Pay and parenthood: Baby makes dad richer and mum poorer

We know that a woman's earnings are affected by starting a family. But new research reveals a man's are too – for the better. Jane Merrick investigates

It has long been assumed that when a working woman takes time off to have children, her career, and pay, can suffer. But a new report has found that when men become fathers, their pay actually increases – by an average of 19 per cent compared with their childless male colleagues.

Research by the Institute for Public Policy Research think tank (IPPR) has uncovered this "fatherhood bonus", the flipside to the "motherhood penalty" that hits many women when they have children. The report reveals that the difference between the pay of mothers and fathers is 26 per cent, for parents in their early forties. A decade ago it was even higher, at 32 per cent.

The IPPR report suggests that the "fatherhood bonus" could be down to two key factors: first, that many men strive to become breadwinners as soon as they have children, and so apply for higher-paid positions. It also speculates that male bosses with children are more likely to give higher pay rises to employees who are also fathers, ahead of men who are childless, out of sympathy.

The research reveals that mothers born in 1958 earned 14 per cent less by the time they were 40, in 1998, than they would have done if they had not had children. For mothers who are in their early forties today – those born in 1970 – the "motherhood penalty" is slightly smaller, but there is still a substantial 11 per cent difference between working mums and childless women.

Fathers born in 1958 earned 16 per cent more by the age of 40 than men who did not have children. The "fatherhood bonus" is even greater for today's dads in their forties: an average of 19 per cent more than working men with no children.

The IPPR report, which compared the salaries of those in full-time work only, found it made no difference what age men had their children, their earnings still rose. For women, there is an advantage in having children later, with those becoming mothers in their early twenties suffering a greater pay penalty than those leaving it until their thirties.

Despite the differences between mothers and fathers in their forties and fifties, the gender pay gap for men and women in their twenties has almost disappeared.

The analysis is part of a wider IPPR report, to be published in the new year, into the aspirations of men and women born in 1958 and 1970, assessing the impact of 50 years of feminism on the way we live now.

The IPPR said: "Academic evidence suggests that there are a number of factors that can help explain the 'fatherhood pay bonus'. In some cases, upon becoming fathers, men increase their earning capacity because they feel a greater responsibility to breadwinning for the family (and to compensate for their partner's reduced earnings).

"Other research suggests that fatherhood is valued by some employers because of the perceived loyalty it may bring, and is therefore rewarded. Other reasons suggest that some fathers wait to have children until they feel they earn enough to support a family."

The think tank said there was also international academic evidence suggesting that the "motherhood penalty" was strongest in countries with policies and cultural values that support the ideal of the male breadwinner and the female homemaker.

In the UK, female employment rates are much lower for mothers than for women without children. Scandinavian countries with high-quality, affordable childcare and extended parental leave, including Iceland, Sweden and Denmark, have the highest maternal employment rates. Dalia Ben-Galim, IPPR associate director, said the slightly better pay situation for mothers born in 1970 compared to those born in 1958 was down to the latter group taking a longer break from work after having children.

She added: "Women have made lots of progress. Female employment soared in the 1980s. Since the mid-1990s girls have been outperforming boys at school and university, and in the last decade the gender pay gap between men and women in their twenties has almost disappeared.

"But discussions about gender and pay are often divorced from the wider structural context that drives female disadvantage in work and wages, which is closely associated with their primary responsibility for care, particularly childcare.

"We were surprised to find a 'fatherhood pay bonus'. With dads in the UK tending to work long hours and many fathers still seeing themselves as breadwinners, they may be working longer to make up for their partner working fewer hours."

Siobhan Freegard, founder of the UK's biggest parenting website Netmums, said: "The motherhood pay penalty reflects the traditional division of labour once a couple become parents. Many new mums choose either to work part time or to stay full time but in a less demanding role, so they have time and energy to devote to raising their children – which usually means a pay cut.

"But for men, becoming a father often spurs them on to be better providers for their family, working harder and climbing the career ladder faster – which brings a bigger pay packet.

"Of course it is problematic that there are few well-paid but flexible roles for women who want to carry on working full-time at a high level while still being involved in mothering.

"However, the pay penalty also reflects the fact that many women actively choose to step down from their careers at this stage in their life in order to enjoy time with their young children. While careers can be picked up again in the future, you can never get time back with a baby – and most mothers are happy to sacrifice a small part of their pay in order to have this."

A mum's net deficit

Alex Walsh, 37, and his wife Claire, also 37, both work full time. Here he describes how their income has changed since they had children...

I'm an ACA-qualified audit manager with a nine-partner general practice called Rayner Essex LLP, with offices in St Albans and London. I deal with statutory audits and statutory account preparation, among other things, for a wide portfolio of clients.

Claire is currently working full time as a child-minder. This is out of economic necessity. Claire is actually a museum curator and a trained field archaeologist, with specialisms in animal bones and human remains, two post-graduate degrees and a professional qualification. We have three children under six at the moment. In 2007, we had our first. The second came along in 2009, and our third was born on New Year's Day 2012.

Claire would need a gross salary of around £50,000 just to cover childcare costs. Jobs that pay this well in the heritage sector are few and far between, unfortunately, and the economic downturn has only exacerbated this. Recently an assistant director position at a well-known local museum came up. It paid £22,000 a year for 40 hours a week plus one weekend in three.

Yes, I earn considerably more. However all our pay goes into our joint account and we consider it "our" income. We both work hard, I just happen to work in a profession that pays more and haven't had to do any form of child care that's interfered with my career.

In real terms my earnings have possibly decreased when you factor in inflation. In actual terms I'm paid quite a bit more, but then there is a lot more to buy with three kids. Our eldest is almost six now, and the economy has gone through a lot since 2007. Claire returned to work after our first and second children, so our take-home pay was hit hard, even after tax-efficient use of childcare vouchers, by the child-care costs. I'm lucky that my employer is very understanding. Accountancy is traditionally a profession that prides itself on working excessive hours. I know plenty of people who don't see their children much during the week. I start early (often well before 8am) but I'm usually home by 6pm to put the kids to bed, a situation that is relatively uncommon in more traditional accountancy practices. Have I sacrificed a potential increase in earnings or career development/progression to spend more time with my family? It's impossible to say, really. There is definitely a conscious work-life balance issue to consider.

Inevitably, since I was the main wage-earner, the burden of childcare fell on Claire. She worked part time after the first two children. When the last round of vicious local government cuts saw a cull of skills at the local museum Claire worked at, they actually made her redundant when she was eight months pregnant with our third child.

Miranda Atty