Want to minimize the financial hit of having kids? Have them after age 30
Is there a wage penalty for motherhood? Research suggests so, showing that having a child has a negative impact on women's earnings, while fatherhood offers a wage bonus for men. For each child a woman has, her wages decrease by about 4 percent, whereas a man's wages rise by about 6 percent when he becomes a dad, perhaps because employers start to see these earners differently once they've become fathers.
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Last month, new research out of Washington University in St. Louis investigated how having children at specific ages impacted a woman's career and earnings. The information is interesting to consider, not just for the purpose of family and career planning, but for the way in which it could help explain why the pay gap only gets worse as we get older. Let's take a look at some of the key findings.
1. Children have a significant effect on the career path of mothers.
For this study, researchers from Washington University in St. Louis and the Copenhagen Business School in Denmark teamed up to analyze data about the earnings of nearly 1.6 million Danish women, ages 25 to 60, from 1995 to 2009. The findings concluded (pretty definitively, because this was such a huge study) that children can impact the earnings of moms in a big way.
Although some may argue that the findings should be taken with a grain of salt because they pertained specifically to Denmark, the gender pay gap is definitely a problem worldwide and the information obtained through this study gives us all something to think about. Also, it's important to note that according to 2015 data, Denmark's gender pay gap was actually less significant than what exists in the United States.
2. The earlier children arrive, the worse the effect on mother's income.
Data analysis revealed that the lifetime earnings for women who gave birth to their first child at the age of 30 or earlier were lower than when women had their first child after the age of 31. The younger the age of the mother, the worse the effect. Women who had their first child before age 25 were especially impacted.
"Children do not kill careers," said Raul Santaeulalia-Llopis, one of the study's co-authors. "Our main result is that mothers lose between 2 and 2.5 years of their labor income if they have their first child before the age of 25."
3. The effects held regardless of education level.
One might think that the reason women earn less when they have children at a younger age is because their education is likely to suffer as a result. However, even when that is taken into account, researchers found that the income gap held firm. Women who gave birth to their first child after the age of 28 consistently earned less over the course of their careers than similarly educated women with no children. This differential existed regardless of education level. The one exception was that college-educated women who had children before the age of 25 lost about two years of salary over the course of their lifetimes, compared with an average 2.5 years of salary loss for women who became mothers before that age who did not possess a college degree.
4. Having children in your 30s is good for lifetime earnings.
Interestingly, women who had gone to college and who delayed having their first child until after the age of 31 were shown to earn more over the course of their lifetimes than women who had no children. In fact, when mothers waited until the age of 37 to have children, they increased their lifetime earnings by about a half of a year's salary overall. These days, women are waiting longer to have children on average, so this should come as good news to many.
Related: Best and worst cities for families
Be sure to check out the full report on this research for more information.
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