How Mothers Change the Economic Game

By Swati Sureka (Editor)

It’s hard to overstate the importance of mothers to society and to the individual lives of their children; each of us can provide anecdotal evidence of that. The many complexities of motherhood have been the subject of a broad swath of pop cultural and popular discourse, from the likes of Gilmore Girls to Sandra Bullock’s role as Leigh Anne Tuohy in The Blind Side. Mother figures are idolized in nearly every major religion, and have been for millennia. And yet, in nearly every part of the world, we — through our societies and political systems – have systematically failed to adequately recognize mothers as critical economic actors. In honor of Mothers’ Day this year, I will endeavor to very briefly introduce some of the ways in which mothers grow modern economies.

As a brief but important caveat, it is a bit difficult to separate the issues concerning mothers specifically from the more general category of women’s issues. In developing contexts, this is perhaps because the vast majority of mature females bear children during their lifetimes. However, data from the Pew Research Center and OECD show that upwards of 18% of American women and 22% of British women never bear children; these figures are even higher among those with higher education degrees. While the shifting demographics of childbearing are beyond the scope of this discussion, it is significant that discussions of women’s issues in the workforce often boil down to mothers’ issues (i.e. maternity leave and childcare), and that institutionalized sexism in the workplace is often attributed to the possibility of women becoming pregnant rather than more systemic problems affecting all women. Perhaps this merits a larger discussion of the societal expectations of women to bear children and the increasing propensity for women to choose childlessness. My preliminary impressions have led me to wonder about the ways in which we account for women’s economic value in terms of fertility and childrearing as well as contributions to human capital. In any case, it is notable that media outlets and policymakers often conflate the needs and contributions of mothers with those of all women; this analysis is, unfortunately, subject to such biases.

Despite some complexities, the most obvious conclusion one can draw is that empowering mothers empowers others. Mothers, even in more equitable societies, still perform the majority of childcare tasks by a large margin. The education levels of mothers, and not those of fathers, were found to significantly affect the education levels and social mobility of both daughters and sons. Similarly, mothers who control household income have been shown to much more positively impact the welfare of their children than fathers.[i] Educated mothers thus have a distinct and measurable impact on developing the next generation of skilled human capital for economic development. While this is certainly a vital task, what I seek to explore herein is how mothers themselves contribute as economic actors, and our systematic failures in accounting for and maximizing these contributions.

A Developmental Perspective

In the GatesNotes 2016 Annual Letter, Melinda Gates advocates the need for societies to recognize the importance of unpaid work to society, and how much of the burden of such work falls on women (~75%), particularly mothers. She grounds her argument not only on social factors, but on the economic opportunity cost of time spent on mundane labor, which holds women back from “doing paid work, starting businesses, or otherwise contributing to the economic well-being of societies around the world.” She advocates the economic strategy to Recognize, Reduce, and Redistribute the burden of unpaid work in the household. A comprehensive report by the McKinsey Global Institute (MGI) has sought to quantify the economic implications of gender parity progress on global development. They estimate that the untapped potential of women equals as much as $28 trillion (26%) in global growth over the next decade, or a more conservative estimate of $12 trillion (11%) when considering regional patterns of change.

These arguments focus on the potentiality of mothers to contribute more to economies through restructuring the types of labor to which they are able to contribute. Perhaps more subtly, MGI asserted that current measures of GDP do not account for unpaid work, which represents upwards of $10 trillion (13%) in global output. As a special case, the majority of agricultural labor on smallholder farms in developing economies is performed by women, and this work is not highly commoditized in the way that Western agricultural economies are[ii]. This means that global econometrics systematically neglect the direct economic contributions of women, especially in low-resource economies with large agricultural sectors.

The Business Case for Maternal Leave

The United States has repeatedly come under fire for its lack of a robust parental leave policy. Bloomberg Business’s analysis reveals that the US Family and Medical Leave Act only guarantees six weeks of unpaid leave for full-time employees at medium to large-sized companies, which in some states is supplemented by disability insurance with partial pay. California and several other states have passed bills guaranteeing six weeks of paid leave, which, crucially, is paid for by taxes taken out of workers’ wages rather than business themselves, and therefore has little to no effect on profitability. This year, several major cities in the US are enacting their own paid parental leave schemes.

Still, the lack of paid maternal leave in most parts of the US leads to poor job security for new mothers, as well as a rise in ‘voluntary’ attrition. However, granting leave does not equate to equal advancement opportunities surrounding leave periods. Sweden, which provides 16 months of paid parental leave to all citizens, also suffers from large wage and advancement gaps for mothers; this has been characterized as the ‘mommy track’, or a more flexible but significantly less rewarding career path for caregivers. So, while the attrition problem is reduced with paid leave, other problems do take its place, suggesting the need for re-strategizing on both ends of the spectrum.

These criticisms are often focused on critical but nonetheless abstract costs, such as how the lack of protections for parents runs fundamentally counter to American values, harms America’s global image, and damages the interests of workers and families. Therefore, several technology companies  who have reformed their parental leave and child care benefits in the recent past have been praised for being responsive to the needs of workers. It is not a coincidence, however, that this mother-friendly trend has manifested itself within tech companies, considering their focus on data-driven business strategies.

Supporting mothers is not just a matter of social responsibility, but also of fiscal prudence. Mothers represent an indispensable source of human capital that merits investment from a purely economic perspective. A White House report backs up this notion with data from California employers, finding that the family leave policies either boosted or did not affect profitability, turnover, and morale. By improving employee recruitment and retention, as well as motivation, paid leave policies can boost general long-term productivity of companies. Google, for instance, was able to dramatically increase its employee retention by increasing the duration and compensation for leave for new mothers.

Mothers, in addition to being a deeply vital part of society, are critical to macroeconomic development throughout the world and corporate productivity in high-skills service jobs. Addressing the issues that hold mothers back is not merely a public service, but an economic necessity.

[i] Thomas, D. (1990). Intra-Household Resource Allocation: An Inferential Approach. The Journal of Human Resources, 25 (4), pp. 635-664.

[ii] This particular point arose during several personal communications and lectures with Dr. Geoff Banda, a Research Fellow at the Innogen Institute at the University of Edinburgh.