Meet 2 Female Founders Aiming To Close The Gender Pay Gap, 80% Of Which Can Be Attributed To The ‘Motherhood Penalty’

The moment we start a family is a pivotal moment for our financial futures. We think about strollers, diapers, but really, childcare is the biggest financial hit. Infant care is more expensive than college in over half of the U.S., and the U.K. (where I live) is not far from this, either. Parents – often women – are forced to do this math of “my salary vs. childcare,” and this effectively kicks off the “motherhood penalty”. You haven’t heard of it? Read further. 

According to the report conducted by The Institute for Women’s Policy Research (IWPR), women today earn just 49% of the typical men’s dollar, they lose 39% of lifetime earnings after just one year out of the workforce, the penalties of taking time out of the labor force are high—and increasing, so strengthening women’s labor force attachment is critical to narrowing the gender wage gap. 

Mirza – a new platform for working parents – is here to help. Its mission is to help you research fertility options, understand financial costs, and more easily navigate your parental leave policy to make the best decision for you, your family, and your career, and ultimately – make the systemic changes so that we’re not all just individuals, hacking together our own specific band-aid solution. 

The ‘Motherhood Penalty’

Co-founders Mel Faxon and Siran Cao started the company with a mission to close the gender pay gap, and they’re focused specifically on the “motherhood penalty” which makes up 80% of that gap. But, at the very beginning of my conversation with them, they made it clear that this is, in fact, a parenthood penalty – men who are caregivers face the same systemic conflicts between work and family and the same career penalty as women, and worse, the stigmas around “appropriate” masculinity. This is a complex system, so they decided to build Mirza to be part of the solution. 

Their goals for Mirza are twofold: first, tackle this forced “choice” between career and family by providing financial support for care; second, upend and reshape the system that puts caregiving and careers in conflict by generating data to create caring workplaces, and last, but not least, “

“I’m an immigrant and daughter of a single mother. To provide for our family, to raise me in the States, my mother had to learn a new profession at night while holding down a job during the day. There’s a reason for that night school – American families effectively need dual incomes in order to be “middle class.” And for single parents, it’s all on you. I definitely spent a lot of time home alone, because childcare is inaccessible, unaffordable – roughly a third of the median income – and it was the necessary choice to provide for the family. Today, my mom is a bank Comptroller. This taught me the value of women’s financial empowerment, the dignity in our careers, and just how crucial childcare is,” Siran Cao, co-founder and CEO of Mirza shares with me. 

“I’ve been lucky to have some incredible female mentors and bosses during my career. In my last position prior to business school, I’d just changed roles and taken on a new project and was thrilled to be working closely with this woman who was an incredible project manager and from whom I couldn’t wait to learn. However, after only two months, she decided to step down from work. It was a heart-wrenching decision for her; I remember her looking at me and saying, “you know Mel, they tell you that you can have it all – kids, a career, but they never tell you how impossibly hard it is to do it all well.” That was the first time I’d come face-to-face with the motherhood penalty, and it’s stuck with me through the evolution of Mirza,” adds Mel Faxon, co-founder and COO of Mirza. 

Together with OnePoll, in December 2020 Mirza’s team surveyed 1000 working women across the U.S., all of who were in a relationship, but who had not yet had children. They wanted to get an understanding of how familiar people are with the “motherhood penalty”, as well as how women think about the intersection of family and career. What they found was simultaneously shocking, but unsurprising. The findings are now collated in the report ‘What to Expense When You’re Expecting: Working Women Discuss the Future of Parenting’.

“Women expect to lose almost 40% of their earnings in their first year of parenthood. What many of us fail to think about is the long-term impacts of taking time out of the workforce. When we take a year of unpaid leave, we actually lose up to 10x our annual salary over the long run – the pay gap is costing women an average of $400,000 over a 40-year career (compared to a man). Another statistic from our survey was that 73% of women who want children think that having children will hold them back in their careers. The research confirms this, and this simply should not be a choice that any parent is forced to make,” Cao explains. 

41% of the women that Mirza surveyed had never heard of the motherhood penalty, and of those who had, only half of them knew what it actually means. The majority of women still believed that they would be the primary caregiver/take time out of work to care for their child. 

Interestingly and shockingly at the same time, 43% of respondents did not know what their current employer’s existing parental leave policies are. Of those who are aware, a quarter (25%) don’t think their employer’s policies are fair. More worrying, however, is the fact that 15% of respondents said their company doesn’t have any set parental leave policies in place – shocking considering the impact businesses’ parental leave policies have had on parents in the year of COVID-19 last year (this year doesn’t seem to be much different, either).

The Role Of The Employers And The Government

Currently, only 20%  of U.S. workers qualify for paid maternity leave. According to the report by UNICEF from June 2019, the U.S. is the only OECD nation without paid maternity leave. The vast majority of parents have to take 12 weeks of unpaid leave, and many resorts to claiming short-term disability. Both Cao and Faxon agree that there are so many ways we can improve this. 

“Employers should start with offering paid parental leave, and making sure birth parents and non-birth parents are provided the same benefits. Simply offering the policy isn’t enough: senior (male!) leadership has to take leave so that employees see that priority from the top,” explains Cao. 

“And we want to acknowledge here, paid leave is really expensive for small employers, so again, legislation comes into play. Federally mandated paid parental leave eases the burden and makes it possible for small employers to offer competitive policies. Finally, employers can support parents with the high cost of care. Caregiving employees are working two full-time jobs. We’ve seen this in the millions of women forced out of the workforce during the pandemic: the lack of childcare support, long work hours. And if parents pay for childcare with post-tax income, parents and non-parents are effectively paid different wages. Or to put it another way, childcare costs are a tax on parents. This is an economic problem: we “tax” parents through childcare; resulting in fewer women contributing to the paid workforce. Why are we taxing, instead of investing in, to put it in purely economic terms, our current and future workforces? Back to legislation,” adds Faxon. 

The Future Of Work For Women 

Now that employees who can are working from home, there’s an element of “flexibility” that employers are providing. That said, flexibility isn’t a panacea. It just means longer, exhausting days. Many working mothers have no choice but to leave their jobs, whereas there have been job gains for women without children and for men. Women also take advantage of flexible work options more than men; when these benefits aren’t utilized evenly across the workforce, the same biases against mothers will continue.

“Working parents have asked for reductions in work hours, and that’s one way that employers can support them. This is a great opportunity to rethink our workplace culture and expectations! Some employers are offering childcare support during the pandemic, and we’re fans of that approach. We don’t think that should end post-pandemic, though!” concludes Cao.

What can women actually do? Well, honestly, the work should not be on women. We’re doing more than enough (as a mum of a toddler, I should know). Cao and Faxon have some ideas and suggestions on actions for men and for managers. “At home, men can share the burden: talk about sharing the homeschooling during the week, what household work they can own, then fully own that work of care. Managers can start career discussions with working moms on their teams. Learn what constraints they’re facing, talk about career goals, and make a plan together to meet those needs. Okay, one thing for working moms. Let some stuff drop.” Yep, nothing to add to that. Apart from – we’ve got some work to do.