Working Girls
Monday, November 26th, 2007Women in my generation can’t complain that they weren’t given opportunities simply because they were women. Every once in a while you still encounter some yahoo with an opinion, but the negative vibe has changed over the last 30 years. When I was younger I can remember people saying that women might not be fit for certain career choices. That because of some physical or psychological component, there were professions that should be reserved for men. When I was a teenager, a board-game was released called “Careers for Girls”. In this game, you could be a fashion designer, school teacher, or “supermom” – anything a little girl could ever want to be! The board-game was pulled from the shelf after a few weeks, and I’m inclined to hunt down and collect copies the way some African-Americans collect lawn jockeys, but the fact that this game made it through R&D and test marketing in 1990 never fails to amaze me.
The negativity now is more of the should/shouldn’t variety. It comes out in lovely expressions such as “HR is a good career for a woman.” Or “women shouldn’t be lawyers because men don’t like women with so much educating.” Both of those are in quotes because they are actual things that people have said to me. The shouldn’ts are worse than the couldn’ts. If you can’t do something, then the option isn’t on the table. For example, I cannot be a successful runway model. I don’t fit the sample sizes, and even if I did, I fall down in heels. I can’t be a professional singer. I have great pitch, but the quality of my voice just isn’t there. If someone tells me that I can’t be a singer, I’m not going to go home and cry about it because it was never possible in the first place (and by the way, the American Idol hopefuls should consider that before losing their shit at Simon). But when someone tells me what I should or should not do, I have a big bone to pick. The bone gets way bigger if the reasoning is based strictly on the fact that I’m a woman. Or that I may someday be a mother. Because motherhood and career success seem to go well together. I would think people would want to set that type of example for their children. But the shouldn’t people are out there, and they want to convince you with math.
Here’s my favorite argument for why women with small children shouldn’t be in the workforce. They, and in this case “they” are usually mothers who stay home and men with small penises, point out that sometimes the cost of daycare is greater than salary earned. Women in their twenties and thirties still drink the Kool Aid on this one all the time. The thing is that it’s just not possible to lose money by working. These people either went to an economics class taught by Rush Limbaugh, or by the same people who are convinced that you can lose money by going up a tax bracket (and it’s possible Rush is selling that snake oil as well). So, for those who are curious, here’s the breakdown of the numbers.
Let’s say the average woman in Montgomery County, Maryland is 35 years old making $50,000 annually before taxes, and getting a 5% raise every year. She has two small children in full-time daycare at $350 per child per week, and pays for the family health insurance out of her paycheck. She also contributes the maximum to her 401(k) and receives a company match. This woman is married, and as her husband makes enough to support the household she does not “have” to work, but enjoys work and wants to continue. Then, someone points out that for what she pays in daycare costs and taxes out of her paycheck, she is losing money by working and she should quit. Should she?
The daycare costs for this family are $36,400 annually. That’s probably about equal to this woman’s annual net income. There’s a tax benefit to contributing to the 401(k), paying healthcare premiums, and paying for dependent care, so at least she will not be taxed on the total amount. But still, she’s definitely spending more than she’s making.
Look at the bigger picture. Each year this woman is putting the maximum into her 401(k). For 2007 that is $15,500. There is an employer match. Let’s say it’s 100% of the first 3% of salary. That would be a extra $1,500 of benefit, for a total contribution of $17,000. As our woman is 35, this will grow tax free for up to 35 more years. In that time, $17,000 will be worth well over $200,000 assuming an 8% annual return. Additionally, this woman gets an average of a 5% raise every year. At that rate, in the (approximately) eight years it takes to raise two kids, spaced two to three years apart from birth to kindergarten, this woman will now earn $73,800. And each of those years can easily be worth another $200,000 in her retirement account if she continues to contribute the maximum. So, daycare for two children for eight years costs $291,200. Leaving the workforce costs $1,600,000 in retirement income plus the $23,800 difference in annual income assuming that this woman could return to the workforce at the same rate of pay she once had, and the compounding salary growth every year to come. And, as someone who does hiring, I can tell you that there’s very little chance that this woman will be able to get $50,000 a year in eight years, even with cost of living adjustments taken into consideration. The technology will have changed, the laws that influence her industry will have changed, and she will be out of practice at dealing with the every day demands of office work, which, although not harder than motherhood are just different. If you want to stay home because that’s what you want, then stay home. Just don’t try to convince me you’re making more money by not having a job.
I won’t go the whole way down the road towards the other problem with the quitting work model. Even though I think it’s the biggest problem, it’s harder to show mathematically. It is that without any economic power in a marriage you lose not only some of your power in the push and pull of everyday compromise, but ALL of your ability to know why you stay in your marriage. If you are not economically viable as a single person, then your ability to leave, or even to insist on counseling, if the marriage goes into the crapper is zero. So even if I could find a way to lose money by working, I’d still work every day of my life for the comfort of waking up knowing that I’m married because I want to be, and that I can change my mind at any time, even if I never do. That peace of mind is worth millions.