The motherhood penalty: Why mothers face the widest gender pay gap

Media releases

The ‘motherhood penalty’ is a major factor in Australia’s gender pay gap and this must be addressed if we’re ever going to close the gap, said Diversity Council Australia.

DCA’s CEO, Lisa Annese, said recent ABS statistics showing the national gender pay gap has increased to 18.2% – the highest level in 30 years – paints a depressing picture and demands urgent attention.

“The current gender pay gap means women are currently earning just under 82 cents for every dollar their male colleagues earn, down from an average of 85 cents, ten years ago. This is despite Australian tribunals handing down the ever first equal pay case in 1975. How can we still be in this position in 2014?

“DCA has investigated local and international research which highlights a growing body of evidence about the ‘motherhood penalty’ – the impact that bearing and raising children has on women's wages – that is both disturbing and compelling,” said Lisa.

Key findings include:

  • Raising children accounts for a 17% loss in lifetime wages for women, with the kind of work many mothers undertake not only being lower-paid than the work they did prior to having children, but also frequently not reflecting their abilities, education levels or work experience.
  • In Australia, the wage gap among mothers has been analysed by a number of studies using Household, Income and Labour Dynamics in Australia (HILDA) survey data to reveal that each child lowers women’s wages – with estimates varying from 4% for the first child, to 9% for two or more children.
  • The level of penalty is linked with the length of maternity leave taken. While the immediate wage-penalty effect following childbirth can be explained in part because of the large number of women – 84% in Australia – who work part time when their child is under two, the effect persists with analysis suggesting that the wage penalty emerges over time through reduced wage growth.
  • The effect begins when women are pregnant, with recent data from the Australian Human Rights Commission showing that half of all women experience discrimination at work during pregnancy, parental leave or on return to work.
  • U.K. research shows that for every year a woman spends away from employment on ‘family caring work’, there is an average wage penalty of 1% and an extended effect on longer term earnings. Similarly, U.S. wage penalties of between 5% and 7% per child have been identified.
  • The highest penalty is found among women with only high school education, suggesting a key determining factor may be an inability to negotiate workplace flexibility with which to meet family responsibilities.
  • Possible explanations include discrimination (such as where an employer thinks that a woman will be less productive after having children); a reduction in women’s skills after an absence from the workplace; many women moving into lower paid ‘mother-friendly’ occupations when they have children; and lower levels of work experience.

“In the lead up to Equal Pay Day on 5 September 2014, it is critical that we redouble our efforts to tackle this gross inequity,” added Lisa. “There are a lot of practical and relatively simple steps employers can take to address the problem and this must be given priority.”

Organisations can help reduce the gender pay gap by ensuring they have strategies in place to support mothers – and fathers – to manage their family responsibilities alongside their paid work. These include:

  • Ensuring flexible work is available to all employees at all levels of the organisation
  • Designing jobs, workflows and careers that can encompass flexible working
  • Making sure organisational culture supports both women and men to work flexibly
  • Supporting pregnant women and mothers to return to work and to continue to be valued members of the workforce with the same opportunities as their colleagues
  • Reviewing wage setting and pay scales to ensure part-time workers are compensated at the same levels as their full-time counterparts
  • Putting in place performance evaluation and development criteria that are gender-neutral and do not disadvantage employees working flexibly
  • Providing salary transparency where possible
  • Training managers on how to manage employees working flexibly.