ECONOMIC ENGAGEMENT OF MOTHERS - Kauffman.org

ECONOMIC ENGAGEMENT

OF MOTHERS: ENTREPRENEURSHIP,

EMPLOYMENT, AND

THE MOTHERHOOD WAGE PENALTY

Jessica Looze and Sameeksha Desai | DECEMBER 2020

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Economic Engagement of Mothers: Entrepreneurship, Employment, and the Motherhood Wage Penalty

AUTHORS

Jessica LoozeI and Sameeksha DesaiI

ACKNOWLEDGMENTS Michelle Budig, Tessa Conroy, Alyse Freilich

SPECIAL PRODUCTION THANKSKim Wallace Carlson, Kim Farley, Lacey Graverson, Megan McKeough,

Tim Racer, Kayla Smalley, Shari Wassergord

This is a publication by the Ewing Marion Kauffman Foundation utilizing content and data from multiple sources and external contributors. Every effort has been made to verify the accuracy of the information contained herein, and it is believed to be correct as of the

publication date. Nonetheless, this material is for informational purposes, and you are solely responsible for validating the applicability and accuracy of the information in any use you make of it.

© 2020, Ewing Marion Kauffman Foundation

Suggested citation: Looze, J and Desai, S. (2020) Economic Engagement of Mothers: Entrepreneurship, Employment, and

the Motherhood Wage Penalty, Ewing Marion Kauffman Foundation: Kansas City.

IEwing Marion Kauffman Foundation

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ECONOMIC ENGAGEMENT OF MOTHERS: ENTREPRENEURSHIP, EMPLOYMENT, AND THE MOTHERHOOD WAGE PENALTY

Table of Contents

Introduction ............................................................................................ 3

The economic role of mothers in their households ........................................ 4

Barriers to mothers’ economic participation ................................................. 4

Thefinancialandnonfinancialcostsofchildcare .............................................. 5

The motherhood wage penalty ................................................................... 5

Whatcontributestothemotherhoodwagepenalty? .......................................... 6

Biasinhiringandpromotion................................................................................ 7

Entrepreneurship and motherhood .............................................................. 7

Whydomothersbecomeentrepreneurs? ........................................................... 8

Whatstopsmotherswhowanttostartabusinessfrom becomingentrepreneurs? .................................................................................... 8

Career and caregiving pathways ................................................................. 9

Policy considerations ............................................................................. 10

Work-familypoliciescanhaveasignificantimpact onentrepreneurship .......................................................................................... 10

Supportingmothersisavitalpartoftherecovery fromtheCOVID-19recession ............................................................................ 10

Paidfamilyleaveforallworkers ........................................................................ 11

Affordable,high-qualitychildcare ..................................................................... 12

Flexibleschedules ............................................................................................. 12

Whatcouldthesepoliciesdoforentrepreneurship? ......................................... 13

References ........................................................................................... 14

Endnotes .............................................................................................. 16


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IntroductionTheeconomicvaluewomenbringtotheirownhouseholdsandtothebroadereconomyiswell-documented.Infact,nearlyalloftheeconomicgainsthathaveoccurredamongmiddleclassfamiliessince1970havecomefromtheincreasedearningsofwomen.1 Mothersmakesubstantialcontributionstothefinancesofmanyfamiliesandhouseholds.In2018,nearlyhalfofthemorethan 30millionfamilieswithchildrenunder18intheUnitedStateshadeitherasinglemotheroramarriedmothercontributingatleast 40%ofacouple’sjointearnings.2

Nearly all of the economic gains that have occurred among middle class families since 1970 have come from the increased earnings of women.

Mothers’unpaidworkisalsocrucialtotheirhouseholdsandtheeconomy.Mothersspendmoretimethanfathers“orchestratingfamilylife,”includingcaringforchildren,transportingthemtoschoolandotheractivities,anddoinghousework.3Whileitisdifficulttodeterminethemonetaryvalueofunpaidhouseholdwork,estimatessuggestthatincorporatingthevalueofnonmarketworkwouldraisenominalGDPbysomewherebetween30%and40%.4

Despitetheimportanceofmothers’economiccontributions,thebroadereconomyfailstosupportmothersinavarietyofways. Thewell-beingofchildrenisnotonlyimportantforfamilies,butalsothefutureoftheeconomy.Yetthecostsofraisingchildrenfalllargelyonfamilies—anddisproportionatelyonmothers.Inadditiontothelackofsupportforcombiningcareerswithcaregiving,mothersfaceamotherhood wage penalty,whichaccountsformuchofthegenderwagegap.5Evenentrepreneurship,aneconomicactivitythatcanpotentiallyoffermoreautonomyandflexibility,ismademoredifficultformothersbychildcarechallengesandbarrierstoentrepreneurshipforwomenmorebroadly.

Whyismotherhoodundervaluedandunsupportedeconomically?Howdoesmotherhood,andthemanychallengesthataccompanyit,shapewomen’sdecisionsabouttheircareerchoicesandabouttheirpursuitofentrepreneurshipinparticular?Whatdoesentrepreneurshipsupportmeanforentrepreneurswhoaremothers?Andhowcanwesupportmothers’accesstoopportunitiestoengageintheeconomy—andeasetheiraccesstoopportunitythroughentrepreneurship?

Thisreporttakesuptherelationshipamongmotherhood,caregiving,thepersistentwagepenaltyitcarriesforwomen,employment,andentrepreneurship.Wediscussthemotherhoodwagepenalty,andseveralofthefactorsproposedtohelpexplainit.Wealsodiscussengagementinentrepreneurshipamongmothers,andspecificallyhowchildrenshapewomen’sdecisionsabout—andopportunitiesfor—businessownership.Wepayparticularattentiontotheimplicationsofthefluiditybetweenentrepreneurshipandwageandsalarywork,asindividualsmoveinandoutofthesetypesofworkthroughouttheirlives.Thetypesofconstraintsmothersfaceandsupportstheyreceivecanhaveaprofoundeffectonthesetransitions.Finally,weendwitharoadmapforsupportivepoliciesthatenablemotherstoengageinmeaningfulwork,providefortheirfamilies,andcontributetothebroadereconomy.Thesepoliciesmustbeacentralfeatureofthepost-COVID-19economy.

Why is motherhood undervalued and unsupported economically? How does motherhood, and the

many challenges that accompany it, shape women’s decisions about

their career choices and about their pursuit of entrepreneurship

in particular?

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The economic role of mothers in their householdsDespitepersistentnarrativesandpublicpoliciesthatassumethemajorityofhouseholdshaveafull-timestay-at-homemotherandanemployedmalebreadwinner,onlyabout1in5Americanhouseholdshasastay-at-homeparent.6In2019,72.3%ofwomenwithchildrenunder18yearsoldwereemployed,aswere66.4%ofmotherswithchildrenunder 6yearsold.7

Motherswhoareentrepreneursmakecrucialfinancialcontributionstotheirfamiliesandtheeconomy.Amongentrepreneurmothers,1in4reportedbeingthesoleproviderintheirhouseholdpriortothepandemic.Twenty-sevenpercentofBlackentrepreneurmothersreportedbeingsoleproviders,comparedto19%ofHispanicentrepreneurmothersand23%ofwhiteentrepreneurmothers.

Eveninhouseholdswithadditionalsourcesofincome,entrepreneurmothersareoftensubstantialcontributors.OfBlackentrepreneurmothers,43%reportedcontributingatleast half(butnotall)oftheirhouseholdincome,and51%ofHispanicand52%ofwhiteentrepreneurmothersdidthesame.Takentogether,70%ofBlackentrepreneurs,71%ofHispanicentrepreneurs,and76%ofwhiteentrepreneurswhoaremotherscontributesomewhere betweenhalfandalloftheirhouseholdfinances.8

TheCOVID-19pandemichasincreasedtheimportanceofthecontributionsthatentrepreneurswhoaremothersmaketotheirhouseholdfinances.Morethanathirdofmarriedorcohabitingentrepreneurswhoaremothers(35%)reportedthattheirspouseorpartnerhadbeenlaidoff orfurloughedand/orhadtheirhoursorpaycutduringthepandemic.Theincomebroughtin bytheseentrepreneurswhoaremothershasbecomeevenmorevitaltofamilyfinances.9

Barriers to mothers’ economic participationDespitemothers’highratesoflaborforceparticipationandtherelianceofhouseholdsandthebroadereconomyonmothers’paidandunpaidwork,manymothersdonothavethesupporttheyneed.Asaresult,mothersfacesubstantialchallengesbalancingcaregivingandfamilyresponsibilitieswitheconomicparticipation.

Thearrivalofachildbringsimportantshiftsinhouseholdneedsandresources,shapingparents’economicactivitiesinmultipleways.Householdresponsibilitiesandexpensesincreasewiththeadditionofanewfamilymember.Inadditiontofood,clothing,andmedicalservices,childrenrequiremanyhoursofcareandnurturingeachday.Manyparentsdonothaveaccesstopaidleavethatwouldallowthemtostayhomeintheirchildren’searliestweeksandmonthswithoutasignificanteconomiccost.Related,thelackofhigh-quality,affordablechildcareinmanypartsoftheU.S.makeparents’ongoingdecisionsabouthowtobalancetheircareerswiththeirchildren’sneedsdifficult.Inadditiontoprovidingfortheimmediateneedsofyoungchildren,newparentsmustplanforthemorelong-termcaregivingandfinancialcommitmentstheywillneedtomaketoprovidefortheirfamilies.

1in 4reported being the sole

provider in their household.

Among entrepreneur mothers

3 in 4reported their income

contributes to at least half of their household finances.

Among entrepreneur mothers

Many parents do not have access to paid leave that would allow them to stay home in their children’s earliest weeks and months

without a significant economic cost.

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The fi nancial and nonfi nancial costs of child careFormanymothers,thecostsofchildcarecanaffecttheviabilityofholdingajob.Ifchildcareexpensesaregreaterthanthetake-homepayfromajob,itmaynotbefinanciallyviabletoremainemployed.Atthesametime,ifcarearrangementsareinconvenientbecauseoftheirlocationsorbecausetheyhavelimitedhoursofoperation,aparenthasmoreconstraintsontheiremploymentopportunities.Unpredictabilityofschedules,especiallyprevalentinlow-wage,servicesectorjobs,makeitdifficultformanymotherstofindcarearrangementsthatalignwiththeirworkschedules.10

Inadditiontothefinancialcostsofchildcareitself,thereareothercosts,includingtransportationandtimespentawayfromotheractivities.Simplyput:thereare24hoursinaday.Ifittakes30minutesinadditiontoaparent’sregularmorningcommutetodrivetoachildcarelocation,andanother30minutesonthewayhomeintheevening,thisleavesparentsonelesshourperdaytoengageinotheractivities.

Thesefactorsallhaveimportantimplicationsforwhether,when,andhowmothersparticipateinthelabormarket.Theyalsohaveimplicationsformothers’accesstoopportunitiesthroughentrepreneurshipandtheoutcomesoftheirbusinesses.Motherswhodonothaveregularaccesstoaffordable,high-qualitychildcarearefacedwithdifficultdecisionsastheyseektobalancetheirchildren’ssafetyandearlydevelopmentwiththeirfamilyfinancesandtheirabilitytocommittotheirownjobs,careers,andopportunities.

The motherhood wage penaltyAmongfull-time,year-roundworkers,womenearn81.5centsforeverydollarearnedbymen—agenderwagegapof18.5%.11Thisgapisnotablysmallerbetweenwomenandmenwithoutchildren(about7%)12andmuchlargerbetweenwomenandmenwithchildren.Medianannualearningsamongmotherswhoareemployedfull-time,year-roundis$40,000,comparedwith$56,000forfathers,amountingtoagapofnearly29%.13Thegenderwagegap,then,islargelyamotherhoodwagegap—theresultofthemotherhoodwagepenalty.

Althoughestimatesvary,thegrossmotherhoodwagepenaltyistypicallyestimatedtobebetween5%and10%perchild.14Thisamountvariesbymothers’ageatfirstbirthandnumberofchildren.Womenwhobecomemotherswhentheyareolderfacesmallerwagepenalties,15whilemotherswhohavegreaternumbersofchildrenfacelargerpenalties.16

Themotherhoodwagepenaltyislargeramongwhitewomen,andchildrenhavesmallereffectsonthewagesofBlackandHispanicwomen.17TheearningsofBlackandHispanicwomenarelower,onaverage,thanthoseofwhitewomen.Medianweeklyearningsofwhitewomenare78.4%ofthoseofwhitemen,comparedto61.4%and56.0%forBlackandHispanicwomen,respectively.18LowerearningsamongBlackandHispanicwomenmeanthereislessroomforthesewagestofall.

$56,

000

ANN

UALL

Y

$40,

000

ANN

UALL

Y

Median annual earnings among mothers who are employed

full-time, year-round is $�0,000, compared with $5�,000 for fathers, amounting to a gap of nearly �9%.

The gender wage gap

is largely a motherhood

wage gap — the result of the motherhood

wage penalty.

genderwage gap

White women earn

78.4%WOMEN’S MEDIAN EARNINGS COMPARED TO WHITE MEN

Black women earn

61.4%Hispanic women earn

56.0%of what white men earn.

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What contributes to the motherhood wage penalty?Work experience and job tenure.Manywomentaketimeawayfromthelabormarketfollowingthebirthoradoptionofachild.Thistimeawayresultsinlostopportunitiesfordevelopingandcultivatingrelevantskills,buildingprofessionalnetworks,andreceivingpromotionsandpayincreases.Lessworkexperienceaccountsformuchofthemotherhoodwagepenalty.19

Competing demands.Manyworkplacescontinuetobestructuredaroundexpectationsofthe“idealworker”whohasfewdemandsoutsideofwork,includingtakingcareofchildren.20Yetmothersspendmoretimeprovidingcareforchildrenanddoinghouseworkthanfathers.Mothersspendanaverageof1.74hourscaringforandhelpingchildreninthehouseholdeachdaycomparedto0.91hoursamongfathers.21Evenwhenmothersprovidemoreincomeforthefamily,theyspendabout30%moretimewithchildrenthanfathers.22

Part-time work. Whilethemotherhoodwagepenaltyexistsevenamongfull-time,year-roundworkers,women’sdisproportionaterepresentationinpart-timework—whichoftenisnotpaidaswellasfull-timework—contributestotheirlowerearningsoverall.Somewomenchoosepart-timeworktoaccommodateotherresponsibilitiesorinterests,buttherearemanywomenwhoearnlessbecausetheyareinvoluntarypart-timeworkers—theyarewillingandabletoworkfull-time,buttheycanonlyfindpart-timeemployment.Womenofcoloraredisproportionatelyemployedininvoluntarypart-timework.23Evenwomenwhoareemployedpart-timevoluntarilymaybechoosingthislower-incomepathbecausecaregivingresponsibilitiesmakefull-timeworktoodifficult.Infact,onethirdofwomenwhoworkpart-timevoluntarily(34%)reportdoingsobecauseofchildcareproblemsand/orfamilyorotherpersonalobligations,comparedto8%ofmen.24

Long and infl exible hours. Formanyfull-timeworkers,especiallythoseinprofessionalandmanagerialjobs,workhourshaveincreasedinrecentdecades.25

Workingverylonghours(usuallydefinedas50ormorehoursperweek)hasbecomeincreasinglycommon.Compensationforworkinglonghourshasincreased,leadingtowagedifferentialsbetweenthosewhoareabletoputintheselonghoursandthosewhoarenot.26Evenifmothersremainemployedtheirincomesmaysufferiftheyarenotabletoputinthelonghours—oftenduringparticulartimesoftheday.

“Family-friendly” work. Withtheexceptionofpart-timework,“family-friendly”jobcharacteristicshavenotbeenfoundtoaccountformuchofthemotherhoodwagepenalty.Infact,manysuchcharacteristics,includingautonomyandscheduleflexibility,areassociatedwithhigherwages.28Themotherhoodwagepenaltyissmallerinoccupationscharacterizedbygreaterautonomy,fewerteamworkrequirements,andlesscompetitiveness—allcharacteristicsmorecompatiblewithfamilyandcaregivingneeds.29Itappears,then,thatwiththeexceptionofhoursspentatwork,mothersarenottradinghigherwagesformorefamily-friendlyworkconditions.

MOTHERS SPEND MORE TIME CARING FOR AND HELPING CHILDREN IN THE

HOUSEHOLD THAN FATHERS.

1in 3women who work

part-time voluntarily report doing so because

of problems with child care or family or other personal reasons

compared to �% of men.

Compensation for working long hours (usually defi ned as 50 or more hours per week) has increased, leading to wage diff erentials between those

who are able to put in these long hours and those who are not.

In households in which husbands work very long hours, wives — and especially mothers —

are more likely to exit the labor market.27

This suggests that many mothers whose spouses are employed very long hours likely withdraw from the labor market because they

take on more responsibilities at home. The same pattern, however, is not seen among husbands whose wives work long hours.

1.74 HOURS

0.91 HOURS

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Work effort.Becausemothersspendmoretimeandeffortonchildcareandhousework,theyareassumedtospendlesseffortonpaidwork.30Thispresumptionoflowerproductivityatworkthenleadstolowerwages.Infact,mothersreportsimilarlevelsofworkeffortasfathersandmenandwomenwithoutchildren,however,andmothersreportgreaterjobengagementand workintensitycomparedtofathers.31

Job mobility.Movingfromonejobtoanotherisanimportantwaythatmanyworkersincreasetheirwages,especiallyintheearlyyearsoftheircareers. Whilemorethanaquarterofmotherswhochangeemployersfollowingthebirthofachild(27.3%)switchtojobsthatprovidelowerpay,anevengreaterproportion(38%)whochangeemployersfollowingthebirthofachildendupinjobswithhigherpay.32Motherswithyoungchildren,however,arelesslikelythanwomenwithoutchildrentochangejobsvoluntarily.33Ifmothersexperienceasortof‘joblock’inthattheyarelesswillingorabletochangejobs,especiallyintheirearlycareers,theymaymissoutonopportunitiestoincreasetheirwages.34

Entrepreneurship and motherhoodTherearetwoimportantconsiderationstokeepinmindwhenthinkingaboutentrepreneurshipandmotherhood:

1. Financial considerations, caregiving responsibilities, and time demands are intertwined. These factors shape the types of opportunities mothers have as entrepreneurs, their access to resources and networks, and their financial and growth outcomes.

2. The relationship between an individual as a employee and as an entrepreneur is fluid, as entrepreneurship is one of the many options that individuals may consider when thinking about how to engage in the economy alongside other aspects of their lives.

Motherswhoareentrepreneursconfrontmanyofthesamechallengesthatemployedmothersfacewhenitcomestocombiningcaregivingandhouseholdresponsibilitieswithpaidwork.Infact,self-employedwomenreportspendingmoretime,onaverage, onchildcareactivitiesandlesstimeinpaidworkcomparednotonlyself-employedmen,butalsotoemployedwomenandmen. Self-employedwomenreportanaverageof14hoursperweekofprimarychildcare(meaningthatchildcareisthemainactivityconductedduringthattime)comparedto11.9hoursamongemployedwomen.Differencesintimespentonsecondarychildcare(caringforachildwhiledoinganotherprimaryactivity)areevenlarger,withself-employedwomenspendingaboutanhourmore onsecondarycareperday(5.7vs.4.6hours).36

Bias in hiring and promotion

Mothersareoftenperceivedaslesscompetentandcommittedtotheworkplace,andthisbiasshowsupinemployers’decisionsabouthiringandpromotions.Womenjobapplicantswithoutchildrenwereabouttwiceaslikelyasequallyqualifiedmotherstoreceiveacallbackfromapotentialemployer.Evaluatorswhosawfictitiousjobapplicantprofilesthatvariedonlybyparentalstatusratedmothersaslesscompetentandcommittedtopaidwork,recommendedthemlessoftenforhireandwerelesslikelytopromoteorrecommendthemformanagementcomparedtowomenwithoutchildren.They also recommended starting salaries for mothers that were 7.4% less than those offered to women without children.Instarkcontrast,fatherswereseenasmorecommittedtopaidworkandwereofferedhigherstartingsalariesthanmenwithoutchildren.35

Mothers who are entrepreneurs confront many of the same challenges that employed mothers face when it comes to combining

caregiving and household responsibilities with paid work.


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Childrenincreasethelikelihoodthatwomenwillenternonprofessional,nonmanagerialself-employment:eachadditionalchildincreaseswomen’slikelihoodofself-employmentinnonprofessional,nonmanagerialoccupationsby10%,whiletheyhavenoeffectonthelikelihoodwomenwillenterprofessional,managerialself-employment.37Notably,womenentrepreneursinprofessionaloccupationsdonotfaceawagepenaltyforchildren.However,womenentrepreneursinnonprofessionaloccupationsfaceawagepenaltyofapproximately6%perchild.Thispenaltymeansthatifawomanstartswith$10,000inearningsfromself-employmentinanonprofessionaloccupation,herearningswillfallto$9,400afterherfirstchildandto$8,836afterhersecondchild.Muchofthispenaltyistiedtothelargeshareofnonprofessionalwomenentrepreneurswhoarechildcareproviders,andthelowwagesassociatedwiththiswork.38

Each additional child increases women’s likelihood of self-employment in nonprofessional, nonmanagerial occupations by 10%

Why do mothers become entrepreneurs?Amongmotherswhohavebecomeentrepreneurswithinthelastfiveyears,thetopreasonsforhavingstartedabusinessinclude:39

57%Be my own boss,

be independent, or control my future

52%Make money,

obtain a higher standard of living, or increase my wealth

46%Gain greater

flexibility or provide more work-life

balance

44%Follow

a passion

37%Take advantage

of a business opportunity

What stops mothers who want to start a business from becoming entrepreneurs? Nearly2in5motherswhoareveryinterestedinstartingabusinessbutultimatelydonotreportthatfamilyandcaregivingresponsibilitiesisa

primaryreason.Amongthesemothers(pre-entrepreneurshipleavers),40thetopreasonsfornotbecomingentrepreneursinclude:

44%My business

might not be able to survive

37%Family considerations like marriage/divorce/

child care/aging parent care

31%It might take

too much time

27%Might lose focus,

lack drive, passion or motivation or

just burn out

21%Need employer-

provided health care/insurance

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Career and caregiving pathwaysThefluiditybetweenwageandsalaryemploymentandentrepreneurshipcanbeseenwhenweconsidertheoptionsavailabletomothers.Entrepreneurshipisoneofthemanyoptionsthatindividualsmayconsiderwhenthinkingabouthowtoengageinpaidworkalongsideotheraspectsoftheirlives.Atleastfivepathwaysmayemergefromcareerandcaregivingconsiderations:

Mothers who previously passed up a wage or salaried job because they felt it would conflict with family obligations were more likely to become entrepreneurs than

those who had not passed up such an opportunity, suggesting that entrepreneurship may offer some mothers a way to achieve more work-family balance.

Leave the labor force entirely

Ifbalancingpaidworkandcaregivingisnotattainable,somemothersmayleavethelaborforceentirely,atleastforatime.Thisdecisionresultsincriticallossesinjobskills,experience,andtenure.Italsooftenresultsinsubstantialwagepenaltieswhenandifmothersreturntothelaborforce.

Turn to necessity-driven entrepreneurship

Somemothersmayleavewageorsalaryworkandturntonecessity-drivenentrepreneurshiptoavoidcompletelydisconnectingfromthelaborforce.Amothermaymakethischoiceifshehadpreviouslybeenworkinginalow-payingjobthatdidn’tprovidetheflexibilityandfinancialresourcesnecessarytomeetcaregivingneedsandmaintainemployment.Whennecessity-drivenentrepreneurshipresultsinself-employmentinnonprofessionaloccupations,itisoftenlow-payingandmaynotprovideenoughincomeforfamilies.

Choose entrepreneurship to balance multiple priorities

Somemothersmayleavewageorsalaryworkandchooseentrepreneurshipinordertocreateaviablemodelofeconomicparticipationandcaregivingthatworksfortheiruniquesituation.Thischoicemaybemorecommonwhenwageorsalaryemploymentdoesnotprovidetheflexibilitythatmothersneed.Motherswhopreviouslypassedupawageorsalariedjobbecausetheyfeltitwouldconflictwithfamilyobligationsweremorelikelytobecomeentrepreneursthanthosewhohadnotpassedupsuchanopportunity,suggestingthatentrepreneurshipmayoffersomemothersawaytoachievemorework-familybalance.41

Remain employed

Ifbalancebetweenwageorsalaryemploymentandcaregivingisviable,somemothersmaybeabletoremainemployed,continuetogenerateincome,buildtheirskills,andincreasetheirexperience.Thismaybetterpositionmotherstoengageinentrepreneurshipshouldanopportunityarise.

Choose entrepreneurship to pursue an economic opportunity

Ifbalancebetweeneconomicparticipationandcaregivingisviable,somemothersmaybeabletochooseentrepreneurshipinsteadofwageorsalaryworkinordertopursueanentrepreneurialopportunityandgrowtheircareerinthisway.

Figure 1: Five career and caregiving pathways of mothers

Note: The five pathways represent typologies of activities, but they are not mutually exclusive and not exhaustive.


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Policy considerationsSupportingmothersastheymoveamongeconomicactivitiesthroughouttheirlivesisimportanttoensuringgreatereconomicgainsforwomen,fortheirfamilies,andforthebroadereconomy.Policies,therefore,shouldgivemotherhoodtheeconomicimportanceandsupportthatitdeserves.

Work-family policies are not traditionally considered entrepreneurship policies but can have a significant impact on entrepreneurship.Policiesmustaddressthechallengesthatfamilies—andparticularlymothers—faceinattendingtobothpaidworkandcaregivingresponsibilities.Themotherhoodwagepenaltyandbarrierstoeconomicopportunitiesforwomenareproblemsfacingthewholeeconomy.Work-familypoliciessuchaspaidleave,affordableandhigh-qualitychildcare,andflexibleschedulesenablemotherstoremainconnectedtothelabormarket—bothasemployeesandasentrepreneurs.Whilenottraditionallyconsideredentrepreneurshippolicies,theyplayanimportantroleinpavingaroadtowardaccesstoopportunityforentrepreneurshipforthoseindividualswhomaywanttopursueit.

Supporting mothers is a vital part of the recovery from the COVID-19 recession

COVID-19hasleftmanyfamiliesscramblingtocareforandeveneducatetheirchildrenaschildcarecentersandin-personschoolshaveclosed.Thebulkoftheseresponsibilitieshavefallentowomen.42Giventheintensifieddemandsaroundcaregivingalongsidearecessionthathasdisproportionatelyaffectedthetypesofjobsthatwomen—especiallywomenofcolor—oftenhold,suchasthoseintheservicesectorandretail,it’snotsurprisingthatwomenareexitingthelabormarketatanalarmingrate.

NearlyfourtimesasmanywomenthanmendroppedoutofthelabormarketinSeptember2020.Whilenearly216,000menleftthelabormarket,roughly865,000womendidthesame.43Mothershavebeenhitparticularlyhard.ByOctober2020,mothersbetweentheagesof24and39werenearlythreetimesmorelikelythanfathersinthesameagerangetoreportbeingunabletoworkduringCOVID-19duetoaschoolorchildcareclosure.44

EvenbeforeCOVID-19,parentsfacedariskthattheywouldnotbeabletosendtheirchildtocarearrangementsbecauseofillness.COVID-19hasexacerbatedthisunpredictability,asparentsnowconfrontthepossibilitynotonlythattheirownchildmaygetsick,butalsothatotherchildrenandstaffmembersbeingsickcouldclosetheentirecenterorschoolforanextendedperiodoftime.Thisunpredictabilitymakesitdifficultforparentstocountoncarearrangementsthatmaketheiremploymentpossible.Forparentswhomayrelyonfamilysupport,suchasgrandparents,forchildcare,concernsabouthealthandexposurecanlimituseofthoseoptions.

Thesewomenwillfaceimportantchoicesduringtherecovery.Shouldtheyreturntoemployment?Shouldtheyremainoutofthelabormarket?Shouldtheybecomeentrepreneurs?Iftheybecomeentrepreneurs,thechallengestheyfacewillshapetheoutcomesoftheirbusinessactivity.Iftheyreturntoemploymentafter takingtimeaway,somewillfacewagepenalties.

RecoveryeffortsfromtheCOVID-19recessionneedtoaddressthecontinuedinequitiesfacingwomenintheeconomy,includingtheeconomicconsequencesofmotherhood.Asustainablepathforwardfortheentireeconomyrequiresequitableaccessandsupportformotherstoengageinwageandsalaryworkandinentrepreneurship—andforequitablerewardstotheseactivities.

Supporting mothers as they move among economic activities

throughout their lives is important to ensuring greater economic gains

for women, for their family, and for the broader economy.


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Paid family leave for all workers TheFamilyandMedicalLeaveAct(FMLA),passedin1993,providesfortwelveweeksofunpaid,job-protectedleaveforspecifiedfamilyandmedicalreasons,includingthebirthoradoptionofachild.Manyworkersarenoteligibleforthisleave,however,includingself-employedworkersandemployeesofsmallfirms(fewerthan50employees).Infact,lessthan60%ofallU.S.workersareeligiblefortheprotectionsprovidedbyFMLA.45Theseexclusionsareespeciallyimportantwhenthinkingabouttheemployeesofentrepreneurs,asnewbusinessesaretypicallysmallandsonotrequiredtoofferjob-protectedleavetotheiremployees.

Evenamongworkerswhoareeligibleforthisbenefit,manycannotaffordtotakeunpaidleave.Andlessthan1in5civilianemployeeshasaccesstopaidfamilyleave.46NinestatesandWashingtonD.C.haveenactedpaidfamilyandmedicalleavelaws.47Privatecompaniesareincreasinglyprovidingpaidfamilyleavetoemployees,butthesebenefitsarelargelyconcentratedamonghighincomeworkers,whilelow-wageandpart-timeworkersaremuchlesslikelytohaveaccesstopaidleave.48

Disparitiesinaccesstopaidleaveexacerbateinequalitiesamongworkers,asthosewhoearnlowwagesareofteninmostneedofthissupportbutlesslikelytoaccesstoit.Atthesametime,itismoredifficultforsmallerfirmstocoverthecostsofpaidleavefortheirworkers,comparedtolargerfirmswiththeresourcestobeabletoofferthisbenefit.

Paidfamilyleavehelpskeepwomenconnectedtothelabormarket,whichcanlessenthemotherhoodwagepenaltybecausewomenarenotcompletelyremovedfrompaidwork.TheintroductionofpaidfamilyleaveinCaliforniaandNewJerseywasfoundtoincreasemothers’laborforceattachmentintheyearofbirthanduptofiveyearsafterward.Formotherswithcollegedegrees,theeffectslastedclosertoeightyears.50Paidmaternityleaveisalsoassociatedwithhigherpayamongmothers.Wagesofmotherswhowereworkingpriortothebirthoftheirfirstchildandreceivedpayduringtheirmaternityleaveare9%higherthanthoseofothermothers.51Studiesonothercountriesalsosupportthisconclusion,astherearelowermotherhoodwagepenaltiesincountrieswithleavesofmoderatelengths.52

Only nine states — California, Colorado, Connecticut, Massachusetts, New Jersey,

New York, Oregon, Rhode Island, Washington — and Washington D.C. have enacted paid

family and medical leave laws.

Less than 1 in 5 civilian employees has access to paid family leave.

Paid leave for fathers can increase gender equityPaidleaveforfathersisimportanttothepersonalandeconomicwell-beingoffamiliesasitcanincreasegenderequityathomeandintheworkplace.PaidpaternityleaveinQuebecincreasedthetimemothersspentinpaidworkaswellasthetimefathersspentdoinghouseworkforyearsaftertheprogram.Thissuggeststhatprovidingfatherswithpaidtimeofftospendwiththeirchildrenwhentheyareinfantscaninfluencehowparentsallocatetimetochildcare,householdwork,andpaidworkyearslater.49

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Affordable, high-quality child care Childcareisexpensive.In40statesplustheDistrictofColumbia,thecostofchildcarefortwochildrenexceedsmortgagecostsamonghomeowners.53Giventhesehighcosts,itisnotsurprisingthatmothersareoftenfacedwithdifficultchoicesaboutwhethertoengageinpaidworkorthemselvesprovidecarefortheirchildren.

Reducedout-of-pocketcostsforpublicearlycareandeducation—aswellasincreasedavailability—canhavepositiveimpactsonmothers’laborforceparticipationandworkhours.54Furthermore,smallermotherhoodwagepenaltieshavebeenfoundincountrieswithmorepubliclyfundedchildcare.55

Flexible schedulesThewaythatjobsarestructuredandrewardedperpetuatesinequalityinthelabormarket.Firmsoftenhaveincentivestodisproportionatelyrewardworkerswhoputinlonghoursandwhoworkparticularhours.56

Itistellingthatsomanymothersciteindependence,flexibility,andtheneedtobalanceworkandfamilyasreasonsthattheyturnedtoentrepreneurship.Itisalsotellingthatsomanymothersultimatelydecidednottopursueabusinessideabecausetheywereworrieditmighttaketoomuchtime.Workplacesthatdonotaccountforthemanydemandsonmothers’timestandtolosewomenwhoseskillsandexperiencemaybetremendousassetstotheirbottomlines.Atthesametime,perceptionsaroundthedemandsofentrepreneurship,especiallythoseregardingthetimeinvestmentnecessary,maykeepsomemothersfrompursuingabusinessopportunityandbecomingentrepreneurs.

Forentrepreneursandwageandsalaryemployees,creatingacultureandenactingpoliciesthatvaluebothmarketworkandindividuals’livesmoreholisticallycanhelpalleviatetheparticularchallengesmothersface,whilealsosupportingthelivesandlivelihoodsofallindividuals.Policiesmustsupportflexibleworkpracticesandworktoreduceexpectationsaroundhoursdevotedtopaidwork.Itisnotenoughforworkplacestoofferflexibleorreducedworkhoursasaccommodationsforsomeworkers,especiallyiftheymustbenegotiatedwithcurrentsupervisorsandaresubjecttochange.Individualswhousetheseaccommodationsfear(andoftenface)a“flexibilitystigma”iftheirworkhoursareseenasadeviationfromworkplacenorms.57

For entrepreneurs and wage and salary employees, creating a culture and enacting policies that value both market work and individuals’ lives more holistically

can help alleviate the particular challenges mothers face, while also supporting the lives and livelihoods of all individuals.

Public preschool program

Beginningin2009,Washington,D.C.expandedtheirpublicpreschoolprogram—onceavailableonlytolow-incomefamilies—toallfamilieslivingintheDistrictofColumbia,regardlessofincomelevel.Theprogramofferstwoyearsofuniversal,full-daypreschoolacrossthecity’spublicschools,publiccharters,andsomeprivatepreschoolprograms.Sinceimplementationoftheprogram,thelaborforceparticipationrateamongmothersinWashingtonD.C.hasincreasedbyaround12percentagepoints,and10ofthesepercentagepointsareattributedtotheexpansionofpreschool.58

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What could these policies do for entrepreneurship?• Mothers may gain greater choice in how they engage in employment.Ifmothershadaccesstowell-payingjobs

thatprovidetheflexibilitythatcaregivingrequires,theycouldcontinuetodeveloptheirskillsandgainexperienceinthelabormarket.CalculationsmadepriortothecurrentrecessionestimatethatifU.S.womenbetweentheagesof25and54participatedinthelaborforceatthesamerateaswomeninthisagerangeinCanadaandGermany—countrieswithpaidleaveandotherfamilysupportivepolicies—therewouldbemorethanfivemillionmorewomenintheU.S.laborforce,resultinginmorethan$500billionofadditionaleconomicactivityperyear.59

• Mothers who may have otherwise been pushed into necessity entrepreneurship — which often generates low income — may have more choices in how they engage economically, including to remain in paid employment. Incountrieswithgenerouslysubsidizedchildcare,aswellasthosewithhigherratesofpart-timeemploymentamongwomen,womenarelesslikelytoturntoentrepreneurshipoutofaneedforamoredesirableemploymentsituation.60Supportivepoliciescanexpandtheeconomicchoicesofmothers,sotheycandeterminewhen,andhow,itisbestforthemtoengageinspecificeconomicactivities,includingentrepreneurship.Ifchildcarecostsareaffordabletofamiliesandifwomenhaveflexibilitytobalancetheirpersonalandworklives,theymayhavemorechoicesabouteconomicparticipationtoaccommodatethedemandsofcaregivingandpaidwork.Beingabletocontinuetoworkinwageandsalaryjobsmaygivesomemotherstheopportunitytobuildtheirskillsandconsidertheiroptionssothattheyarepositionedtoengageinentrepreneurshiplaterintheircareersifsuchanopportunityarises.

• Mothers who choose entrepreneurship as an attractive economic opportunity may be better able to start a business — and to grow it. Whenmothershaveattractiveoptionsinthelabormarketandtheflexibilitythatallowsthemtocarefortheirchildrenwhilebuildingtheircareers,entrepreneurshipmayposeyetanotherappealingoptionforutilizingtheirtalents—enhancingthefinancialwell-beingofthesemothers,theirfamilies,andthebroadereconomy.Moderatelengthsofpaidleaveandmoregenerouschildcareprovisionsmeanthatwomenaremorelikelytobeengagedinthetypesofgrowth-orientedentrepreneurshipthatcreatejobsanddriveinnovation.Incountriesthatoffermothersamoderateamountofpaidleave(between20and30weeks),womenrunlargerbusinesses,aspiretogreaterbusinessgrowth,andaremorelikelytointroduceanewproductorservice.Incountrieswithhighlevelsofchildcareprovision,womenentrepreneursaremorelikelytosellproductsorservicesthatrequiretheuseofnewtechnology.61

Broader gains come from smoothing the path to economic participation for mothers, whether it is through wage or salary work or entrepreneurship. While the work-family policy changes described above are not traditionally considered entrepreneurship policies, they play an important role in opening access to entrepreneurship for individuals who want to pursue it. Supportive policies can enhance the development of the skills and experience needed for productive work and for growth-oriented entrepreneurship — immediately or in the future.

14


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Endnotes1. CouncilofEconomicAdvisers(2015).

2. InstituteforWomen’sPolicyResearch(2020a).

3. Bianchi,Robinson,andMilkie(2006).

4. Folbre(2017).

5. England,(2005);Waldfogel(1998).

6. Livingston(2018).

7. U.S.BureauofLaborStatistics(2020).

8. Basedonsurveysofbusinessownersconductedby GlobalStrategyGrouponbehalfoftheKauffmanFoundationinspring2020.Entrepreneurswereaskedhowmuchdoesincomefromtheirbusinesscontributestobasichouseholdfinances. Theywereaskedtoconsidertheiraverageincomeoverthepast 12months,nottheirimmediatefinancialsituationandanychangesthatmighthaveoccurredduetoCOVID-19.

9. ibid.

10. HenlyandLambert(2014).

11. InstituteforWomen’sPolicyResearch(2020b).

12. Budig(2014).

13. InstituteforWomen’sPolicyResearch(2017).

14. GoughandNoonan(2013).

15. Amuedo-DorantesandKimmel(2005);Taniguchi,(1999).

16. BudigandEngland(2001).

17. Glauber(2007);Waldfogel(1997).

18. InstituteforWomen’sPolicyResearch(2020b).

19. BudigandEngland(2001);LundbergandRose(2000).

20. Acker(1990);Williams(2000)

21. U.S.BureauofLaborStatistics,Averagehoursperdayparentsspentcaringforandhelpinghouseholdchildrenastheirmainactivity,2019annualaverages.

22. Raleyetal.(2012).CalculationsfromTable5.

23. Fisher(2015).

24. U.S.BureauofLaborStatistics(2018),Table4.

25. JacobsandGerson(2004).

26. ChaandWeeden(2014).

27. Cha(2010).

28. Glass(2004).

29. YuandKuo(2017).

30. Becker(1985).

31. Kmec(2011).

32. Laughlin(2011).Table11

33. Looze(2017).

34.Whilesomehavearguedmothersandwomenwithoutchildrenmightdifferin“careerambition”whichwouldimpactearnings,statisticalmodelsthattakethisintoaccountstillfindamotherhoodwagepenalty.Itisalsopossiblethatwomenmaydecidetohavechildrenatapointwhentheircareersarenotgoingwellorwhentheirwagesarelow.Thereissomesupportthatmothersearnlessthanwomenwithoutchildrenpriortothebirthoftheirfirstchild. (LundbergandRose,2000).

35. Correlletal(2007).

36. Gurley-Calvezetal(2009).

37.Budig(2006a).

38. Budig(2006b).

39. Dataarefromanationallyrepresentativesurveyof22,034adults intheUnitedStatesconductedbetweenJune19,2020and August3,2020.SeeDesaiandHowe(2020).

40. SeeDesaiandHowe(2020).

41. Thébaud(2016).

42. HeggenessandFields(2020).

43. Carrazana(2020).

44. MalikandMorrissey(2020).

45. Brownetal(2020).

46. PizzellaandBeach(2019),Table31.

47. KaiserFamilyFoundation(2020).

48. Sawhilletal(2019).

49. Patnaik(2019).

50. JonesandWilcher(2020).

51. Boushey(2008).

52. Budigetal(2016).

53. ChildCareAwareofAmerica(2019).

54. Morrissey(2017).

55. Budigetal(2016).

56. Goldin(2014).

57. KellyandMoen(2020).

58.Malik(2018).

59. U.S.DepartmentofLabor(2015).

60. Thébaud(2015).

61. ibid.

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