The ‘Gender Pay Gap’ Is a Myth That Won’t Go Away

Wells Fargo economists, using labor market data, calculated that the drop in daycare employment from pre-pandemic levels has left about 460,000 families still in need of alternative arrangements. The latest data adds to evidence that a shortage of child-care workers is rippling throughout the U.S. workforce, hampering companies who are trying to hire more workers and particularly affecting the careers of women...But as parents struggle to find care for their children, the responsibility of staying home more often falls on the mother, Wells Fargo said. The labor-force participation rate among women has fallen to the lowest levels in decades during the pandemic, according to government data. “There are no overnight fixes to this issue,” Sarah House, a senior economist at Wells Fargo and co-author of the report, said in an interview. She added that there were broader implications for overall economic growth as a result of the child-care labor shortage.

Camille Furst, "Nearly Half a Million Families Are Hurt by the Child-Care Labor Shortage,"Wall Street Journal, March 2, 2022, https://www.wsj.com/articles/nearly-half-a-million-families-are-hurt-by-the-child-care-labor-shortage-11646237879

Nearly Half a Million Families Are Hurt by the Child-Care Labor Shortage

A daycare worker shortage has left nearly half a million families without child care, according to a new report, keeping many parents at home and hindering the labor market.

Wells Fargo economists, using labor market data, calculated that the drop in daycare employment from pre-pandemic levels has left about 460,000 families still in need of alternative arrangements.

The latest data adds to evidence that a shortage of child-care workers is rippling throughout the U.S. workforce, hampering companies who are trying to hire more workers and particularly affecting the careers of women.

Broadly, the U.S. labor market has recently shown signs of improvement as employers hired rapidly late last year and in January. The economy added 467,000 jobs in January and job growth in November and December was revised higher. The unemployment rate is 4%.

But as parents struggle to find care for their children, the responsibility of staying home more often falls on the mother, Wells Fargo said. The labor-force participation rate among women has fallen to the lowest levels in decades during the pandemic, according to government data.

“There are no overnight fixes to this issue,” Sarah House, a senior economist at Wells Fargo and co-author of the report, said in an interview. She added that there were broader implications for overall economic growth as a result of the child-care labor shortage.

President Biden, in his State of the Union address on Tuesday, urged lawmakers to take up a proposal to cut child-care costs for families. He said many families pay as much as $14,000 a year on child care per child.

“Middle-class and working families shouldn’t have to pay more than 7% of their income for care of young children,” Mr. Biden said. He said his plan, part of the Build Back Better bill that passed the House of Representatives in November but has stalled in the Senate, could cut the cost in half for many families.

Stephanie Schmit, director of child care and early education at the Center for Law and Social Policy, said the child-care industry has suffered from a declining number of workers for years, even before the Covid-19 pandemic, amid low wages and poor benefits. She said the pandemic gave more awareness to the issue, highlighting longstanding problems in the industry.

Cindy Lehnhoff, the director of the National Child Care Association, said the child-care industry needs the federal funding to attract workers.

“We definitely have to have some government assistance, similar to public school systems, if we want early education and child care to be at its very best,” Ms. Lehnhoff said.

new NBER upon becoming parents, women (especially more educated women) adopt more negative views toward female employment (ie., they are more likely to say that women working hurts family life) Women on average (and, again, more educated women in particular) report that parenthood is harder than they expected.

rings true with my experience, lots of our friends are on their second kid now and lots of the mom's are thinking about leaving the workforce (granted their husbands have the ability to support a family)

"...This paper provides evidence suggesting that women do not fully anticipate the effect of motherhood. Using rich data from the British Household Panel Survey (BHPS) and an event-time framework, we document that women's labor supply exhibits a sudden, large, and persistent decline in the years immediately after the birth of the first child. Additionally, we show that women become significantly more conservative in terms of their attitudes toward the appropriate role of women and men in the household and society. The effects are considerably more muted for men...their labor supply response (if any) is about one- tenth the size of that observed for women, and while they too appear to become slightly more conservative post-childbirth, the magnitude of the effect is much smaller and not statistically significant. The effects of motherhood on women's gender-role attitudes exhibit no appreciable pre-trend and show no evidence of fadeout, suggesting that the effects of motherhood on gender-related attitudes are unexpected and long-lasting. Given that the gender-related questions asked in the BHPS are not about women's own preferences but about the appropriate role of women and men more generally, we would expect a woman who fully anticipates the effects of motherhood to report similar attitudes before and after her first birth. Therefore, we interpret the sudden conservative shift in attitudes post-childbirth as indirectly suggesting that women do not anticipate these changes in their views. To the extent that these gender- related attitudes shape employment preferences, these results also suggest that part of the employment response to motherhood is likely to be unanticipated. Interestingly, despite the fact that motherhood is a very common event, women seem surprised by the consequences. We provide more direct evidence on the question of anticipation by showing that women during the sample period appear to systematically over-estimate their likelihood of employment after first birth. While childless women in the BHPS make very accurate predictions about their labor force attachment one year later, upon the birth of the first child, women are significantly more likely to state that they expect to remain in the labor market when, in fact, they give up paid work twelve months later. To examine longer-term expectations, we turn to US data and show that beginning in 1978, female high school seniors have been increasingly under-estimating the probability that they will be home-makers by age thirty. Qualitative evidence from a series of interviews of women who graduated from Northwestern in 1993 provide additional supporting evidence of a lack of anticipation of the effects on motherhood on labor supply decisions. That women do not appear to fully anticipate the employment effects of motherhood has important implications for understanding education decisions, occupational choice, and dynamic labor supply and savings. In particular, in most dynamic models of fertility and labor supply, women's preferences are fixed and they are assumed to be able to perfectly forecast the costs of motherhood and childcare....Recent models that endogenize education to fertility decisions also assume perfect foresight of childcare costs.....Our results question the validity of these assumptions and raise the question of how these models can accommodate relaxing the assumption of fixed preferences and the (systematic) lack of anticipation of the costs of motherhood. Our findings also provide an alternative resolution to the puzzle of why women continue to make rapid gains in human capital investment relative to men in spite of their apparent stalled progress in the labor market. To the extent that before they become mothers, women expect that they will continue to have high labor market attachment after motherhood, they will make their education decisions on the basis of these potentially erroneous beliefs, resulting in some degree of over-investment" in education (at least from the point of view of the human capital model). While there may be other sources of non-labor market returns to education, the failure to correctly anticipate the employment effects of motherhood provides an alternative, though not mutually exclusive, explanation of the puzzling decoupling of women's educational gains and labor market progress...."

Ilyana Kuziemko, Jessica Pan, Jenny Shen, Ebonya Washington, "The Mommy Effect: Do Women Anticipate the Employment Effects of Motherhood?" National Bureau of Economic Research, June 2018, http://www.nber.org/papers/w24740