Mothers who take parental leave see lower wages: study

OTTAWA – Parenthood is a costly endeavour that goes beyond paying for basics such as food, clothing, shelter and education, according to a report released Tuesday.

TD Economics says mothers who have taken time off for parental leave face a consistent wage gap of about three per cent for every year of absence. The penalty is as much as three times more for women who have exited the workforce three or more times.

The TD report says women’s wages, in general, are about 20 per cent less than men’s. Half of that difference cannot be explained by factors that typically influence pay levels such as experience, hours worked, occupation, industry and age.

"The research leads us to conclude that exits from the labour force, most often related to family or motherhood – not gender – are the culprit behind this unexplained wage gap," said TD Economics deputy economist Beata Caranci, one of the report’s authors.

Depreciation of skills is thought to be one factor why mothers who take extended leaves would see smaller salaries, TD said. But economists behind the study also said employers are using the frequency of parental leaves as a signal for how committed women are to their jobs.

But the report added that women’s own choices are partly behind the "motherhood gap" in pay, as they are more likely to consider to work-life balance issues in choosing jobs – because of duties as home – as opposed to mainly financial incentives.

Given the worker shortage expected to result in the coming years from Canada’s aging population, employers cannot ignore working moms as potential employees.

"With a significant portion of the skilled labour force in Canada retiring over the next 10 years, employers will need to do all they can to attract and retain highly skilled women, including mothers," said TD senior economist Pascal Gauthier, another co-author of the study.

The report said mothers can take measures themselves to reduce the financial impact of parental leaves. It recommended women build up their work experience before taking temporary absences. It added that women who return to the same employer will typically face less of a wage penalty than those who return to work with another organization after a parental leave.