The parenthood penalty? Exploring gender, family and pay in London

This is the fourth of a series of Peabody Index reports. In this report, we focus in particular on the gender pay gap, and how London differs from the rest of the country. We also explore how childbirth and parenthood impacts labour market outcomes.

The gender pay gap

• The gender pay gap is substantial across the UK, though London performs better on some measures. Across the UK, the median weekly pay of women in work is about a third (32.2%) lower than is the case for men. In cash terms, this amounts to £173 per week. London has a weekly gender pay gap of 27.7%, the lowest among UK regions.
• The gender pay gap is also a feature among those on lower incomes. Among those receiving some form of government benefits, median weekly pay among women is 26.5% lower than it is for men across the UK. London has a much lower gender pay gap among benefits recipients in work, at just 9.2% – the lowest of all UK regions.
• With women much more likely than men to be carers – looking after children and other family members – they are also much more likely to be out of work and not seeking employment (that is, economically inactive). About a quarter (24.5%) of women in the UK aged between 16 and 65 are economically inactive, compared to just 15.1% of men. London has an economic inactivity rate of 27.1% – the third highest after Northern Ireland and the North East of England.

The parenthood penalty

• For men in the UK aged 35-45, having one or two children is associated with higher median weekly earnings.
• In contrast, having children has a clear negative impact on the median earnings of women. For women across the UK aged 35-45, median weekly pay of those with two children in the household is 26.1% lower than among women with no children. In contrast, men with two children have a median weekly pay 21.8% higher than men with no children.
• In London, this “motherhood penalty” is even higher at 30.0%. At the same time, the “fatherhood premium” is much lower in the capital at just 2.3%.
• The key driver of the “motherhood penalty” for weekly pay is a sharp decline in hours worked among women. While male median working hours are the same among men with no children, one child or two children, female working hours decline dramatically following childbirth.
• Childcare costs in London are higher than any other part of the country. Conceivably, this might be a contributing factor to higher levels of female non-participation in the labour market in London. In Inner London, full-time nursery care costs on average £343 per week. This compares with £269 in Outer London and £233 in Great Britain.

The Peabody Index

With respect to our regular Peabody Index, which tracks the real incomes of London’s social housing tenants:

• Real incomes in December 2019 fell 0.4% compared with the same month of 2018. While 2019 saw an acceleration in employee wage growth, for lower income households in London, these gains from employment income were offset by freezes in working age benefits.
• Analysis of data in the ONS Labour Force Survey suggests that the proportion of economically active social housing tenants in paid employment in London stood at 88% in Q3 2019 – broadly unchanged from the start of the year. The proportion of tenants that were unemployed stood at 11.1%, slightly up from 10.0% in the previous quarter.