News

How Paternity Leave Can Narrow the Gender Pay Gap

(Article by Siri Hedreen originally appeared in Business.com)

The “motherhood penalty” may be inevitable, but fathers can share some of the burden.

Before he became one of the four founding partners of Culhane Meadows, Grant Walsh had to fight his firm to get a single day off for the birth of his second child. This led him and his colleagues to create their own “cloud-based” firm – one centered on flexibility and work-life balance. Now that the tables have turned, Walsh is the one urging employees to take parental leave.

“Men generally have a very hard time taking vacation or family time off because of the competitive pressures they feel at work,” Walsh said. “Requiring them to take time off from work when they welcome a new baby into the family may be the only way to really break this cultural stigma.”

For Walsh, company-mandated paternity leave is a win-win scenario for the firm and the new father – good work-life balance makes a satisfied employee, and a satisfied employee is a productive employee. There’s also a third party that benefits from mandated paternity leave: working mothers.

“When fathers have access to parental leave benefits, women are more likely to return to work sooner and achieve greater leadership roles,” said Mari Hegyi, people team manager at Limeade, which offers eight weeks of parental leave to both mothers and fathers.

In a global survey of 21,980 firms, the amount of paternity leave given was strongly correlated with the percentage of women on company boards, Hegyi added.

In effect, the more that men share the burden – and privilege – of child care, the more level the playing field. That’s not to forget the one benefit that transcends climbing the corporate ladder: “[Paternity leave] is also positively associated with development of children,” said Hegyi.

Paternity leave and the gender pay gap

Key to understanding what paternity leave can do for working women is understanding the disadvantages mothers face.

It’s been widely reported for years now that women earn less money than men – currently about 20% less. A 2019 study conducted by SurveyMonkey, however, found that 46% of American men believe the gender pay gap is untrue, or “made up to serve a political purpose.” What’s more, despite changing attitudes toward gender roles, the younger the respondent, the more likely they were to believe that men and women are paid equally.

This may be driven by the feeling that many of the underlying problems have already been solved. After all, women are now more likely to get a college degree than men, and the Equal Pay Act has been in place for over half a century.

Economists also note a widespread misconception in what the pay gap represents: Women as a whole earn 80 cents for every dollar earned by a man, but that’s not controlling for job type or education level. Indeed, low-level male and female workers tend to earn very similar wages, while the highest levels of management tend to have the widest pay gap, with female MBAs earning 74 cents on the dollar.

The motherhood penalty

Then there’s motherhood. All else being equal, the wages of women and men without child care obligations are nearly identical. As soon as children are introduced, however, male and female wages begin to diverge – this is known as the “motherhood penalty.” For all the progress that’s been made tackling gender discrimination in the workplace, gender clearly still plays a role in parenting, as there is very little wage penalty associated with fatherhood.

Dollar amount is only part of the chasm. Men are also far more likely to be promoted into the higher levels of a company. In a National Bureau of Economic Research (NBER) study of workers in Denmark, one of the most progressive countries in the world on paternity leave, men are more likely to become managers than women with each year that passes since the birth of their first child.

According to the same study, the motherhood penalty may not be just an additional inconvenience, but the crux of the wage gap itself. Loss in earnings as a result of motherhood contributed to 80% of the gender pay gap in 2013, compared with only 40% in 1980. In some ways this is encouraging – it suggests we’ve largely overcome many of the blatantly sexist contributors to the wage gap. Yet when a couple decides to have a child, the mother still faces the brunt of the economic losses, while the father’s career continues unscathed.

Some of these are willing compromises made by mothers but not fathers. As economist Claudia Goldin explains, mothers tend to seek out jobs with flexibility in scheduling to accommodate child care and are less likely to work overtime or angle for promotions and bonuses. At high-level, performance-based positions, this can mean an especially large hit in compensation that accumulates throughout a woman’s career, resulting in most managerial positions still being held by men.

Thus, the role of paternity leave is twofold. For one, the more fathers can contribute to child care, the less of a choice women have to make between their careers and their child’s wellbeing. There’s also an argument to be made that a father’s availability in the first few weeks sets a family expectation, creating the pattern for a more equitable division of child care if both parents return to full-time work.

When fathers are unable to take paternity leave, the mother immediately has the advantage in learning a child’s tendencies and needs, said Amy Sanchez, who runs her own executive career coaching business, Swim Against the Current. “The fault lies on both sides once that cadence is established – Mom jumps up to tend to a crying baby because she’s gotten in the habit of doing so … but this knee-jerk reaction doesn’t give Dad a chance to test and learn so he can proactively jump in.”

Family leave

While the United States remains the only OECD country that doesn’t require businesses to provide paid maternity leave, companies with over 50 employees must offer 12 weeks unpaid. Some states and private companies have supplemented this with their own policies on family leave, with some extending the benefits to fathers.

That’s not to say that offering paternity leave will singlehandedly change gender roles in parenting. When maternity leave is offered, it’s almost always utilized, but in the few companies offering paternity leave, many fathers waive those benefits.

Indeed, a 2016 Deloitte survey found that while 63% of respondents thought men and women should get the same amount of leave, 54% said their colleagues would judge a man for taking paternity leave more than a woman, and 33% of men went as far as saying that taking advantage of paid leave would put their position in jeopardy.

For companies particularly keen on combating this stigma, a solution has presented itself in mandated paternity leave.

“Men often neglect family in order to get ahead at the office, but in the long run, they often come to regret that decision,” Walsh said. “Mandatory paternity leave is one way employers can essentially save employees from themselves.”

At Culhane Meadows, job agreements center on work-life balance. Attorneys work remotely, don’t log their hours and, without a time-based compensation model, can technically take all the leave they want. In the case of traditional firms, like the one he worked at when his second child was born, Walsh supports the growing trend of mandated paternity leave. Part of this comes from his belief in the mechanics of the free market.

“Companies who demonstrate a firm commitment to equality and who offer strongest benefits will be recognized for their efforts and will be rewarded within the marketplace by attracting top talent,” Walsh said.

However, not everyone who supports paternity leave would go so far as to mandate it.

“I personally wouldn’t, because I believe everyone has to make the decision that’s right for them and their family,” Sanchez said.

Luckily, stigma does not have to be fought with force. Instead, some high-profile fathers – from Prince Harry to the CEO of Toms Shoes – are trying to normalize fathers’ more active role in child care by making a point of using their paternity leave benefits.

“It’s important for senior leadership to set the example and to also encourage employees to take leave,” Hegyi said. She also suggests employers focus on helping parents re-enter their jobs after leave, such as with the option for a part-time schedule.

Changing attitudes

In any sort of social change, progress can be slow and is often divided generationally. Sanchez, for one, has noticed an increasing acceptance of paternity leave among her clients, particularly in the Bay Area where she resides.

On the other hand, “when I share my husband’s plan with my retired father and neighbor, who both worked for large corporations, they both balk at the notion of taking so much time off,” Sanchez said. “In their day, dads got three days off at most.”

Even as paternity leave itself may take a generation to accept, its effect on women in the workplace may take another generation to kick in. In the NBER study examining Denmark’s gender pay gap, there was also a correlation between a mother’s and daughter’s setback in earnings after having children – in other words, daughters tend to emulate the child care decisions of their parents. The more traditional the gender roles of her parents (i.e., Dad is the breadwinner, Mom stays at home), the more likely a daughter is to take the active role in the care of her children, and the higher the motherhood penalty she’ll experience in the workplace.

Curiously, the study observes no relationship between the child care arrangement of a couple and the future decisions of their son. This suggests that, while women make parental leave decisions based on their own parents’ habits, men may be more easily swayed by office culture. Hence, an employer nudging them to take paternity leave may be enough to change their ways.