthepost-COVID-19economy.
Why is motherhood undervalued and unsupported economically? How does motherhood, and the
many challenges that accompany it, shape women’s decisions about
their career choices and about their pursuit of entrepreneurship
in particular?
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
The economic role of mothers in their householdsDespitepersistentnarrativesandpublicpoliciesthatassumethemajorityofhouseholdshaveafull-timestay-at-homemotherandanemployedmalebreadwinner,onlyabout1in5Americanhouseholdshasastay-at-homeparent.6In2019,72.3%ofwomenwithchildrenunder18yearsoldwereemployed,aswere66.4%ofmotherswithchildrenunder 6yearsold.7
Motherswhoareentrepreneursmakecrucialfinancialcontributionstotheirfamiliesandtheeconomy.Amongentrepreneurmothers,1in4reportedbeingthesoleproviderintheirhouseholdpriortothepandemic.Twenty-sevenpercentofBlackentrepreneurmothersreportedbeingsoleproviders,comparedto19%ofHispanicentrepreneurmothersand23%ofwhiteentrepreneurmothers.
Eveninhouseholdswithadditionalsourcesofincome,entrepreneurmothersareoftensubstantialcontributors.OfBlackentrepreneurmothers,43%reportedcontributingatleast half(butnotall)oftheirhouseholdincome,and51%ofHispanicand52%ofwhiteentrepreneurmothersdidthesame.Takentogether,70%ofBlackentrepreneurs,71%ofHispanicentrepreneurs,and76%ofwhiteentrepreneurswhoaremotherscontributesomewhere betweenhalfandalloftheirhouseholdfinances.8
TheCOVID-19pandemichasincreasedtheimportanceofthecontributionsthatentrepreneurswhoaremothersmaketotheirhouseholdfinances.Morethanathirdofmarriedorcohabitingentrepreneurswhoaremothers(35%)reportedthattheirspouseorpartnerhadbeenlaidoff orfurloughedand/orhadtheirhoursorpaycutduringthepandemic.Theincomebroughtin bytheseentrepreneurswhoaremothershasbecomeevenmorevitaltofamilyfinances.9
Barriers to mothers’ economic participationDespitemothers’highratesoflaborforceparticipationandtherelianceofhouseholdsandthebroadereconomyonmothers’paidandunpaidwork,manymothersdonothavethesupporttheyneed.Asaresult,mothersfacesubstantialchallengesbalancingcaregivingandfamilyresponsibilitieswitheconomicparticipation.
Thearrivalofachildbringsimportantshiftsinhouseholdneedsandresources,shapingparents’economicactivitiesinmultipleways.Householdresponsibilitiesandexpensesincreasewiththeadditionofanewfamilymember.Inadditiontofood,clothing,andmedicalservices,childrenrequiremanyhoursofcareandnurturingeachday.Manyparentsdonothaveaccesstopaidleavethatwouldallowthemtostayhomeintheirchildren’searliestweeksandmonthswithoutasignificanteconomiccost.Related,thelackofhigh-quality,affordablechildcareinmanypartsoftheU.S.makeparents’ongoingdecisionsabouthowtobalancetheircareerswiththeirchildren’sneedsdifficult.Inadditiontoprovidingfortheimmediateneedsofyoungchildren,newparentsmustplanforthemorelong-termcaregivingandfinancialcommitmentstheywillneedtomaketoprovidefortheirfamilies.
1in 4reported being the sole
provider in their household.
Among entrepreneur mothers
3 in 4reported their income
contributes to at least half of their household finances.
Among entrepreneur mothers
Many parents do not have access to paid leave that would allow them to stay home in their children’s earliest weeks and months
without a significant economic cost.
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
The fi nancial and nonfi nancial costs of child careFormanymothers,thecostsofchildcarecanaffecttheviabilityofholdingajob.Ifchildcareexpensesaregreaterthanthetake-homepayfromajob,itmaynotbefinanciallyviabletoremainemployed.Atthesametime,ifcarearrangementsareinconvenientbecauseoftheirlocationsorbecausetheyhavelimitedhoursofoperation,aparenthasmoreconstraintsontheiremploymentopportunities.Unpredictabilityofschedules,especiallyprevalentinlow-wage,servicesectorjobs,makeitdifficultformanymotherstofindcarearrangementsthatalignwiththeirworkschedules.10
Inadditiontothefinancialcostsofchildcareitself,thereareothercosts,includingtransportationandtimespentawayfromotheractivities.Simplyput:thereare24hoursinaday.Ifittakes30minutesinadditiontoaparent’sregularmorningcommutetodrivetoachildcarelocation,andanother30minutesonthewayhomeintheevening,thisleavesparentsonelesshourperdaytoengageinotheractivities.
Thesefactorsallhaveimportantimplicationsforwhether,when,andhowmothersparticipateinthelabormarket.Theyalsohaveimplicationsformothers’accesstoopportunitiesthroughentrepreneurshipandtheoutcomesoftheirbusinesses.Motherswhodonothaveregularaccesstoaffordable,high-qualitychildcarearefacedwithdifficultdecisionsastheyseektobalancetheirchildren’ssafetyandearlydevelopmentwiththeirfamilyfinancesandtheirabilitytocommittotheirownjobs,careers,andopportunities.
The motherhood wage penaltyAmongfull-time,year-roundworkers,womenearn81.5centsforeverydollarearnedbymen—agenderwagegapof18.5%.11Thisgapisnotablysmallerbetweenwomenandmenwithoutchildren(about7%)12andmuchlargerbetweenwomenandmenwithchildren.Medianannualearningsamongmotherswhoareemployedfull-time,year-roundis$40,000,comparedwith$56,000forfathers,amountingtoagapofnearly29%.13Thegenderwagegap,then,islargelyamotherhoodwagegap—theresultofthemotherhoodwagepenalty.
Althoughestimatesvary,thegrossmotherhoodwagepenaltyistypicallyestimatedtobebetween5%and10%perchild.14Thisamountvariesbymothers’ageatfirstbirthandnumberofchildren.Womenwhobecomemotherswhentheyareolderfacesmallerwagepenalties,15whilemotherswhohavegreaternumbersofchildrenfacelargerpenalties.16
Themotherhoodwagepenaltyislargeramongwhitewomen,andchildrenhavesmallereffectsonthewagesofBlackandHispanicwomen.17TheearningsofBlackandHispanicwomenarelower,onaverage,thanthoseofwhitewomen.Medianweeklyearningsofwhitewomenare78.4%ofthoseofwhitemen,comparedto61.4%and56.0%forBlackandHispanicwomen,respectively.18LowerearningsamongBlackandHispanicwomenmeanthereislessroomforthesewagestofall.
$56,
000
ANN
UALL
Y
$40,
000
ANN
UALL
Y
Median annual earnings among mothers who are employed
full-time, year-round is $�0,000, compared with $5�,000 for fathers, amounting to a gap of nearly �9%.
The gender wage gap
is largely a motherhood
wage gap — the result of the motherhood
wage penalty.
genderwage gap
White women earn
78.4%WOMEN’S MEDIAN EARNINGS COMPARED TO WHITE MEN
Black women earn
61.4%Hispanic women earn
56.0%of what white men earn.
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
What contributes to the motherhood wage penalty?Work experience and job tenure.Manywomentaketimeawayfromthelabormarketfollowingthebirthoradoptionofachild.Thistimeawayresultsinlostopportunitiesfordevelopingandcultivatingrelevantskills,buildingprofessionalnetworks,andreceivingpromotionsandpayincreases.Lessworkexperienceaccountsformuchofthemotherhoodwagepenalty.19
Competing demands.Manyworkplacescontinuetobestructuredaroundexpectationsofthe“idealworker”whohasfewdemandsoutsideofwork,includingtakingcareofchildren.20Yetmothersspendmoretimeprovidingcareforchildrenanddoinghouseworkthanfathers.Mothersspendanaverageof1.74hourscaringforandhelpingchildreninthehouseholdeachdaycomparedto0.91hoursamongfathers.21Evenwhenmothersprovidemoreincomeforthefamily,theyspendabout30%moretimewithchildrenthanfathers.22
Part-time work. Whilethemotherhoodwagepenaltyexistsevenamongfull-time,year-roundworkers,women’sdisproportionaterepresentationinpart-timework—whichoftenisnotpaidaswellasfull-timework—contributestotheirlowerearningsoverall.Somewomenchoosepart-timeworktoaccommodateotherresponsibilitiesorinterests,buttherearemanywomenwhoearnlessbecausetheyareinvoluntarypart-timeworkers—theyarewillingandabletoworkfull-time,buttheycanonlyfindpart-timeemployment.Womenofcoloraredisproportionatelyemployedininvoluntarypart-timework.23Evenwomenwhoareemployedpart-timevoluntarilymaybechoosingthislower-incomepathbecausecaregivingresponsibilitiesmakefull-timeworktoodifficult.Infact,onethirdofwomenwhoworkpart-timevoluntarily(34%)reportdoingsobecauseofchildcareproblemsand/orfamilyorotherpersonalobligations,comparedto8%ofmen.24
Long and infl exible hours. Formanyfull-timeworkers,especiallythoseinprofessionalandmanagerialjobs,workhourshaveincreasedinrecentdecades.25
Workingverylonghours(usuallydefinedas50ormorehoursperweek)hasbecomeincreasinglycommon.Compensationforworkinglonghourshasincreased,leadingtowagedifferentialsbetweenthosewhoareabletoputintheselonghoursandthosewhoarenot.26Evenifmothersremainemployedtheirincomesmaysufferiftheyarenotabletoputinthelonghours—oftenduringparticulartimesoftheday.
“Family-friendly” work. Withtheexceptionofpart-timework,“family-friendly”jobcharacteristicshavenotbeenfoundtoaccountformuchofthemotherhoodwagepenalty.Infact,manysuchcharacteristics,includingautonomyandscheduleflexibility,areassociatedwithhigherwages.28Themotherhoodwagepenaltyissmallerinoccupationscharacterizedbygreaterautonomy,fewerteamworkrequirements,andlesscompetitiveness—allcharacteristicsmorecompatiblewithfamilyandcaregivingneeds.29Itappears,then,thatwiththeexceptionofhoursspentatwork,mothersarenottradinghigherwagesformorefamily-friendlyworkconditions.
MOTHERS SPEND MORE TIME CARING FOR AND HELPING CHILDREN IN THE
HOUSEHOLD THAN FATHERS.
1in 3women who work
part-time voluntarily report doing so because
of problems with child care or family or other personal reasons
compared to �% of men.
Compensation for working long hours (usually defi ned as 50 or more hours per week) has increased, leading to wage diff erentials between those
who are able to put in these long hours and those who are not.
In households in which husbands work very long hours, wives — and especially mothers —
are more likely to exit the labor market.27
This suggests that many mothers whose spouses are employed very long hours likely withdraw from the labor market because they
take on more responsibilities at home. The same pattern, however, is not seen among husbands whose wives work long hours.
1.74 HOURS
0.91 HOURS
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
Work effort.Becausemothersspendmoretimeandeffortonchildcareandhousework,theyareassumedtospendlesseffortonpaidwork.30Thispresumptionoflowerproductivityatworkthenleadstolowerwages.Infact,mothersreportsimilarlevelsofworkeffortasfathersandmenandwomenwithoutchildren,however,andmothersreportgreaterjobengagementand workintensitycomparedtofathers.31
Job mobility.Movingfromonejobtoanotherisanimportantwaythatmanyworkersincreasetheirwages,especiallyintheearlyyearsoftheircareers. Whilemorethanaquarterofmotherswhochangeemployersfollowingthebirthofachild(27.3%)switchtojobsthatprovidelowerpay,anevengreaterproportion(38%)whochangeemployersfollowingthebirthofachildendupinjobswithhigherpay.32Motherswithyoungchildren,however,arelesslikelythanwomenwithoutchildrentochangejobsvoluntarily.33Ifmothersexperienceasortof‘joblock’inthattheyarelesswillingorabletochangejobs,especiallyintheirearlycareers,theymaymissoutonopportunitiestoincreasetheirwages.34
Entrepreneurship and motherhoodTherearetwoimportantconsiderationstokeepinmindwhenthinkingaboutentrepreneurshipandmotherhood:
1. Financial considerations, caregiving responsibilities, and time demands are intertwined. These factors shape the types of opportunities mothers have as entrepreneurs, their access to resources and networks, and their financial and growth outcomes.
2. The relationship between an individual as a employee and as an entrepreneur is fluid, as entrepreneurship is one of the many options that individuals may consider when thinking about how to engage in the economy alongside other aspects of their lives.
Motherswhoareentrepreneursconfrontmanyofthesamechallengesthatemployedmothersfacewhenitcomestocombiningcaregivingandhouseholdresponsibilitieswithpaidwork.Infact,self-employedwomenreportspendingmoretime,onaverage, onchildcareactivitiesandlesstimeinpaidworkcomparednotonlyself-employedmen,butalsotoemployedwomenandmen. Self-employedwomenreportanaverageof14hoursperweekofprimarychildcare(meaningthatchildcareisthemainactivityconductedduringthattime)comparedto11.9hoursamongemployedwomen.Differencesintimespentonsecondarychildcare(caringforachildwhiledoinganotherprimaryactivity)areevenlarger,withself-employedwomenspendingaboutanhourmore onsecondarycareperday(5.7vs.4.6hours).36
Bias in hiring and promotion
Mothersareoftenperceivedaslesscompetentandcommittedtotheworkplace,andthisbiasshowsupinemployers’decisionsabouthiringandpromotions.Womenjobapplicantswithoutchildrenwereabouttwiceaslikelyasequallyqualifiedmotherstoreceiveacallbackfromapotentialemployer.Evaluatorswhosawfictitiousjobapplicantprofilesthatvariedonlybyparentalstatusratedmothersaslesscompetentandcommittedtopaidwork,recommendedthemlessoftenforhireandwerelesslikelytopromoteorrecommendthemformanagementcomparedtowomenwithoutchildren.They also recommended starting salaries for mothers that were 7.4% less than those offered to women without children.Instarkcontrast,fatherswereseenasmorecommittedtopaidworkandwereofferedhigherstartingsalariesthanmenwithoutchildren.35
Mothers who are entrepreneurs confront many of the same challenges that employed mothers face when it comes to combining
caregiving and household responsibilities with paid work.
ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
8
Childrenincreasethelikelihoodthatwomenwillenternonprofessional,nonmanagerialself-employment:eachadditionalchildincreaseswomen’slikelihoodofself-employmentinnonprofessional,nonmanagerialoccupationsby10%,whiletheyhavenoeffectonthelikelihoodwomenwillenterprofessional,managerialself-employment.37Notably,womenentrepreneursinprofessionaloccupationsdonotfaceawagepenaltyforchildren.However,womenentrepreneursinnonprofessionaloccupationsfaceawagepenaltyofapproximately6%perchild.Thispenaltymeansthatifawomanstartswith$10,000inearningsfromself-employmentinanonprofessionaloccupation,herearningswillfallto$9,400afterherfirstchildandto$8,836afterhersecondchild.Muchofthispenaltyistiedtothelargeshareofnonprofessionalwomenentrepreneurswhoarechildcareproviders,andthelowwagesassociatedwiththiswork.38
Each additional child increases women’s likelihood of self-employment in nonprofessional, nonmanagerial occupations by 10%
Why do mothers become entrepreneurs?Amongmotherswhohavebecomeentrepreneurswithinthelastfiveyears,thetopreasonsforhavingstartedabusinessinclude:39
57%Be my own boss,
be independent, or control my future
52%Make money,
obtain a higher standard of living, or increase my wealth
46%Gain greater
flexibility or provide more work-life
balance
44%Follow
a passion
37%Take advantage
of a business opportunity
What stops mothers who want to start a business from becoming entrepreneurs? Nearly2in5motherswhoareveryinterestedinstartingabusinessbutultimatelydonotreportthatfamilyandcaregivingresponsibilitiesisa
primaryreason.Amongthesemothers(pre-entrepreneurshipleavers),40thetopreasonsfornotbecomingentrepreneursinclude:
44%My business
might not be able to survive
37%Family considerations like marriage/divorce/
child care/aging parent care
31%It might take
too much time
27%Might lose focus,
lack drive, passion or motivation or
just burn out
21%Need employer-
provided health care/insurance
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
Career and caregiving pathwaysThefluiditybetweenwageandsalaryemploymentandentrepreneurshipcanbeseenwhenweconsidertheoptionsavailabletomothers.Entrepreneurshipisoneofthemanyoptionsthatindividualsmayconsiderwhenthinkingabouthowtoengageinpaidworkalongsideotheraspectsoftheirlives.Atleastfivepathwaysmayemergefromcareerandcaregivingconsiderations:
Mothers who previously passed up a wage or salaried job because they felt it would conflict with family obligations were more likely to become entrepreneurs than
those who had not passed up such an opportunity, suggesting that entrepreneurship may offer some mothers a way to achieve more work-family balance.
Leave the labor force entirely
Ifbalancingpaidworkandcaregivingisnotattainable,somemothersmayleavethelaborforceentirely,atleastforatime.Thisdecisionresultsincriticallossesinjobskills,experience,andtenure.Italsooftenresultsinsubstantialwagepenaltieswhenandifmothersreturntothelaborforce.
Turn to necessity-driven entrepreneurship
Somemothersmayleavewageorsalaryworkandturntonecessity-drivenentrepreneurshiptoavoidcompletelydisconnectingfromthelaborforce.Amothermaymakethischoiceifshehadpreviouslybeenworkinginalow-payingjobthatdidn’tprovidetheflexibilityandfinancialresourcesnecessarytomeetcaregivingneedsandmaintainemployment.Whennecessity-drivenentrepreneurshipresultsinself-employmentinnonprofessionaloccupations,itisoftenlow-payingandmaynotprovideenoughincomeforfamilies.
Choose entrepreneurship to balance multiple priorities
Somemothersmayleavewageorsalaryworkandchooseentrepreneurshipinordertocreateaviablemodelofeconomicparticipationandcaregivingthatworksfortheiruniquesituation.Thischoicemaybemorecommonwhenwageorsalaryemploymentdoesnotprovidetheflexibilitythatmothersneed.Motherswhopreviouslypassedupawageorsalariedjobbecausetheyfeltitwouldconflictwithfamilyobligationsweremorelikelytobecomeentrepreneursthanthosewhohadnotpassedupsuchanopportunity,suggestingthatentrepreneurshipmayoffersomemothersawaytoachievemorework-familybalance.41
Remain employed
Ifbalancebetweenwageorsalaryemploymentandcaregivingisviable,somemothersmaybeabletoremainemployed,continuetogenerateincome,buildtheirskills,andincreasetheirexperience.Thismaybetterpositionmotherstoengageinentrepreneurshipshouldanopportunityarise.
Choose entrepreneurship to pursue an economic opportunity
Ifbalancebetweeneconomicparticipationandcaregivingisviable,somemothersmaybeabletochooseentrepreneurshipinsteadofwageorsalaryworkinordertopursueanentrepreneurialopportunityandgrowtheircareerinthisway.
Figure 1: Five career and caregiving pathways of mothers
Note: The five pathways represent typologies of activities, but they are not mutually exclusive and not exhaustive.
ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
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Policy considerationsSupportingmothersastheymoveamongeconomicactivitiesthroughouttheirlivesisimportanttoensuringgreatereconomicgainsforwomen,fortheirfamilies,andforthebroadereconomy.Policies,therefore,shouldgivemotherhoodtheeconomicimportanceandsupportthatitdeserves.
Work-family policies are not traditionally considered entrepreneurship policies but can have a significant impact on entrepreneurship.Policiesmustaddressthechallengesthatfamilies—andparticularlymothers—faceinattendingtobothpaidworkandcaregivingresponsibilities.Themotherhoodwagepenaltyandbarrierstoeconomicopportunitiesforwomenareproblemsfacingthewholeeconomy.Work-familypoliciessuchaspaidleave,affordableandhigh-qualitychildcare,andflexibleschedulesenablemotherstoremainconnectedtothelabormarket—bothasemployeesandasentrepreneurs.Whilenottraditionallyconsideredentrepreneurshippolicies,theyplayanimportantroleinpavingaroadtowardaccesstoopportunityforentrepreneurshipforthoseindividualswhomaywanttopursueit.
Supporting mothers is a vital part of the recovery from the COVID-19 recession
COVID-19hasleftmanyfamiliesscramblingtocareforandeveneducatetheirchildrenaschildcarecentersandin-personschoolshaveclosed.Thebulkoftheseresponsibilitieshavefallentowomen.42Giventheintensifieddemandsaroundcaregivingalongsidearecessionthathasdisproportionatelyaffectedthetypesofjobsthatwomen—especiallywomenofcolor—oftenhold,suchasthoseintheservicesectorandretail,it’snotsurprisingthatwomenareexitingthelabormarketatanalarmingrate.
NearlyfourtimesasmanywomenthanmendroppedoutofthelabormarketinSeptember2020.Whilenearly216,000menleftthelabormarket,roughly865,000womendidthesame.43Mothershavebeenhitparticularlyhard.ByOctober2020,mothersbetweentheagesof24and39werenearlythreetimesmorelikelythanfathersinthesameagerangetoreportbeingunabletoworkduringCOVID-19duetoaschoolorchildcareclosure.44
EvenbeforeCOVID-19,parentsfacedariskthattheywouldnotbeabletosendtheirchildtocarearrangementsbecauseofillness.COVID-19hasexacerbatedthisunpredictability,asparentsnowconfrontthepossibilitynotonlythattheirownchildmaygetsick,butalsothatotherchildrenandstaffmembersbeingsickcouldclosetheentirecenterorschoolforanextendedperiodoftime.Thisunpredictabilitymakesitdifficultforparentstocountoncarearrangementsthatmaketheiremploymentpossible.Forparentswhomayrelyonfamilysupport,suchasgrandparents,forchildcare,concernsabouthealthandexposurecanlimituseofthoseoptions.
Thesewomenwillfaceimportantchoicesduringtherecovery.Shouldtheyreturntoemployment?Shouldtheyremainoutofthelabormarket?Shouldtheybecomeentrepreneurs?Iftheybecomeentrepreneurs,thechallengestheyfacewillshapetheoutcomesoftheirbusinessactivity.Iftheyreturntoemploymentafter takingtimeaway,somewillfacewagepenalties.
RecoveryeffortsfromtheCOVID-19recessionneedtoaddressthecontinuedinequitiesfacingwomenintheeconomy,includingtheeconomicconsequencesofmotherhood.Asustainablepathforwardfortheentireeconomyrequiresequitableaccessandsupportformotherstoengageinwageandsalaryworkandinentrepreneurship—andforequitablerewardstotheseactivities.
Supporting mothers as they move among economic activities
throughout their lives is important to ensuring greater economic gains
for women, for their family, and for the broader economy.
ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
11
Paid family leave for all workers TheFamilyandMedicalLeaveAct(FMLA),passedin1993,providesfortwelveweeksofunpaid,job-protectedleaveforspecifiedfamilyandmedicalreasons,includingthebirthoradoptionofachild.Manyworkersarenoteligibleforthisleave,however,includingself-employedworkersandemployeesofsmallfirms(fewerthan50employees).Infact,lessthan60%ofallU.S.workersareeligiblefortheprotectionsprovidedbyFMLA.45Theseexclusionsareespeciallyimportantwhenthinkingabouttheemployeesofentrepreneurs,asnewbusinessesaretypicallysmallandsonotrequiredtoofferjob-protectedleavetotheiremployees.
Evenamongworkerswhoareeligibleforthisbenefit,manycannotaffordtotakeunpaidleave.Andlessthan1in5civilianemployeeshasaccesstopaidfamilyleave.46NinestatesandWashingtonD.C.haveenactedpaidfamilyandmedicalleavelaws.47Privatecompaniesareincreasinglyprovidingpaidfamilyleavetoemployees,butthesebenefitsarelargelyconcentratedamonghighincomeworkers,whilelow-wageandpart-timeworkersaremuchlesslikelytohaveaccesstopaidleave.48
Disparitiesinaccesstopaidleaveexacerbateinequalitiesamongworkers,asthosewhoearnlowwagesareofteninmostneedofthissupportbutlesslikelytoaccesstoit.Atthesametime,itismoredifficultforsmallerfirmstocoverthecostsofpaidleavefortheirworkers,comparedtolargerfirmswiththeresourcestobeabletoofferthisbenefit.
Paidfamilyleavehelpskeepwomenconnectedtothelabormarket,whichcanlessenthemotherhoodwagepenaltybecausewomenarenotcompletelyremovedfrompaidwork.TheintroductionofpaidfamilyleaveinCaliforniaandNewJerseywasfoundtoincreasemothers’laborforceattachmentintheyearofbirthanduptofiveyearsafterward.Formotherswithcollegedegrees,theeffectslastedclosertoeightyears.50Paidmaternityleaveisalsoassociatedwithhigherpayamongmothers.Wagesofmotherswhowereworkingpriortothebirthoftheirfirstchildandreceivedpayduringtheirmaternityleaveare9%higherthanthoseofothermothers.51Studiesonothercountriesalsosupportthisconclusion,astherearelowermotherhoodwagepenaltiesincountrieswithleavesofmoderatelengths.52
Only nine states — California, Colorado, Connecticut, Massachusetts, New Jersey,
New York, Oregon, Rhode Island, Washington — and Washington D.C. have enacted paid
family and medical leave laws.
Less than 1 in 5 civilian employees has access to paid family leave.
Paid leave for fathers can increase gender equityPaidleaveforfathersisimportanttothepersonalandeconomicwell-beingoffamiliesasitcanincreasegenderequityathomeandintheworkplace.PaidpaternityleaveinQuebecincreasedthetimemothersspentinpaidworkaswellasthetimefathersspentdoinghouseworkforyearsaftertheprogram.Thissuggeststhatprovidingfatherswithpaidtimeofftospendwiththeirchildrenwhentheyareinfantscaninfluencehowparentsallocatetimetochildcare,householdwork,andpaidworkyearslater.49
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
Affordable, high-quality child care Childcareisexpensive.In40statesplustheDistrictofColumbia,thecostofchildcarefortwochildrenexceedsmortgagecostsamonghomeowners.53Giventhesehighcosts,itisnotsurprisingthatmothersareoftenfacedwithdifficultchoicesaboutwhethertoengageinpaidworkorthemselvesprovidecarefortheirchildren.
Reducedout-of-pocketcostsforpublicearlycareandeducation—aswellasincreasedavailability—canhavepositiveimpactsonmothers’laborforceparticipationandworkhours.54Furthermore,smallermotherhoodwagepenaltieshavebeenfoundincountrieswithmorepubliclyfundedchildcare.55
Flexible schedulesThewaythatjobsarestructuredandrewardedperpetuatesinequalityinthelabormarket.Firmsoftenhaveincentivestodisproportionatelyrewardworkerswhoputinlonghoursandwhoworkparticularhours.56
Itistellingthatsomanymothersciteindependence,flexibility,andtheneedtobalanceworkandfamilyasreasonsthattheyturnedtoentrepreneurship.Itisalsotellingthatsomanymothersultimatelydecidednottopursueabusinessideabecausetheywereworrieditmighttaketoomuchtime.Workplacesthatdonotaccountforthemanydemandsonmothers’timestandtolosewomenwhoseskillsandexperiencemaybetremendousassetstotheirbottomlines.Atthesametime,perceptionsaroundthedemandsofentrepreneurship,especiallythoseregardingthetimeinvestmentnecessary,maykeepsomemothersfrompursuingabusinessopportunityandbecomingentrepreneurs.
Forentrepreneursandwageandsalaryemployees,creatingacultureandenactingpoliciesthatvaluebothmarketworkandindividuals’livesmoreholisticallycanhelpalleviatetheparticularchallengesmothersface,whilealsosupportingthelivesandlivelihoodsofallindividuals.Policiesmustsupportflexibleworkpracticesandworktoreduceexpectationsaroundhoursdevotedtopaidwork.Itisnotenoughforworkplacestoofferflexibleorreducedworkhoursasaccommodationsforsomeworkers,especiallyiftheymustbenegotiatedwithcurrentsupervisorsandaresubjecttochange.Individualswhousetheseaccommodationsfear(andoftenface)a“flexibilitystigma”iftheirworkhoursareseenasadeviationfromworkplacenorms.57
For entrepreneurs and wage and salary employees, creating a culture and enacting policies that value both market work and individuals’ lives more holistically
can help alleviate the particular challenges mothers face, while also supporting the lives and livelihoods of all individuals.
Public preschool program
Beginningin2009,Washington,D.C.expandedtheirpublicpreschoolprogram—onceavailableonlytolow-incomefamilies—toallfamilieslivingintheDistrictofColumbia,regardlessofincomelevel.Theprogramofferstwoyearsofuniversal,full-daypreschoolacrossthecity’spublicschools,publiccharters,andsomeprivatepreschoolprograms.Sinceimplementationoftheprogram,thelaborforceparticipationrateamongmothersinWashingtonD.C.hasincreasedbyaround12percentagepoints,and10ofthesepercentagepointsareattributedtotheexpansionofpreschool.58
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
What could these policies do for entrepreneurship?• Mothers may gain greater choice in how they engage in employment.Ifmothershadaccesstowell-payingjobs
thatprovidetheflexibilitythatcaregivingrequires,theycouldcontinuetodeveloptheirskillsandgainexperienceinthelabormarket.CalculationsmadepriortothecurrentrecessionestimatethatifU.S.womenbetweentheagesof25and54participatedinthelaborforceatthesamerateaswomeninthisagerangeinCanadaandGermany—countrieswithpaidleaveandotherfamilysupportivepolicies—therewouldbemorethanfivemillionmorewomenintheU.S.laborforce,resultinginmorethan$500billionofadditionaleconomicactivityperyear.59
• Mothers who may have otherwise been pushed into necessity entrepreneurship — which often generates low income — may have more choices in how they engage economically, including to remain in paid employment. Incountrieswithgenerouslysubsidizedchildcare,aswellasthosewithhigherratesofpart-timeemploymentamongwomen,womenarelesslikelytoturntoentrepreneurshipoutofaneedforamoredesirableemploymentsituation.60Supportivepoliciescanexpandtheeconomicchoicesofmothers,sotheycandeterminewhen,andhow,itisbestforthemtoengageinspecificeconomicactivities,includingentrepreneurship.Ifchildcarecostsareaffordabletofamiliesandifwomenhaveflexibilitytobalancetheirpersonalandworklives,theymayhavemorechoicesabouteconomicparticipationtoaccommodatethedemandsofcaregivingandpaidwork.Beingabletocontinuetoworkinwageandsalaryjobsmaygivesomemotherstheopportunitytobuildtheirskillsandconsidertheiroptionssothattheyarepositionedtoengageinentrepreneurshiplaterintheircareersifsuchanopportunityarises.
• Mothers who choose entrepreneurship as an attractive economic opportunity may be better able to start a business — and to grow it. Whenmothershaveattractiveoptionsinthelabormarketandtheflexibilitythatallowsthemtocarefortheirchildrenwhilebuildingtheircareers,entrepreneurshipmayposeyetanotherappealingoptionforutilizingtheirtalents—enhancingthefinancialwell-beingofthesemothers,theirfamilies,andthebroadereconomy.Moderatelengthsofpaidleaveandmoregenerouschildcareprovisionsmeanthatwomenaremorelikelytobeengagedinthetypesofgrowth-orientedentrepreneurshipthatcreatejobsanddriveinnovation.Incountriesthatoffermothersamoderateamountofpaidleave(between20and30weeks),womenrunlargerbusinesses,aspiretogreaterbusinessgrowth,andaremorelikelytointroduceanewproductorservice.Incountrieswithhighlevelsofchildcareprovision,womenentrepreneursaremorelikelytosellproductsorservicesthatrequiretheuseofnewtechnology.61
Broader gains come from smoothing the path to economic participation for mothers, whether it is through wage or salary work or entrepreneurship. While the work-family policy changes described above are not traditionally considered entrepreneurship policies, they play an important role in opening access to entrepreneurship for individuals who want to pursue it. Supportive policies can enhance the development of the skills and experience needed for productive work and for growth-oriented entrepreneurship — immediately or in the future.
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY
Endnotes1. CouncilofEconomicAdvisers(2015).
2. InstituteforWomen’sPolicyResearch(2020a).
3. Bianchi,Robinson,andMilkie(2006).
4. Folbre(2017).
5. England,(2005);Waldfogel(1998).
6. Livingston(2018).
7. U.S.BureauofLaborStatistics(2020).
8. Basedonsurveysofbusinessownersconductedby GlobalStrategyGrouponbehalfoftheKauffmanFoundationinspring2020.Entrepreneurswereaskedhowmuchdoesincomefromtheirbusinesscontributestobasichouseholdfinances. Theywereaskedtoconsidertheiraverageincomeoverthepast 12months,nottheirimmediatefinancialsituationandanychangesthatmighthaveoccurredduetoCOVID-19.
9. ibid.
10. HenlyandLambert(2014).
11. InstituteforWomen’sPolicyResearch(2020b).
12. Budig(2014).
13. InstituteforWomen’sPolicyResearch(2017).
14. GoughandNoonan(2013).
15. Amuedo-DorantesandKimmel(2005);Taniguchi,(1999).
16. BudigandEngland(2001).
17. Glauber(2007);Waldfogel(1997).
18. InstituteforWomen’sPolicyResearch(2020b).
19. BudigandEngland(2001);LundbergandRose(2000).
20. Acker(1990);Williams(2000)
21. U.S.BureauofLaborStatistics,Averagehoursperdayparentsspentcaringforandhelpinghouseholdchildrenastheirmainactivity,2019annualaverages.
22. Raleyetal.(2012).CalculationsfromTable5.
23. Fisher(2015).
24. U.S.BureauofLaborStatistics(2018),Table4.
25. JacobsandGerson(2004).
26. ChaandWeeden(2014).
27. Cha(2010).
28. Glass(2004).
29. YuandKuo(2017).
30. Becker(1985).
31. Kmec(2011).
32. Laughlin(2011).Table11
33. Looze(2017).
34.Whilesomehavearguedmothersandwomenwithoutchildrenmightdifferin“careerambition”whichwouldimpactearnings,statisticalmodelsthattakethisintoaccountstillfindamotherhoodwagepenalty.Itisalsopossiblethatwomenmaydecidetohavechildrenatapointwhentheircareersarenotgoingwellorwhentheirwagesarelow.Thereissomesupportthatmothersearnlessthanwomenwithoutchildrenpriortothebirthoftheirfirstchild. (LundbergandRose,2000).
35. Correlletal(2007).
36. Gurley-Calvezetal(2009).
37.Budig(2006a).
38. Budig(2006b).
39. Dataarefromanationallyrepresentativesurveyof22,034adults intheUnitedStatesconductedbetweenJune19,2020and August3,2020.SeeDesaiandHowe(2020).
40. SeeDesaiandHowe(2020).
41. Thébaud(2016).
42. HeggenessandFields(2020).
43. Carrazana(2020).
44. MalikandMorrissey(2020).
45. Brownetal(2020).
46. PizzellaandBeach(2019),Table31.
47. KaiserFamilyFoundation(2020).
48. Sawhilletal(2019).
49. Patnaik(2019).
50. JonesandWilcher(2020).
51. Boushey(2008).
52. Budigetal(2016).
53. ChildCareAwareofAmerica(2019).
54. Morrissey(2017).
55. Budigetal(2016).
56. Goldin(2014).
57. KellyandMoen(2020).
58.Malik(2018).
59. U.S.DepartmentofLabor(2015).
60. Thébaud(2015).
61. ibid.