Association for Public Policy Analysis & Management

We use the Urban Institute’s Dynamic Simulation of Income Model (DYNASIM3) to calculate the lifetime effects of providing care to children and disabled adults. Our study overcomes many shortcomings of previous studies model by considering full distributions of lifetime earnings, Social Security eligibility and benefits, and retirement pensions foregone for caregiving; we also take into account payroll taxes.

We find that the lifetime costs of providing care vary widely from person to person, even within relatively narrow categories, for example defined by education, number of children, and birth cohort. Our projections suggest that the average mother in the 1976 to 1980 birth cohorts can expect to forego about $281,000 in earnings over her lifetime, assuming that she could have earned her recent average earnings during spells in which she was providing care and earning below that wage rate. This estimate is comprised of $257,000 in lost earnings due to child care and then $24,000 in lost earnings for care for adults with disabilities, including older adults. The average masks significant variation, with a quarter of these women foregoing $390,000 dollars in wages and ten percent foregoing almost $600,000. Many mothers work consistently, interrupting their careers for such short periods that the measured earnings losses are zero or quite modest, even if their leisure losses and out-of-pocket expenses devoted to care may be significant.

When we incorporate losses in savings and retirement benefits, like pension contributions and Social Security accruals, into our analyses for mothers in the 1976 through 1980 birth cohorts, estimated losses increase by another 15 percent, about $40,000 on average. More educated mothers experience steeper losses in absolute dollars because they have better access to quality employee benefits. Accounting for increased payroll taxes offsets a portion of the lost earnings, about 7 percent on average. Accounting for both benefits and payroll taxes, we estimate a net income loss of $362,000 for the average mother in the 1976 through 1980 birth cohorts, $258,000 for the median mother, $489,000 for the mother at the 75^th percentile, and $800,000 for the mother at the 90^th percentile.

We find that estimates of the lifetime costs of providing care are sensitive to a number of analytic choices. For example, when valued at national minimum or caregiver wages rather than based on personal earnings capacity, earnings losses tend to be greater for less-educated mothers. This is not surprising given that it is much more difficult for such mothers to earn enough to pay for child care, so they ultimately tend to take more time out of the labor force. In contrast, when we consider potential earnings lost using one’s maximum observed earnings to date, more educated mothers tend to feel stronger caregiving effects, given that with each potential year in the labor force they forego a larger amount both in salary and in benefits. Almost 10 percent of mothers with a college degree can expect to forego as much as a million dollars in earnings alone when considering their earnings potential.