Would you willingly do something that costs you 20 per cent of your lifetime pay?
Let me put this to you in a different way: would you be willing to do something that costs you over a Dh1 million?
I'm referring to women taking time off from earning, say to bring up children, or to support your spouse because you’re relocating, or because parents need help.
Be aware that losing Dh1m might be the best-case scenario; the losses you stack up could be much more in reality – we just don’t know the full, accurate picture.
The Washington based Institute for Women’s Policy Research found that women who took a career break between 2001 and 2015 earned 51 per cent less than men.
These findings, shared at the very end of last year, show it costs a lot more than the monthly pay cheque you won’t collect.
You lose retirement benefits, you lose wage growth, and you pass up the opportunity of going to the next level in your earning life – through promotion and progression. These losses are amplified throughout the arc of your working life.
For a feel of how much you give up, check out the online calculator The Centre for American Progress (CAP) has shared. It works out how much you lose for each year you take off work – whatever the reason.
The calculation puts it at three to four times your annual salary lost for each year not worked. It works out at 19 per cent of a woman’s lifetime earnings – 22 per cent of a man’s – if they take five years out of earning while they bring up children for example – according to the CAP.
The calculator does not factor in the childcare, or other, expenses you’d save – that’s something for you to do – but however much it is, I bet you it doesn’t compare to the figure the calculator churns out. These calculations are based on various assumptions, like the age you start working, how many years you take out, projected earnings and so on. The Institute for Women’s Policy Research deals with real figures. And the reality is much, much worse than assumptions made to date. The study used real income over a 15-year period. The finding that women earned roughly half the income of men, purely due to time off for family or childcare, is shocking. The future ramifications worrying.
When faced with a tug on our emotions and time – let’s stick with the example of having young children, relevant to so many, and a hugely emotional issue - we often look at the immediate cost of something like childcare (so outgoings in lieu of us being available to take on the issue in hand). We calculate this versus what we bring in on the back of an envelope, and make decisions purely based on that bottom line – without considering the life-long impact it has.
Yes, we prioritise our children’s welfare – and so we should - but I invite you to consider whether your decision increases the chance of you becoming dependent on them in your later years, or struggling for money down the line. Neither is in your child’s best interest. When making decisions like this, we must shift our thinking to the opportunity cost over a lifetime – and not just the immediate ‘in versus out’ calculation.
Personally, I advocate always earning something: you’re all in when you can focus on your career, and then flexi/part-time - even with a bit of time off – when life comes at you.
Of course, if you are savvy and have secured your financial independence, then the world is your oyster. Most don’t have this luxury.
Here's how that million plus dirhams was calculated: it's reasonable to assume that a graduate will earn around Dh5.5m in the UAE over the course of their working life, or $1.4m in the US or £1.1m. Twenty per cent of the dirham amount is Dh1.1m.
Childcare is expensive – but taking time off earning anything costs much, much more. Now imagine what you’re losing out on if you earn 50 per cent of your childless counterpart, or your peer who stayed earning, no matter how little, while part-timing for example.
Unless you’re a trust-fund kid, or have your life’s expenses covered somehow, then don’t do it – don’t step out of the world of earning. If you must, then make sure it’s not for long. Not because I want you to give up your best years to the office – but because I want you to be safe, to have choice and always to live with dignity. A minimum of 20 per cent of your lifetime’s earnings will go a long way towards ensuring this.
Nima Abu Wardeh is a broadcast journalist, columnist and blogger. Share her journey on finding-nima.com