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This article was published 23/5/2009 (2895 days ago), so information in it may no longer be current.
RAISING children is not without its obvious sacrifices. But women often end up giving up much more than men, especially when it comes to their careers.
A recent press release from Investors Group cited some Statistics Canada facts and figures in this regard.
Women who choose to have children often earn less than their childless counterparts, and the more children they have, the less they can expect to earn in their careers.
To put it bluntly, the release stated women are economically penalized for being mothers.
"I call it taking one for the team," says Lisa Macdonald, a mother of two young children who works part-time as a financial adviser for a small Winnipeg firm.
Macdonald, who has an MBA, worked for several years in the financial industry, but she and her husband, Guy Bru, knew that when they chose to have children, she might not be able to continue on the same career path.
"One of the decisions that made me leave was, 'If I was planning to take time off to raise children, is the job going to be there when I come back?'"
She left her high-paying position and found another job where the employer was more family-minded and would let her take time off and then return to work part-time after she had taken maternity leave.
Macdonald and her husband consider themselves fortunate to be in this position, but luck has little to do with it. Both come from financial backgrounds, so whenever the prospect of having children was discussed, so too was a financial plan.
Tax lawyer and certified financial planner Christine Van Cauwenberghe, a working mother herself, says taking time off to raise a family may have an economic cost for women and their families, but that doesn't mean the cost cannot be mitigated.
The first step is to start planning as soon as possible, even if children won't be in the picture for some time, says Van Cauwenberghe, a planner with Investors Group.
"They need to start planning earlier and try to put away smaller amounts over a longer period of time to try to take advantage of the benefits of compounding," she says.
That process has become easier than in past years, thanks to the creation of the tax-free savings account (TFSA), which lets couples set aside as much as $5,000 annualy in an account where it can grow tax-free.
"If you are not earning very much money, a tax-free savings account is much better than an RRSP, because with an RRSP, you get a tax deduction," she says. "But if you're not earning any income, the tax deduction isn't worth that much -- not to mention the fact that when you withdraw later from an RRSP, you have to pay tax on it at that point."
A number of tax incentives also are available that can help reduce some of the costs.
The new child tax credit allows claims of up to $1,000 per child under 18 years of age every year. In real savings, that amounts to a little more than $300 per child.
The universal child care benefit provides families with $100 a month per child under six years old. The lowest income earner can also claim up to $7,000 in yearly expenses for child-care per child under seven and $4,000 per child between seven and 16.
Both of these incentive programs are aimed at addressing the increasing need and cost of daycare in Canada, but if you ask many parents, they fall short of the mark.
"It's nice to have the money, but it does absolutely nothing to solve the current child-care problems in Manitoba," Macdonald says. "I currently have a two-and-half-year-old at home and a one-year-old at home, and I would have a lot of problems if I had to go back to work full-time tomorrow, because I'm on one waiting list that they tell me is at least three years long."
Single mothers, in contrast, often have no choice but to go back to work and bear the cost of daycare, which far exceeds the benefits of the programs.
"The Harper government is paying families only $100 a month, and that, if you are lucky, might buy you four days of child care in a month," says Jennifer deGroot, executive director of the UN Platform for Action Committee Manitoba (UNPAC), an organization that promotes the social, economic and political welfare of women.
Fully subsidized daycare would be the best solution to the "penalty of motherhood," providing mothers who choose to go back to work after having children have the option of doing so, she adds.
But affordable and available daycare is only part of the equation in finding a solution to a problem that discourages career-minded women from having children on the one hand and prevents those who do from returning to work and contributing to an economy that desperately needs their skills on the other.
As deGroot points out, the workforce is aging and our economy needs workers to keep growing.
"We are facing a strong birth-rate decline, so I think people need to start paying attention to that," she says. "Work needs to be changed and adapted to accommodate mothers."
Employers can play a role in allowing more flexible work hours, deGroot says, adding this is already seen in many workplaces.
But she would also like to see a price put on the unpaid work of motherhood. Market economics does a fine job of measuring paid work, but it rarely looks at the cost of unpaid labour.
"The work that women do in the home is often made invisible, and women will often do it no matter what," she says. "Governments assume that they'll do it."
But the costs are extremely high, she says, citing a book by New York Times economics reporter Ann Crittenden that estimated the amount of wage-earning power a woman gives up could easily amount to more than a million dollars.
Changing this situation would, of course, require a major shift in public policy, where unpaid mothers' work would have a price.
"I'm in favour of a guaranteed annual income," deGroot says. "Currently, if you are a single parent and you have quite a few children, your only option is to be on welfare, which I don't consider to be a guaranteed annual income."
And mothers and children living in poverty have implications for the bottom line of all families, she says.
"Studies have shown that when societies are more equal, then everybody's health improves, not just the health of people living in poverty, but also the health of rich people," she says. "Everybody will be better off when society's more equal."
Here are some of the numbers that show women who have children face more economic challenges compared to women who choose not to have children.
"ö From 1993 to 2004, the hourly wage of women with children was 12 per cent less than women without children.
"ö Women who had one child earned nine per cent less, and wages were 12 and 20 per cent less, respectively, for mothers of two and three children.
"ö Single women with children earn 20 per cent less than childless women. The gap is twice as large as the gap between married and common-law mothers and married, childless women.
"ö 51.6 per cent of lone-parent families headed by women are poor, figures from 2006 show.
"ö Women and youth account for 83 per cent of Canada's minimum-wage workers. More than one-third of lone mothers with paid employment must raise a family on less than $10 an hour, according to the Report Card on Child Poverty in Canada from 2000.
Missing out on EI
When the Liberal government changed unemployment insurance to employment insurance, it changed more than just the name. It made it much harder to qualify. The number of people who qualified fell from 80 per cent in the 1980s to 30 per cent in the late 1990s. "Lots of people can't access EI, particularly for their second or subsequent children, because they can't get basic maternity benefits because they haven't put enough time in," says Jennifer deGroot, executive director of the UN Platform for Action Committee Manitoba.
She adds only about a third of mothers can access EI for maternity benefits, which pays 55 per cent of her wage to a maximum of $447 per week. "But if you earn minimum wage and go on maternity leave, 55 per cent of that is impossible to live off."
CPP -- Christine Van Cauwenberghe, a tax lawyer for Investors Group, says families who have children or are thinking about having children should be aware of the child-rearing dropout provision. "Basically, what it says is that if you are raising a child at home under the age of seven, you can choose to take out those years when calculating how much CPP you are entitled to receive," she says. "Because your earnings could be artificially low during those years, that actually could increase the amount of CPP you receive, because the benefits are based on how much income you've earned."
Of course, deGroot says that only works for mothers who have participated in the workforce. "I know women who raised seven or eight children and worked extremely hard their whole life, but yet never earned any money. Now they're under severe financial stress." StatsCan figures from 2006 found that more than 40 per cent of single, widowed or divorced women over 65 are poor. Poverty rates for all seniors have improved overall, but the gap between men and women remains. The poverty rate for senior women is more than 19 per cent, while the rate for senior men is almost 10 per cent.