The cost of having children — women lose earnings for 5 years after birth: RBC

Having children comes at a “significant” cost for a woman’s career, according to a recent report from the Royal Bank of Canada, which says women are paid less than they would otherwise have been for up to five years after giving birth.

In the year following the birth of a first child, women aged 25 to 34 saw their earnings fall by almost half compared to women with no children, according to the 2016 census, said RBC Economics Research.

While this isn’t surprising, considering most women take parental leave and stop doing paid work for as long as 18 months in Canada, the study said the drop in income lasts for years after they go back to work.

“A more worrying statistic is that women experience a significant earnings penalty spanning five years after the birth of a child,” said Andrew Agopsowicz, senior economist at RBC, said.

Overall, women aged 25 to 38 saw earnings that were down by four per cent in the five years after having a child, compared to those with no children, the study said.

It’s even worse for younger women, with those aged 25 to 29 losing an additional 14 per cent in earnings over this period.

The reason younger women see more of an income loss could be due to having children at the same time as a key period for career development and advancement, RBC said.

“Focusing on women who have their first child between the ages of 30 and 34, we find that while there is again a substantial initial cost, earnings quickly return to, and even surpass, the level of those without children,” Agopsowicz said.

“This suggests that having children early in one’s career can have an outsized impact on earnings.”

Fathers see incomes rise

On the other hand, men do not typically experience any penalty for having children, according to the report, which says men actually see an increase in earnings after they become fathers.

“Whether this is because employers see fathers as harder working or more committed than non-fathers is up for debate and further study, but the fact remains that career costs of parenthood are largely placed on women,” Agopsowicz said.

Women having to balance the demands of work and family to a greater degree than men also leads them to spend “substantially” more time doing unpaid work, especially childcare, the study said.

Last year, about a third of women aged 25 to 34 said they were working part-time in order to care for children, compared to less than five per cent of men in the same age group.

“A woman working part-time earns 74 cents for every dollar a full-time female worker earns, compounding even further the wage gap,” Agoposowicz said.

“Additionally, working part-time may make it more difficult to be considered for promotion into higher-paying management roles, contributing even further to the difference in wages between men and women.”

Women delay having children

One of the ways that women mitigate losing income in their careers is to delay having children.

The average age of women at the birth of their first child went from around 27 years in 2001 to around 29 years in 2016, according to the report.

“The data suggests some women are waiting until their career is more established before starting a family,” Agopsowicz said. “This is especially true as more and more women enter professional programs such as law, medicine or business.”

Added to all this, having children is not the only factor that weighs on earnings for women.

The study said more women are working less in order to take care of older family members.

“While there has been an increase in both men and women reducing their work hours due to “personal or family responsibilities,” women continue to bear the greater burden,” RBC said.

“This trend is projected to continue, creating a new imperative for policymakers to help women manage the responsibilities of not only raising children, but caring for the elderly as well.”

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