The economics of a mom’s love

There’s an old country song “No charge”, made famous in Canada in the 1970s when Tommy Hunter recited it on an episode of his CBC TV show.

While a mother is preparing the family dinner, her young son comes to her with a piece of paper. On it is a list of chores and charges, and a tally: $14.75. She pauses, wipes her hands on her apron and takes up a pen. She turns the paper over and lists all the acts of motherly love from childbirth to sleepless nights and kissing bruises, writing “no charge” next to each.

Well, with tears in his eyes, the son looks up and says, “Mama, I sure do love you.” Then he takes back the page, and in big letters writes, “PAID IN FULL.”

Identifying and measuring unpaid work

It’s a blatant pull at your heart strings – as a good country song is wont to do – but at the same time, there is truth in those words.

Time spent on unpaid household/family activity

Every few years Statistics Canada publishes a series of research papers on Women in Canada.[1] From its 2018 report, here are some key observations on the economic well-being of women:

- Women are more likely than men to participate in housework activities, and they spend more time doing so.
- Both mothers and fathers spend more time on childcare than thirty years ago, but women have increased their time with children to a greater extent than men.
- A greater proportion of women than men perform routine childcare tasks on a given day, and spend more time doing so.
- Women are overrepresented as caregivers to adult family members or friends, particularly when the care recipient has a long-term health condition or a physical or mental disability.

This is a big picture view of the relative amount of time spent by men and women, and how it has changed over the years – and in some ways how it hasn’t. Apart from the time aspect, can we put a dollar value on this?

What if mom was on a salary?

Each year around Mother’s Day, the website salary.com publishes an estimate of what a mom would earn if paid in the open market. While acknowledging that it cannot assign a value to all features of parenthood, the site draws from about three dozen job categories to represent the core competencies of motherhood. Its most recent estimate of median annual salary for a stay-at-home mom is US$184,820. And as if it’s necessary to point out, the figure is even more compelling when converted to Canadian dollars.

Of course, this is mainly a promotional exercise for the website and its services, but it helps illustrate the wide breadth of a mother’s contribution to the family, on top of it being unpaid.

The paid work picture

The Statistics Canada research notes that, “historically, women’s financial security has been closely tied to their familial relationships with men.” This is looking back from the mid 20^th century, referring to a woman’s father while she was growing up, then her spouse/common-law partner as she moved into adulthood.

Progress over the decades

Labour force participation of women increased from the 1960’s, at the same time as women were gaining more access and control over household resources. Since then, women’s economic well-being has evolved dramatically, again as compiled by Statistics Canada:

- Women’s average personal income more than doubled in constant dollar terms from 1976 to 2015, with the gender disparity in income being cut in half over that 40-year stretch.
- Women’s earnings make up a larger share of family income than ever before. In families with a working woman in the core working ages of 25 to 54, the woman contributed 47% to the family’s income in 2015.
- Women’s workforce participation has enhanced the security of couple families. These families are more resilient to the rising cost of living, downward wage pressure for men, and unemployment generally.
- Dual-earner families are also better protected in recessions, with women experiencing fewer job losses due to their larger representation in non-cyclical sectors such as education, health care and government.

For her, and those around her

These trends in women’s work participation and income growth are self-evidently beneficial to affected women personally. As well, society overall is better off, both in the social sphere and in the economic benefit of the fuller participation and contribution of women. And finally, spouses and families are able to enjoy more abundant, diversified and stable financial lives.

And without mom? – The role of life and disability insurance

There is plenty that can be learned from the Statistics Canada research and other sources about the state of women in our society. It can and should motivate individual and collective action toward greater gender equality.

For current purposes though, let’s look at what this means at the individual or family level. In particular, what economic hardship will befall a family if mom dies or becomes disabled, and where does insurance fit in?

Loss of income source

While life and disability insurance have many uses, their primary purpose is to replace lost household income. The positive progress in women’s employment and income over the decades provides both direct and indirect evidence of why and how much harm may be inflicted if tragedy hits. There’s double damage in the case of disability due to additional cost of care, and of course it’s especially devastating for a single mother family.

The obvious direct impact is the actual income that is no longer coming in. The less obvious part in the case of a dual-earner family is the loss of stability and diversification. Though it may not be easily quantifiable, it would be helpful for a couple to anticipate how the death or disability of one of them could affect the practical and financial viability of the survivor’s continuing occupation.

Loss of that unpaid labour

This brings us back to all that time mom spends on unpaid household/family activity. In mom’s absence, some of those tasks may be replaced by bought services, but money is no proxy for a parent’s presence, love, affection and attention. To continue to fulfill that role, dad may need to change his work routine, and possibly even make some broader career adjustments.

In this respect, in addition to replacing mom’s lost income, insurance can also stand in for the reduced income dad may experience due to increased caregiving demands. Whether this is a temporary measure or a permanent new normal, the family is given the time to grieve, heal and look to the future in financial security and comfort.

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[1] Women in Canada: A Gender-based Statistical Report
https://www150.statcan.gc.ca/n1/pub/89-503-x/89-503-x2015001-eng.htm

Money matters among men and women

There are innumerable differences between women and men, including when it comes to money matters. That’s both in terms of how we think about money, and how we manage it.

Though the economic makeup of today’s population has evolved over recent generations, there remain important and relevant distinctions. As well, historical rules of thumb and so-called common wisdom may no longer apply in today’s economy, especially if they were premised or skewed toward male characteristics.

For women, this necessitates taking a principled approach to financial matters generally – and investing in particular – reflecting our current society and their own individual characteristics.

Ability to earn, capacity to save

On average, women face greater challenges in being able to save effectively toward their later years. According to Statistics Canada, women as a group earn about 87 cents for every dollar earned by men. While the reasons are complex and the situation has improved over recent decades, this is a systemic hurdle to be aware of, though it may apply to a greater or lesser extent for a given individual.

Being part of a couple may relieve this concern to some extent. Two can usually live cheaper than one, and therefore save more, both in working and retirement years. However, if there is a breakdown, women tend to fare worse economically post-relationship. That’s in addition to any depletion of mutual savings if the parting is contentious.

Women may leave the workforce to raise children, reducing their income during the time they are away, and possibly affecting their career prospects. Again, statistics show that women spend more time than men in child-rearing, even when both continue to work. As well, women tend more often to be family caregivers to older generations, requiring periodic time away from work, and possibly indeterminate leave in some cases.

Whether these commitments are by choice, due to social pressures or driven by a particular family’s economic demands, they affect both current income and the ability to build savings.

Saving for a longer life expectancy

Typically, women live almost five years longer than men. While it is a positive to be able to share extended time with family and friends, it comes with financial baggage. The prospect of a longer life has the built-in need to fund a longer retirement. And it’s not only the length of time that must be considered, but also how that time is spent.

Take the traditional male-female relationship. A married woman will generally live through the waning health and end-of-life care of her husband. On top of the financial, physical and emotional demands, on average she then has another half decade ahead of her. It could even be longer if, as was perhaps more common in past generations, she married someone older than her. Of course, a new relationship may blossom, but she has to be prepared for the likelihood of eventually being entirely on her own.

Thus, her financial planning must anticipate being part of two end-of-life processes, with all their related costs. Even with the benefit of a helpful adult child or other family member when she is in decline, it is likely that she will require more assisted living services and professional support (and accordingly more associated cost) than was required in the care of her husband when she herself may have carried much of the load on a daily basis.

In a same-sex relationship, you have two women each with longer life expectancy than men. While it may be a guess which partner may be the survivor, there will be more expected years of declining health to fund, possibly both happening at the same time. That is in addition to the income and savings challenges that now both sides of the couple may have experienced in their working years, as mentioned above.

What’s a woman to do?

Be intimately informed

As a woman, you must be informed about financial matters from the very beginning, as you are more likely to face the brunt of it at the very end. This is self-evidently true for singles, and more likely than not in either type of couple relationship as outlined above.

Start saving early, for flexibility later

Individual earning capabilities and family circumstances will vary, but having savings both in-hand and in-mind from the earliest point provides the best grounding to respond to circumstances as life unfolds.

Invest with balanced intention

Those savings have to be invested while delicately balancing two competing priorities: you need to participate in market advances to build savings in your accumulating years, and protect against market retreats in your decumulating years so funds are there when you need them.

Be emotionally aware to be financially prepared

There is an old myth that men invest logically and women invest emotionally. While that stark distinction has been debunked, it is true that both logic and emotion influence money matters for all of us. Accept and listen to the emotions that can affect your behaviour, so that you can make informed decisions that best serve your lifelong needs.

Speak to a financial advisor about how these points about women generally may apply to you specifically. Together, you can then review your savings routine and investment portfolio to ensure that they align with your long-term personal and financial goals.

Tag: Women

‘No charge’ for mom – Are you insure about that?