When it comes to raising a family, childcare costs are a huge expense that can start to rival your mortgage payments. With daycare costs as high as $2,000 per month in major cities, many families opt out altogether, and instead choose to have one parent stay home.
While this might seem economical at first glance, it has a catastrophic long-term negative impact of the lifetime income of the parent that gives up their career, even for only a few years, in order to care for their child.
Childcare is not paid out of one partner’s income, it’s a household expense
I hate when I hear a new mom say the reason she decided not to go back to work is that her monthly income would be a piddly few hundred dollars (if that) after childcare expenses. Many women do the math that if their take home pay is $2,500 per month and they spend $2,000 per month on childcare, they are working full-time hours for a net income of only $500 per month.
Your child isn’t only your child, and therefore the cost of their care isn’t only your responsibility. If both partners are working full-time, then a portion of both of their salaries goes towards childcare expenses. If you earn $2,500 per month and your spouse also earns $5,000 per month, then proportionally you are bringing home 1/3 of the household income and they are bringing in 2/3’s. As a result, you should see it as you’re picking up the tab on 1/3 of childcare expenses, and they’re funding the remaining 2/3. This is the appropriate breakdown to split child-rearing expenses, whether or not you’ve merged bank accounts.
Even the Government of Canada does its calculations proportional to income when determining how much each parent should pay towards child-rearing expenses in separated and co-parenting families. Separated parents split the costs between them, so a portion of the total expense comes out of both their incomes. If you see childcare expenses as coming out of only one person’s income, all you’re really doing is punishing your partner for shacking up with you. Not cool.
You cannot afford to miss out on years of work experience
The finances of one parent staying home to care for children full-time isn’t only about the net income to the household for that year, there are significant long-term costs to be considered. If daycare will cost you $24,000 per year, you might think you’re “saving” $24,000 in expenses by having one parent stay home full-time. But how much damage are you doing to your career?
Every year a person stays out of the workforce, they miss out on experience, networking, promotions, and raises. Certifications and memberships lapse and expire, skills get rusty, and connections are lost. The long-term costs of interrupting your career are substantial, and far more expensive than the out-of-pocket costs of daycare.
Your foot in the door (or rather, on the corporate ladder) is as important as your paycheque. Don’t step out of the workforce because off-the-cuff calculations suggest you wouldn’t be earning enough to “justify” working full-time. Your career is justifiable. Your work matters. What you do is important, and what’s more, it’s equally as important as your partners’ work. Research indicates that workers can expect to lose up to 3 to 4 times their annual salary for each year out of the workforce.
A woman earning the median salary for younger full-time, full-year workers—$30,253 annually in 2014—who takes five years off at age 26 for caregiving would lose $467,000 over her working career, reducing her lifetime earnings by 19 percent. – The Hidden Cost of Interrupting a Career for Childcare
The real cost of staying home with your child full-time is not the difference between your salary and daycare, it’s the years of lost opportunities and missed promotions, which is a multi-six- or seven-figure bill. You can’t afford it.
The “Mommy Tax” is real, and this is why it happens
When it comes to income loss because of parenthood, women bear the brunt of the burden. In fact, where having a child typically has a negative impact on a woman’s career and income, it usually has a net positive impact on those of a man’s. As a result, mothers earn as much as 14% less than childless women.
There are a number of reasons for this, virtually all of which can be summed up in two words: “The Patriarchy”. However, if you want to get specific, the main one is that women are still the default primary caregivers of children. While it is becoming increasingly common for men to take longer parental leaves or become a stay-at-home dad, it’s nowhere near equal. More often than not, it is the mother’s career that is stopped and stunted in the name of providing childcare, and the reasons for this are everything from her income usually being lower (remember the patriarchy?) and her being perceived as the more natural and nurturing parent (there it is again, the patriarchy!).
Unfortunately, this is so ingrained in our culture and society, undoing it will take a few generations and progressive legislations, like mandatory paid paternity leave. It likely won’t be happening in your lifetime, which is why you have to recognize daycare as one of the best career and income protections available to you as a woman.
It might be the best $2,000 per month you ever spent!