Here’s one that just doesn’t add up: why childcare costs often don’t sit with both working parents in couple families.
I’ve met many women who make decisions about going back to paid work based on how their salary alone stacks up compared to the costs of having their kids in care. And this cost-benefit analysis is only further exacerbated when they are looking at having two or more children in care. So this is a little—or maybe big!—bugbear of mine. And it’s right up there with people commenting on dads looking after their own children as ‘babysitting’! Infuriating on so many levels, I know.
To show what I mean, here are some simplified estimates looking at three hypothetical couple families with two working parents, calculated using the Centrelink Payment and Service Finder.
Let’s assume we have a couple who each has a taxable income of $60,000 a year (total household income of $120,000). After having two children, the mother wants to return to work three days a week so her income drops to $36,000. The out of pocket cost (after the Child Care Subsidy) of having two children in centre-based day care three days a week is $19,528 (assuming $130 per eight-hour day per child). If comparing her salary and the cost of childcare in isolation, she’s returning to work for $16,472 a year (46%).
Consider the same scenario as above, however both working parents have a taxable income of $100,000 a year (total household income of $200,000). The mother’s salary drops to $60,000 working three days a week, and the childcare out of pocket cost for two kids, three days, after the Child Care Subsidy is now $25,503. Mum’s now returning to work for $34,497 a year (57%).
Now, let’s see what happens when two higher income earning parents (total household taxable income of $200,000) work full-time with two children in childcare five days a week. The out of pocket cost (after the Child Care Subsidy) of having two children in childcare five days a week is $44,323 (assuming $130 per eight-hour day per child). Now, when we compare Mum’s salary and the cost of childcare in isolation, she’s returning to work for $55,677 a year (56%).
Many working parents facing the decision whether to work full-time, or even work at all, would make the call that it just isn’t worth it. Surely the costs of childcare should be evaluated against the overall household income of both parents though? And the opportunity of the mother returning to paid work would look a lot more attractive.
So I get it, the cost of childcare is sooooo expensive. It really is crazy how much it costs. And I really do cringe every year when I receive that letter saying my childcare costs are going to increase by $20 a week per child. You are not alone in thinking that the cost of childcare is increasing at a rapid rate. In fact, according to the Australian Bureau of Statistics, from 2012 to 2017 wages increased by 12.6% while childcare costs increased by 44.3%.
But what I find incredible is the idea that women should be the ones responsible for taking on the full burden of childcare costs. Their decision to work or not work should not hinge solely on their earning capacity. Surely there were two people involved in bringing a little person into this world, so why should the cost of care be evaluated against just the mother’s salary? It just doesn’t make sense at all.
I’m a huge fan of journalist Annabel Crabb, and in her book The Wife Drought, she raises some really great points about the short-term ‘cost’ evaluation that often occurs in households. Writes Annabel:
‘A woman who takes leave from work to have a baby and then elects not to work at all gives up more than the ticket value of her immediate salary she would have recovered on her return. She gives up her capacity to win further advancement. She gives up the professional relationships and networks that might otherwise have yielded opportunities for promotion. The salary foregone is far, far greater than the figure punched in to the household calculation when the decision is made.’
Hear, hear. We could not agree more.
The bottom line is that women’s advancement in the workplace can be held back by short term trade-offs. We need to better support women’s return to paid work and this is just one area where women are unfairly penalised. Equating childcare costs to the value of their salary alone just doesn’t make sense. The longer-term career opportunities for women who return far outweigh the immediate household costs.
Written by Kate Pollard, Co-founder of Circle In.
Read more about the unique challenges women face in the workplace.