Women are working more everywhere…except in the U.S. That headline in The Washington Post calls attention to what I agree is our country’s underutilized resource. Indeed, many “privileged” high-potential, mid-career women leave the workforce each year primarily because they feel they should be home with young children. But through my work I have met thousands of less financially secure women who leave the workforce—and never return—blaming the cost of child care for a decision that could impact their standard of living for many years to come.
Child care does carry a big pricetag—an average of $7,800 per year as the article notes. For women who earn far less than six figure salaries, that’s a huge after-tax expense. A minimum wage worker brings in only about $15,000 per year, which means that once they pay taxes, child care likely eats more than half of their earnings.
Does it make sense to pay out more than you bring in? For higher earners, at what point does the expense of child care outweigh the benefits of working? To both questions, I believe that for mothers child care is truly the cost of doing business. As the article points out, it’s shortsighted to leave the workforce because of child care costs—especially because the cost of long-term financial security is so much more.
In the book I have underway, Work for A Rainy Day: Why A Woman’s Work is Never Done, I address many facts that women often do not consider when they make the decision to stay out of the workforce for what often becomes a period of many years. Here are just four:
- Women need a minimum of 10 contributing years to earn enough credits to be eligible for Social Security on their own earnings record. An informal study I once conducted found that a significant percentage of MBAs work less than 10 years after earning their degree.
- Women lose 20% of their earning power when they are out of the workforce for just one year. I’ve seen the average number of years out as 12—dramatically increasing the loss of earning power.
- Medicare does not cover all of the huge health care costs incurred in retirement. The average retired couple will need $240,000 just to cover unreimbursed health care costs in their retirement years.
- As longevity rates increase, we do not only need to fund our own retirements that could span 30 years or more, we may have to support elderly parents who run out of money or adult children who struggle in an increasingly unstable freelance job market.
Just these facts are reasons to stay in the workforce–despite the percentage of your income childcare costs take away. Remember that there are many definitions of “work” and many part-time, freelance and entrepreneurial ways to minimize the hours you are away from home and still generate a paycheck. When your children are young, your pocketbook could have many lean years, but you’ll make wise investments in your portfolio of skills, future earning potential, long-term marketability, and lifetime financial security, too.
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