The 2018 mid-term elections will keep the heat on politicians to make childcare more plentiful and affordable. But until significant changes are made, more creative thinking is in order before women at all income levels make the choice to forego work and stay home.
Many women decide to avoid childcare expenses and stay home when they calculate their take-home salary compared to the cost of childcare. But this is not the right calculation: the real equation is your salary times the likely number of years out of the workforce—compared to roughly five years of childcare costs. When women leave the workforce to avoid childcare costs, the “childcare” they provide on their own is definitely not “free”.
The Center for American Progress (CAP) illustrates the impact of leaving the workforce to avoid the childcare expense using their interactive childcare costs calculator. Assuming a 30-year-old woman earning $50,000 annually, the tool illustrates that if she leaves the workforce for three years, she gives up not only $150,000 in income but an additional $140,000 in lost wage growth and $125,000 in retirement assets and benefits over her career lifespan. The total $415,000 loss is just the cost of a three-year hiatus for a mid-level professional —many women have higher salaries and are out of the workforce much longer than three years. In hindsight, most women who opt out say that given a do-over they wouldn’t make the same shortsighted financial decision again.
It’s hard to dispute the cost of opting out, but many justify their exit by saying that work is only possible for higher-earning mothers who can afford the childcare they want and need—and keep plenty of money in their wallets. But this is a dead-end observation: there are an increasing number of resources popping up around the country that can help you find childcare that gives your paycheck a break.
When my daughters were young I learned about a very reasonable licensed babysitting service at the home of an acquaintance. You would never have found this woman’s services in the yellow pages…I found her through word of mouth. With simple research you can find similar resources in your local area—as well as websites like Flexable that link parents with individual caregivers, co-working spaces like the Women’s Business Incubator in Seattle that offers a flexible, preschool for children, and Lyft-type services like Zum in Southern California that provide after-school shuttling services.
Employers are also easing the childcare conundrum through on-site daycare or collaborations with big daycare chains. One too often overlooked corporate benefit is Dependent Care Flexible Spending Accounts (FSAs) that allow employees to direct up to $5,000 of their annual salary to a pre-tax spending account that can be used for childcare—including the cost of preschool, summer day camp or after-school care—and, unbelievably, one out of three parents are unaware that this cost-cutting tactic even exists.
Though innovative childcare resources are becoming more plentiful, there is a lot that parents can do on their own through informal babysitting co-ops. When my youngest daughter reached school age and I no longer needed a full-time caregiver, another professional woman and I split the cost of a babysitter who cared for both our daughters after kindergarten dismissal. This arrangement took some creative thinking and negotiating: we didn’t want to pay a full-time salary—so we helped the babysitter fill up her morning caring for the children of other friends.
Most women want flexible work and many want part-time jobs—and it’s also very possible, for example, to find an in-home babysitter who can work two days for one mother’s children and three days for the children of another mother. And not all reputable babysitters come through fee-based agencies or demand top dollar per hour.
The most creative childcare solution I’ve seen was a young, low-income woman who was determined to work, but lacked the earning power to cover the cost of childcare. She became a school bus driver, and the first seat was always taken by her daughter—in a portable baby carrier. Though most highly educated, professional women would not opt for the bus driver job, and there are not many jobs that allow your children to come along, this is proof that throwing up your hands and saying childcare is unavailable and unaffordable is a shortsighted, defeatist and media hype driven view.
There’s no question that safe, reliable and more affordable babysitting situations can be found, but it’s still human nature to focus more on how much money is left after paying the childcare bill today than what a workforce hiatus adds up to in lost income tomorrow. But whatever math you use, there’s little logic to staying home. While you’re paying for childcare, you may not always bring home an abundance of green dollars—but you’ll steadily be earning experience dollars. Your time working is never for naught: you’re always building your resume and putting those experience dollars in the bank so that you can continually advance your earning power and career.
For many years a secretary at IBM brought her three children to different childcare arrangements in three different towns. She was a single mother and childcare swallowed most of her paycheck. But she persevered, saw her work as an investment for the future, and she is now the head of a highly respected non-profit organization.
A physical therapist who works part-time told me she barely has any money left in her paycheck after she pays for in-home child care. She does not focus on this depressing arithmetic—instead she realizes that a big resume gap would set her back in continuing education credits and very quickly make her skills out of date. She sees her work today as an investment in the career gains she can make when her young children come of age for school.
An HR professional I know shares a similar view. She has two young children with a third on the way, and childcare eats up almost 50% of her take-home salary. She has just completed additional certification to advance her career, and with strategic thinking she has created a childcare mosaic that includes both a live-in au pair from abroad and a local daycare facility.
Though she says these arrangements “bleed money”, she does long-term math and takes solace in the fact that both she and her husband can continue to participate in—and maximize contributions to—not one but two 401(k) plans (as well as reap the benefits of two pension plans and life insurance plans), and save in other ways for retirement.
There’s the professional fulfillment angle for this 30-something HR professional, too:
“I get tremendous personal satisfaction and confidence from my work. Caregivers have many educational benefits that have prepared my children well for school—so they’re learning while I’m working and we all keep on track to get ahead.”
The topic of childcare—and how flexwork can mitigate the cost—is addressed in my upcoming book, Ambition Redefined: Why the Corner Office is Not for Every Woman and What to Do Instead (Nicholas Brealey, Hachette Book Group, October 2018).At your wit’s end trying to blend work & life? Think a reasonable work schedule can’t be found at any company? Before you take a costly work hiatus get my FREE GUIDE to 6 types of #flexwork now found in just about every industry & job function… http://bit.ly/2HIY9ea