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How to Boost Your Household Income: Mind the Gap

How to Boost Your Household Income

The gender pay gap is not just a women's issue; it's a family issue. 

Most American households have two income earners, and women increasingly earn the same or more than their spouses. Women are outpacing men as college graduates, and companies increasingly offer family-friendly policies, including paternity care. 

In 2022, women ages 25 to 34 earned an average of 92 cents for every dollar earned by a man in the same age group – an 8-cent gap. By comparison, the gender pay gap among workers of all ages was more than double that year. 

Anecdotally, I have learned that, in some instances, women are beginning to outpace men in the youngest age bands. This is the case in the healthcare industry in Massachusetts. You can see this by plugging and playing with the QWI Census Bureau Explorer

The writing is on the wall; it's up to all of us to read it. The gender pay gap is disappearing for younger workers and, minus one critical life event could disappear completely. 

In various professional sectors, the gender pay gap is negligible until… 

Marianne Bertrand, Claudia Goldin, and Lawrence F. Katz examined gender differences in the career dynamics of MBAs who graduated from the Booth School of Business of the University of Chicago, where male and female MBAs from this elite program have nearly identical labor incomes and weekly hours worked. 

The earnings gap between men and women widens as their careers progress. Their study identified three proximate factors that may explain the large and rising gender earnings gap. The two most significant: 

  • gender differences in career interruptions combined with large earnings losses associated with any career interruption (of six or more months); 

  • growing gender differences in weekly hours worked with years since MBA. 

A primary factor in this process is the difference in labor market activity between sexes in the period following a first birth. For female MBAs, the presence of children is associated with less job experience, more career interruptions, and shorter working hours, but not for male MBAs. 

The one exception is that children have no adverse impact on employment and earnings for female MBAs with lower-earning husbands.

In various professional sectors, the gender pay gap is negligible until childbearing age. 

Mind the Gap

It's not only women who suffer from the gender pay gap; it's all of us. It impacts our household income. 

What is becoming clear to me is that minus deliberate and data informed discussions about career plans following the birth of a baby, the gender pay gap will persist.

Do the math

This financial calculator was released by the Center for American Progress to illustrate the impact of fiscal policy on American families, which failed to adequately address child care costs. However, couples will find this calculator personally useful because it illustrates the financial implications of a woman leaving the workforce temporarily.

How to Boost Your Household Income

Calculations are based on 2016 numbers. Inflation has increased by roughly 18% since then. To calculate the financial impact of temporarily leaving the workforce, you should add 18%. The calculator can calculate the lifetime cost of lost retirement assets, benefits, and wage growth.

Discuss long term career opportunities

The U.S. Bureau of Labor and Statistics maintains the Occupational Outlook Handbook, providing folks with median pay and projections of new jobs in each career field. 

Combined with the Center for American Progress calculator, couples can plug and play to calculate whose lifetime income suffers most from temporarily leaving the workforce. 

Consider Paternity Leave

None of this is to say that men should now default into temporary lead caregivers; it just means that there should no longer be a default parent based on traditional gender norms. In the modern world, tackling the high cost of child care is a team effort inside and outside the home. 

You will find everything you need to know about paternity leave in our post, A Comprehensive Guide for Men to Understand Paternity Leave.

Learn More

For engaged and recently married couples who want to manage money and the home as a team.

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