How Much Does Motherhood Cost Women in Social Security Benefits?
The increase in female labor force participation coupled with a higher number of women reaching retirement unmarried has increased the share of women claiming Social Security benefits earned through their own job histories. But they still bear the lion’s share of caregiving responsibilities, and the previous literature has provided clear evidence that motherhood reduces earnings during the childbearing and child-rearing years. What remains understudied is the extent to which mothers face lower lifetime earnings and, consequently, lower Social Security income. This paper uses the Health and Retirement Study (HRS) linked to administrative earnings records to answer three questions. First, how much less do mothers earn over their careers compared to childless women, and how much less do they earn for each additional child? Second, how do Social Security benefits differ between mothers and non-mothers? Third, how does each of the existing elements of the Social Security system that indirectly help mothers – namely, spousal benefits and the progressivity of the benefit formula – contribute to reducing the motherhood penalty?
The paper found that:
- The lifetime earnings of mothers with one child are 28 percent less than the earnings of childless women, all else equal, and each additional child lowers lifetime earnings by another 3 percent.
- When examining Social Security benefits, the motherhood penalty is smaller than the earnings penalty. But mothers with one child still receive 16 percent less in benefits than non-mothers, and each additional child reduces benefits by another 2 percent.
- The per-child motherhood penalty is almost negligible among women receiving spousal benefits, but mothers who receive benefits on only their own earnings histories see significantly lower Social Security income than childless working women, and for each child.
The policy implications of the findings are:
- Mothers end up less well off in economic terms when spousal benefits are not available.
- With the receipt of spousal benefits likely to continue its decline, policymakers may want to consider whether to compensate women for their lost earnings due to motherhood.