Tackling poverty and promoting social mobility by raising maternal employment: the potential and the challenges

Gosta Esping-Anderson (2009 and forthcoming) and others (see for example Rainwater and Smeeding 2003) have argued that increasing the employment of low-income women is a win-win: it raises family incomes and thus reduces the risk of poverty, and it raises the enrolment of children in early education and thus promotes social mobility. While much of the success of the Nordic countries in furthering equality and social mobility has been attributed to the generosity of their welfare states, Esping-Anderson and others point to the key role played by the high employment rate of low-skilled women, and of low-skilled mothers in particular.

Since the 1960s, the Nordic countries have implemented a range of family-friendly policies that have promoted the employment of women, and of mothers in particular, while also ensuring that their children are enrolled in universal and high-quality preschool childcare. Others, such as Quebec, Canada, are seeking to follow suit. The result is a society in which maternal employment plays a key role in reducing the risk of poverty for the current generation of children, while universal and high-quality early education helps to level the playing field and reduce the risk of poverty among the next generation.

The Nordic countries indeed do have the highest female employment rates in the OECD. The UK, by contrast, lags behind the Nordic countries and other OECD countries in female employment generally and in maternal employment in particular. According to a recent report from the Resolution Foundation (Plunkett 2011), the UK currently ranks 15th in female employment among the OECD countries, and even lower if one considers maternal employment specifically. Besides the Nordic countries, others with a higher female employment rate include Austria, Germany, the Netherlands and Switzerland. The Resolution Foundation estimates that if the UK had a female employment rate comparable to the better-performing OECD countries, an additional 700,000 to 1.4 million women would be working.

Thus it seems there is substantial scope to increase female and particularly maternal employment in the UK, and the evidence from the Nordic countries and others suggests that doing so would be a clear route to reducing poverty and improving outcomes for children in low-income families.

But this strategy will be limited unless three fundamental and related problems are addressed:

1. the low earnings position of women, particularly mothers
2. the challenges women, and low-income women especially, face in balancing work and family responsibilities
3. the shortfall in high-quality childcare, particularly for children from low-income families.

Addressing the low earnings position of women

It is well known that women in the UK are paid less than their male counterparts. This is not unique to the UK, but the gender pay gap does seem to be larger in the UK (and in the US) than in other peer countries (see for example Joshi et al 1998). A large part of the gender gap in pay derives from what I have called the 'family gap' in pay - the gap in earnings between women with and without children (Waldfogel 1998). Simply put, women without children earn nearly as much as men, all else being equal, but the same is not true of women with children - again, particularly in the UK (and US)(see for example Sigle-Rushton and Waldfogel 2007).

Addressing the family gap would go a long way towards closing the gender gap in pay, although it would not fully address it. Recent work by Alan Manning and Joanna Swaffield, looking at young workers, finds that even fully committed childless women do not earn as much as their male peers. Because the analysis includes controls for all the factors that can be observed and that should matter in the labour market, the results suggest that the remaining gender differences must be due to factors that are not observed - whether those consist of subtle differences in attitudes between men and women, or perhaps subtle differences in attitudes towards men and women on the part of employers.

Providing better work-family balance

Equalising pay between otherwise comparable men and women - although an important goal in itself - would not fully address the challenges facing low-income mothers. So long as women bear the majority of responsibilities for taking care of children, they will disproportionately need policies that help them to balance those responsibilities with those of work. The UK has come a long way in this regard (further than the US has!) with advances in the areas of leave policy, childcare and support for part-time/flexible working implemented as part of its wide-ranging anti-poverty campaign (Hills et al 2009, Waldfogel 2005, 2010). But there is more to be done.

In the area of maternity leave, the last government doubled the length of paid maternity leave and instituted two weeks' paid paternity leave. This was a remarkable achievement and one that the current government should build on by considering ways to incentivise fathers to take more leave during the crucial first weeks and months of an infant's life. Getting fathers more involved early on will help to engage them and, one hopes, lead to a more equitable division of caring responsibilities beyond those first months.

In the area of childcare, the last government instituted free universal preschool for three- and four-year-olds, with a promise to extend preschool to disadvantaged two-year-olds, and also expanded subsidies for childcare for working parents. In spite of constrained budgets, the current government - to its credit - has maintained the commitment to the initial universal provision and to the promised extension. But, at the same time, it has reduced the generosity of the subsidy programme, asking low-income working parents to make a larger contribution to the cost of childcare. If the goal is to move more low-income parents into work and to help them stay in work then cutting back on childcare subsidies is clearly a step in the wrong direction. Even in the best of times, low-income parents can ill-afford the high cost of market-driven childcare - and these, of course, are not the best of times. The research is clear that a lack of access to childcare is a significant barrier to women working, and working full-time. Cutting funding for childcare subsidies is penny wise but pound foolish.

The issue of part-time and flexible work is also crucial. For mothers looking to balance work and family responsibilities, working part-time is often the preferred solution (Alakeson 2012). This is particularly true in the UK, which has the highest rate of women working part-time of any of its peer countries except the Netherlands and Switzerland (Plunkett 2011). Greater support for childcare would reduce the share of women working part-time, but there will always be some mothers who prefer part-time or flexible work, at least some of the time.

However, part-time employment comes with a penalty, as part-time workers are paid less per hour than comparable full-time employees. This part-time pay penalty is particularly large in the UK, because women working part-time are typically segregated into low-paid occupations (Alakeson 2012, Manning and Petrongolo 2005). One remedy for this is to extend part-time and flexible working into a broader range of occupations. The 'right to request' part-time or flexible work arrangements - which the last government introduced for parents of young children or children with disabilities and which has since been extended to parents of older children - is a step in this direction (Waldfogel 2010). As more employees work part-time or flexible hours then employers, ideally, should learn that it is possible for a good job to be held on a part-time or flexible basis. If so, this should make it easier for women with family responsibilities to remain in work and in good jobs.

For the lowest-income workers, however, there is still more the government could do to support part-time and flexible employment. The benefit system provides an incentive for women to work at least 16 hours per week (now 24 in the case of couples), and this incentive is larger for those working full-time (defined as at least 30 hours per week). However, these thresholds should be softened: for some low-income mothers, working less than 16 (or 24) hours per week might be the best way to keep a foot in the labour market, while working 16 (or 24) to 30 hours might be the ideal arrangement for others. To fully support parental choice and ensure that all women are given incentives to work, the benefit system should provide additional support for every additional hour worked, not just for passing specific benchmarks such as 16, 24 or 30 hours.

Improving childcare quality

Finally, there is the issue of childcare quality. The argument that higher rates of maternal employment hold the promise of a more equal society rests not only on that employment being well-paid but also - crucially - on childcare being of high quality. The evidence from Nordic and other countries is clear: where universal childcare is of high quality it not only raises average achievement but also helps to close gaps in achievement and later life outcomes between disadvantaged and more advantaged children. However, the evidence is also clear that moving children into low-quality subsidised care does little to improve outcomes for disadvantaged children, and may even lead to worse outcomes (see review in Ruhm and Waldfogel, forthcoming).

As noted already, the UK has done a commendable job of providing universal preschool to all three- and four-year-olds, and is now extending that provision to disadvantaged two-year-olds as well. However, challenges remain in raising the quality of that universal care and of the care that children receive outside of free part-time preschool hours.

Research shows that a key component of quality is highly educated staff, who can support the development of language and other skills (Waldfogel 1998). The past and current governments have recognised this, but have also recognised that hiring and retaining more qualified staff, or providing more training to existing staff, is costly. However, this is a cost that must be faced, as without high-quality childcare, the potential of maternal employment to produce a more equal society will never be fully realised.

Moreover, raising childcare quality is another potential win-win. Raising the qualifications and pay of childcare workers would not only lead to better child development outcomes but would also help to raise incomes in the largely female and low-income workforce in the childcare sector itself and thus contribute to the goal of reducing poverty.

References

Alakeson V (2012) The Price of Motherhood: Women and Part-Time Work, London: Resolution Foundation

Esping-Andersen G (2009) The Incomplete Revolution: Adapting to Women's New Roles, Cambridge: Polity Press

Esping-Andersen G (forthcoming) 'Equality with a Happy Bourgeoisie: The Social Democratic Road to Equality'

Hills J, Sefton T and Stewart K (eds)(2009) Towards a More Equal Society? Poverty, Inequality, and Policy Since 1997, Bristol: Policy Press

Joshi H and Paci P with Makepeace G and Waldfogel J (1998) Unequal Pay for Men and Women: Evidence from the British Birth Cohort Studies, Cambridge, MA: MIT Press

Manning A and Petrongolo B (2005) 'The Part-Time Pay Penalty', London: Centre for Economic Performance, London School of Economics

Manning A and Swaffield J (2008) 'The Gender Gap in Early-Career Wage Growth', Economic Journal, 118(530): 983-1024

Plunkett J (2011) 'The Missing Million: The Potential for Female Employment to Raise Living Standards in Low to Middle Income Britain', London: Resolution Foundation

Rainwater L and Smeeding T (2003) Poor Kids in a Rich Country, New York: Russell Sage Foundation

Ruhm C and Waldfogel J (forthcoming) 'Long-Term Effects of Early Childhood Care and Education', Nordic Economic Policy Review

Sigle-Rushton W and Waldfogel J (2007) 'Motherhood and Women's Earnings in Anglo-American, Continental European, and Nordic Countries', Feminist Economics, 13(2): 55-91

Waldfogel J (1998) 'Understanding the 'Family Gap' in Pay for Women with Children', Journal of Economic Perspectives, 12(1): 137-156

Waldfogel J (2005) 'Social Mobility, Life Chances, and the Early Years' in Delorenzi S, Reed J and Robinson R (eds) Maintaining Momentum: Promoting Social Mobility and Life Chances from Early Years to Adulthood, London: IPPR

Waldfogel J (2010) Britain's War on Poverty, New York: Russell Sage Foundation