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What are the financial costs of the "mommy track"?

(MoneyWatch) If you invest $40,000, $50,000 or even twice that, plus 4 to 5 years of your time, into a college degree, people say, "good job!" In fact, everyone from the president on down encourages people to do that. The theory is that this will prepare you for a brighter future.

While this college degree doesn't guarantee you a four-bedroom home in the suburbs, the average college graduate earns significantly more than the average person with only a high school diploma.  Everyone recognizes that a few years of sacrifice has the potential to bring big returns in the future. We do many things that don't pay now in the hopes that they will pay off eventually.

So why do we tell women that, unless they are making big money, it makes economic sense to stay home with the kids rather than paying huge day care bills? When we talk about a pay gap between men and women, we have to acknowledge that a good portion of that difference comes because women make different choices then men do. As a recent report on National Public Radio explains:

And among all workers, women are more likely than men to take a significant time off from work to raise children, and they tend to be re-hired at lower wages than their counterparts who remained in the workforce.

It's not just that you lose the money you would have earned while you are home with the children -- you lose future earnings as well. Here's an example. Let's say you're a dragon trainer earning $35,000 per year. You determine that with all the taxes, commuting costs, wardrobe (fireproof clothing is expensive) and day care costs, your total take-home pay comes to less than $5,000 a year. Since that only works out to be a couple of dollars an hour in pay, you and your spouse decide it makes financial sense for you to stay home.

Except that in five years, when the little darling (or probably longer, since the average woman has two children) is in school, you go back into the dragon business and discover that your former coworkers are now making significantly more than $35,000 a year. They have five more years of experience than you do, have received promotions, additional training and some are now managing the position you once had. You can't jump in where they are. And, most likely, you won't even be able to get the job you had when you left the work force years earlier. Why? Your skills are out of date.

So when you do get a job -- which isn't easy because you're competing against not only experienced people, but also the people who are straight out of school and whose training is fresh -- you likely will have to start a lower salary level than below where you left.

And you have to work back up to the original position, as your former coworkers are forging ahead. While it made financial sense, because of the high cost of day care, to stay at home during those early years, it turns out that your income will lag behind your former peers -- perhaps until the day you retire. While you would have only had an extra $25,000 in total take home pay by working those five years, you could end up earning hundreds of thousands of dollars less than your counterparts over the remainder of your working years.

Writing in the letters to the editor of the New York Times, one reader explains it like this: 

When my husband and I were starting our careers and family, I was making less than he was, but we did not calculate whether it made economic sense for both of us to work based on my salary alone. We recognized that the expense of child care was an investment in both of our careers, and one that would enable us jointly to achieve a certain level of income and support our family. The result: We both invested in our future by working. Eventually, my annual income exceeded his.

Just like a college education (or other training) is seen as an investment, working through those early years when day care costs eat up a huge portion of income, is an investment. 

Now, is this saying that you shouldn't stay home with your children? Absolutely not. I jumped onto the mommy track nine years ago and have worked part-time ever since. Is my salary what it would be if I'd stayed full-time in the workforce? Absolutely not. Do I regret that decision? Again, absolutely not. 

If you want to stay home with your children because it is the right thing for your family, then by all means stay home with your children. However, if you are only making that choice because it makes "economic sense" due to the high cost of day care, consider that your choice may not actually make economic sense. Instead, paying for day care could be an investment that makes it possible to maximize your future earnings, just like college. The key is to make your choices with as much information as possible, not just based on what your take home pay is today.

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