Is the Hurdle of the Motherhood Penalty Changing for Working Moms?

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As the United States celebrated Mother’s Day last Sunday, today’s article will continue our recent theme of employment hurdles facing marginalized groups by addressing a major obstacle for working moms.

CALL TO ACTION: Throughout this article series, we want to engage with you, our community, to learn more about organizations that are tackling these hurdles. Our goal is to amplify the good work they are doing to dismantle major employment obstacles and increase diversity and retention.

If you’re a long-time subscriber to the Increase Diversity newsletter, you may remember that this time last year, we asked whether more could be done to build inclusive workplaces for women who have children. I particularly highlighted the “motherhood penalty,” the significant drop in earnings and downward career trajectory that women often experience after becoming parents.

But why are we revisiting this issue in 2024?

In short, because it intersects with several hot topics right now, both politically and in the recruitment community, with many conversations taking place on paid parental leave and fertility benefits, not to mention the new Pregnant Workers Fairness Act that went into effect last June.

Let’s take a closer look at the motherhood penalty and the changes that are now impacting working moms, or will likely do so in the near future, to better understand how we can build equity within our diversity recruiting programs. These are critical issues for a large part of the workforce, because 23.5 million Americans or one-third of all employed women are moms.

Therefore, we will start with a few key facts and figures on the motherhood penalty and how it affects women in the workplace.

Hurdle: The Motherhood Penalty and its Consequences

Some alarming statistics illustrate the size of the problem. Women who take one year off work earn 39% less than those who do not. In the UK, The Fawcett Society discovered that moms with two children earn 26% less than women without children.

A big factor in this is childcare, where the burden continues to fall mainly on mothers.

In an official report from the US Census Bureau, 30% of part-time employed moms with young children mentioned childcare as the reason for not working full-time. It was also by far the most commonly identified reason for career breaks among women with children.

As a result, mothers are 40% more likely than fathers to say childcare issues harmed their career, and a lack of access to care only compounds these problems.

Half of all US families have difficulty finding childcare, meaning that many working moms have to compromise on earnings or career goals. The high cost of childcare pushes many out of the workforce altogether.

The good news is, an increasing number of employers are responding by offering childcare benefits. On-site childcare is the fastest-growing employee benefit of recent years with a 47% increase since 2019, according to The Best Place for Parents’ 2023 National Trends Report.

Nevertheless, it is important to emphasize that the motherhood penalty persists even as children get older. The pay gap narrows but never goes away completely, perhaps because moms face hiring discrimination compared with women without children (as we have mentioned before, with support from multiple studies).

Even worse, the reality is that hiring discrimination starts before women become mothers. According to one former lawyer, merely hinting at the desire to have children—for instance, by asking about childcare benefits in a job interview—is enough to trigger discrimination.

Scholarly research bears this out, suggesting that women who are viewed as having “high future childbearing risk” are discriminated against by employers. In a very real sense, the motherhood penalty may begin long before having children.

More women are apparently responding by taking matters into their own hands, as the reality of this employment hurdle has spurred a rise in female entrepreneurship. Recent academic research has uncovered evidence that women who become mothers are more likely to establish their own businesses to offset the motherhood penalty—a finding that echoes The Fawcett Society’s study mentioned above.

On that more positive note, let’s change tack and focus on two key conversations that could radically change the situation for working moms moving forward.

Conversation 1: Will the US Mandate Paid Parental Leave?

As well as childcare, paid parental leave is vital for working parents yet the US lags behind many other nations. We are the only OECD member country where paid parental leave is not mandated by law, despite the proven benefits of improved postpartum health and greater employee retention.

While the Family and Medical Leave Act does permit 12 weeks of unpaid leave, this is simply unaffordable for many Americans. Companies are increasingly offering paid family leave as an employee benefit to improve recruitment and retention, but only 27% of private sector workers have this option at present and some research suggests its availability is declining.

The wider landscape is changing, however, as paid parental leave was introduced for federal workers in 2020 and 13 states now offer paid family leave programs. President Biden called for a federal paid family and medical lead program in last year’s State of the Union address and reiterated the idea in his 2025 budget proposal in March.

The Family and Medical Insurance Leave (FAMILY) Act was reintroduced to Congress in May 2023 amid this growing momentum, with many voices advocating for paid parental leave to bring the US into line with over 100 other countries.

Another important step in the right direction is the Pregnant Workers Fairness Act, implemented in June 2023, that gives employees the right to reasonable accommodations for pregnancy and childbirth recovery. As we explained in a previous article, this legislation was introduced to prevent pregnant and postpartum women from being fired or forced out of their jobs.

Conversation 2: The Growth of Family-Building Employee Benefits

More than half of employers report improved talent acquisition when offering family leave benefits and this may explain why they are on the rise. On a similar note, fertility benefits are a major growth area and 40% of US employers now provide them.

While they apply to both men and women, these benefits are especially important for women who may be wary of the motherhood penalty and how it can lead to discrimination even before having children. Offering fertility benefits clearly signals an inclusive culture for moms, and 75% of respondents in a large international survey said they viewed these benefits as an important aspect of inclusion. Other studies show that they could have a marked impact on retention.

Unfortunately, this momentum is under threat due to a ruling from Alabama’s Supreme Court in February that caused IVF treatments in the state to be suspended, creating concern over possible implications if other states follow suit. This means an uncertain legal landscape currently surrounds fertility benefits that could stall recent momentum until the legislative picture becomes clear.

How Should We Respond?

First and foremost, we should ensure our own workplaces are fully inclusive of working moms. Beyond that, many advocacy organizations are supporting them at the national level.

These include A Better Balance (who promoted the Pregnant Workers Fairness Act), the Women’s Initiative at the Center for American Progress, the American Association of University Women (AAUW), and the many members of the Paid Leave for All Campaign.

We would like to learn of others that are tackling the issues raised today, whether they be working nationally or regionally. As we explained in the first article in this series, our intention is to engage with the Increase Diversity readership to learn of organizations aiming to dismantle the barriers faced by each marginalized group. We will then compile a list of relevant organizations to share with the community.

In closing, we hope that today’s article has informed and inspired you to create workplaces where moms truly belong, and that support all employees in building successful families.

JOIN US IN THE COMMENTS: What organizations are you aware of (or engaged with) that are tackling the motherhood penalty and related issues? Do you expect the FAMILY Act and the growth in fertility and family benefits to make a real difference for working moms? Share your thoughts below and let us know of any particular organizations you think we should know about.