We need to talk about the gender pay gap and motherhood penalty

Dr Michael Johnston
Bali Haque
NZ Herald
11 March, 2024

According to Stats NZ, the 2023 average gender pay gap across the entire New Zealand workforce was 8.6 per cent. The gap has not shifted much in recent years.

On the face of it,
 the disparity looks sexist and unfair, but the pay gap actually has little to do with employers short-changing women. In New Zealand and most of the countries with which we compare ourselves, men and women doing the same jobs at the same levels are paid the same.

As long ago as 2016, the Economist reported on an international consultancy study involving 8.7 million employees. The researchers found in Europe, women earned just 1 per cent less than men after accounting for sex differences in seniority and type of work. They concluded the gap is caused less by unequal pay for similar work than by factors that result in women being employed in lower-paid jobs or in less senior positions.

One of these factors, and the most significant cause of differences in male and female pay, is the so-called “motherhood penalty”. Women, on average, take much more time out of the workforce than men to look after children. As a result, they fall behind in experience and don’t catch up when they come back to work.

Economist Professor Henrik Kleven and his colleagues at Princeton University used data from Denmark – a country with a high level of gender equality – to investigate this phenomenon. Tracking the five years up to the birth of their first child, men and women showed almost identical workforce participation rates, hours worked and remuneration. Quite simply, in Denmark at least, there is no gender wage gap between women and men who do not have children.

When their first child was born, however, women dropped well below men on all of those measures. Mothers continued to lag behind fathers in the amount they earned for around 20 years. Childless women’s earnings stayed on an upward trajectory. The long-run effect of motherhood on career advancement and remuneration is considerable!

A similar study, funded by the New Zealand Ministry for Women, was carried out by Isabelle Sin, Kabir Dasgupta and Gail Pacheco at Motu, a New Zealand-based research think tank. These researchers compared the monthly earnings of a sample of parents who had their first child in 2005 with those of a sample of non-parents, from 2000 to 2015. Mothers earned lower hourly pay than women without children. Those out of paid work for more than a year suffered a motherhood penalty of 8.3 per cent.

It is clear from this research that to close the gap, we are going to have to address the motherhood penalty.

Part of the solution might be more affordable childcare, but that’s no panacea. For the greatest impact, we would have to revolutionise the workplace. It would not only require more flexible working hours, but more flexible career progression. That would be a tall order, although developments such as working from home will help.

In the end, though, whether or not the motherhood penalty is ever eliminated will come down to the choices parents make. The different rates at which mothers and fathers use paid parental leave illustrates the current state of play.

In New Zealand, mothers are entitled to 26 weeks of paid parental leave and a further 26 weeks of unpaid leave when a child is born. There is an option for this entitlement to be shared with the father.

It’s difficult to obtain New Zealand data, but journalist Michelle Duff used tax data to show in the 2020–2021 financial year, just 504 men took up the paid portion of leave, compared with 34,184 women. That’s one father for every 68 mothers. Even in the most gender-equal countries, where men and women have the same parental leave entitlements, mothers still use a substantial majority of parental leave. In Iceland and Sweden, it is 70 per cent and in Denmark and Finland, 89 per cent.

Men may be taking on more childcare responsibilities than even 10 years ago. But mothers continue to be much more willing than fathers to trade off paid work for what might be termed a “childcare career”.

The Economist published evidence that in Britain, many mothers choose jobs requiring less education and experience when they do go back to work. In other words, they trade down, often for the flexibility to continue to care for their children. In that research, nearly a third of working women reported being overqualified for their jobs.

Could it be that many women simply prefer to focus on motherhood rather than their careers, or is this all down to social conditioning? If it is the latter, we might expect the pay gap to diminish as those social expectations (which might include women choosing not to have children at all) fade. Time will tell.

One thing is clear though: simply complaining about the pay gap without delving into the reasons for it is unhelpful.

To view the original on the NZ Herald website, click here.

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