Investing in Human Capital: Women, Work and Family

It is big news that women who go to college, join the workforce, and delay having children don't lose money when later on they do combine work and family. A recent study by researchers from the University of Maryland and UCLA looked at the economics of women who didn't have children until they were over the age of 26, and found that their earnings were comparable to women who had never had children. Earlier studies add that women with a college education are much less likely to opt out of the workforce when they have a baby than are women with less education.

This is great news, unless of course you worry that all these older, ambitious working mothers are shortchanging their children, but this turns out not to be true either. As we show in our book, Red Families v. Blue Families, the college educated, who postpone childrearing until the parents achieve a measure of financial self-sufficiency and emotional maturity, have become more likely to marry and less likely to divorce than the rest of the population, with two-parent families that remain intact, replicating the statistics that existed before no-fault divorce, the pill and legalized abortion.

Perhaps more surprisingly, these mothers spend no less time on childcare than similar mothers of earlier generations -- it's housecare, not childcare that's changed. Indeed, Princeton University sociologist Sara McLanahan observes that "Children who were born to mothers from the most advantaged backgrounds are making substantial gains in resources. Relative to their counterparts 40 years ago, their mothers are more mature and more likely to be working at well-paying jobs. These children were born into stable unions and are spending more time with their fathers." By contrast, the rest of the country has seen skyrocketing rates of non-marital births, divorce, and single-parent families, magnifying the effects of income inequality on children. And these poorer mothers are the ones more likely to cycle in and out of the workforce, limiting their earnings potential while feeling pressed to adequately care for their children.

How do dual career families manage the juggling act so much better than more traditional families? The well-kept secret is that investments in human capital, in college degrees, specialized training and experience, and workforce stability pay off for employers as well as employees. Employment studies show that the greater a woman's education and experience the more likely she is to work in a flexible labor environment and to live in a state that mandates greater parental leave and other family benefits. Younger, less educated, and less skilled women find that they bring less to the bargaining table in negotiating with their bosses. When they cannot get sufficient maternity leave to manage the second child, they quit. When their children require more after school time, they may find it easier to switch employers than to switch schedules. They are more likely to return to school after their children complete elementary school than before they are born. As a result, they find work-family balance harder to manage than their better off peers -- and their children fall farther behind in the share of society's resources they enjoy.

Where are the men in all this? The wage gap that exists between men and women is also true for mothers and fathers. According to Congressional testimony from last month, "women with children earn about 2.5 percent less than women without children, while men with children enjoy an earnings boost of 2.1 percent, compared with men without children." Fathers, however, are spending more time with their children than they once did, and married college educated men have increased that time the most. Well off working women are also getting the most assistance at home.

Third, as we discuss in Red Families v. Blue Families, the essential next step for all families is reconsideration of the relationship between work and family. For blue families, where human capital acquisition precedes family formation, the challenge is to structure the work place to fit in family. For red families, where family formation may come first, the challenge is to restructure the relationship to the workplace to fit in continued human capital acquisition. We must provide better support and policies for family stability and for work. Moreover, one critical area where genuine convergence between the two models might ultimately transform the debate: can we persuade our prototypical red family to delay family formation to the mid-twenties to maximize their children's well-being?

Cross-posted on New Deal 2.0.