How does single motherhood affect wealth?

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Article Highlights

  • Single mothers are more likely to be younger, less educated and Black or Hispanic

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  • The nontrivial costs of child care constrain single mothers' chances for mobility

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  • High levels of education are the biggest hedge against poverty and unemployment

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Editor's Note: The following is an interview between Aparna Mathur and Kimberly Gedeon of MadameNoire.com, a lifestyle website focused on issues faced by African-American women.

MadameNoire: So why are single mothers more likely to be poor?

Aparna Mathur: First, in terms of demographics, data from Pew suggest that single mothers are more likely to be younger, less educated and black or hispanic. Married mothers tend to be older and are disproportionately white and college-educated.

… More than 80 percent of married mothers have jobs but only 60 percent of single-mothers have full-time jobs. One possible reason for this is that single moms have to raise their children alone and bear the costs of child care by themselves. As a result, they often choose jobs with non-standard schedules. These kinds of work schedules are associated with lower earnings and fewer promotions, since employers do not find it in their interest to invest in training these workers.

…Our analysis using data from the Current Population Survey shows that for [married and single] women without children, the difference in incomes in 2012 was a meager $857. However, for married and single mothers, the difference was $19,000—which is pretty striking.

MN: According to the Organisation for Economic Co-operation and Development (OECD), blacks are disproportionately unwed mothers; 72 percent of black children are born to single mothers. Why?

AP: Marriage rates have fallen for both blacks and whites since the 1960s, but have fallen much more sharply for blacks. As a result, as per data from the Census Bureau, 55 percent of black children live in single-parent homes relative to 21 percent of whites. I believe one big reason for this is the high rate of teen pregnancies amongst blacks relative to other racial and ethnic groups. As a result, many more girls become single mothers at a young age, which leads to poor life outcomes, in terms of education and earnings.

Research also suggests that when women or girls grow up in disadvantaged families and where they perceive a lack of economic opportunity and advancement, they are more likely to settle for having babies outside of marriage.

MN: On MadameNoire, we published an article about IBM executives who revealed that they did not want to hire young women because they’ll get “pregnant over and over again.” Does gender bias in the workplace thwart a single mother’s career mobility?

AP: …There are several reasons why single mothers have a lower trajectory of earnings and promotions. A lot has to do with their inability to take up full-time jobs since they are the sole guardians for their children, and the costs of childcare have increased tremendously in recent times. However, some of it is also likely to be a consequence of employers being reluctant to hire women who will take time off for having kids. While this could show up in the gender wage gap if employers adjust by paying women less, this kind of discrimination is hard to prove, since there are so many factors that could explain wage differences. In fact, some studies suggest that the wage gap all but disappears if we control for the significant factors, such as education level, occupation and experience.

A more likely factor is that single mothers are constrained in their job choices, and the costs of childcare are prohibitive, further limiting their work schedules.

MN: Is the argument that single mothers are “not employable” valid or unfounded?

AP: I think there is some truth to the statement that employers may be more reluctant to hire women who are likely to take time off for maternity leave and other child-rearing responsibilities. However, I would think that instead of not hiring single mothers at all, employers would compensate for their loss of productivity during periods of maternity leave, by making other adjustments, such as adjusting wages downward or not providing other benefits. Clearly a lot would depend upon their cost-benefit calculation. For highly educated and productive women, these issues are less of a concern for employers as well.

MN: What other factors can hinder a single mom from saving and wealth building?

AP: To begin with, single mothers have lower incomes and lower earnings potential due to relatively low levels of education, which results in lower lifetime earnings, leading them to save less and build up less wealth. This is particularly true in the case of teenage moms, who often do not pursue an education once the child is born. On those low incomes, they have to sustain running a household, meeting rental, car, grocery and other expenses. Second, they have to support their children’s education and health care expenses all on their own income, which leads to lower levels of savings. With poor incomes, they are unlikely to build up much in terms of social security contributions, and therefore have lower levels of social security at the time of retirement…

MN: Single mom Shanesha Taylor, who left her two kids in a hot car to attend a job interview, made national headlines. What’s your take on Taylor’s daunting experience?

AP: Shanesha fits our image of a typical low-income single mother, trying to make ends meet. Life is a struggle with meeting expenses, looking after children and providing for their education. Shanesha wanted to improve her life by getting a job, but even showing up for the job interview proved to be a struggle. I have a lot of sympathy for her and women in her situation who feel trapped by their economic and social circumstances, but are hoping against hope for an opportunity to transform their life.

In my study with my colleague Abby McCloskey, [...] one of the things we talk about is reforming the system of child care support that exists in the current tax code. In particular, we talk about expanding the size of the child care tax credit and making it refundable. The child care tax credit provides a credit for families to help meet their child care expenses. Currently, the size of the credit is low relative to average costs of child care and it has not been expanded since the 1980s. Also, it is not refundable—in other words, if a tax filer does not have a tax liability, they don’t get the advantage of the tax credit. This leaves many low-income women out of the system. Our proposal would help low-income women access the credit and offset more of their child care expenses, enabling them to enter the workforce more easily.

MN: What do you say to young women who say, “Marriages fall apart, too. A piece of paper and a ring doesn’t help!”

AP: While single mothers fare worse in the labor market than married mothers, I think the solution to improving economic mobility begins before you enter the labor market. The strongest predictor of high mobility is investments in education—completing high school, going to college or  technical or vocational school. That is key. Unemployment and poverty rates are highest for individuals with low levels of education. So go to school and get trained! The older the ages at which women get married, the higher their education levels, the more stable are the families and the higher the earnings potential of the family.

MN: Lastly, for women who are single moms, are there solutions to improve their financial standing?

AP: High levels of education are the biggest hedge against poverty and unemployment. All other solutions are secondary. The social safety net is a last resort! For low-income women, there are government programs like the Earned Income Tax Credit that have been successful at getting them to enter the labor market. These could be expanded. The child care tax credit should be expanded to enable them to meet expenses of child care while staying employed. I personally do not believe that the government should force employers to offer paid maternity leave, since that could impose costs on businesses and make them more reluctant to hire women who will avail of these benefits.

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