Personal Finance
Women are finding it harder to make ends meet
As the run up to the U.S. presidential election has highlighted, there is a growing share of “childless cat ladies” in this country. There is also a larger share of single women with children.
As marriage rates fell, the number of women heading families rose.
Often, this comes with financial challenges. Many single mothers shoulder the financial responsibility of raising children while also being the primary caretakers, a dynamic that affects their labor market participation and income, according to a recent analysis by the Center for American Progress.
Roughly 75% of single mothers are working, and those with full-time jobs have a median annual income of $40,000, according to the Center’s analysis of 2022 data. Single fathers had a median income of $57,000 per year, the analysis shows.
Caregiving demands have largely contributed to a persistent gender pay gap, often referred to as the “motherhood penalty.”
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During the pandemic, caregiving responsibilities hit working women especially hard. Across the board, women in the workforce faced steeper job losses and slower job recovery than men, according to research by the U.S. Census Bureau.
But by most measures, pandemic relief helped more people get on their feet relatively quickly. In fact, the economic comeback has been one of the most remarkable in modern history, Marc Morial, president and CEO of the National Urban League, recently told CNBC.
Yet, even now, the labor force participation rate for women has not fully returned to pre-pandemic levels. In addition to reduced labor force participation, women’s jobs recovery has lagged men’s: Women now hold just over 3.1 million more jobs than they did in February 2020, while men now hold nearly 3.7 million more jobs, according to a separate report by the National Women’s Law Center.
“This is another area where we see returning to a pre-pandemic status quo as not good enough,” said Julie Vogtman, the National Women’s Law Center’s director of job quality.
Pandemic relief helped
“Deeper structural inequities” are hindering meaningful gains in women’s labor force participation, Vogtman said.
Federal relief aid, primarily through the American Rescue Plan Act, did help mitigate employment losses and create the conditions for strong jobs recovery and wage growth. It also prevented the care system from collapse and cut child poverty in half, according to Vogtman.
“These were historic investments, and it kept the child-care infrastructure from crumbling,” Vogtman said.
However, “the very programs that drove the recovery have now largely expired and, in their absence, have left women and families struggling and unable to meet the rising costs of goods, especially for child care and housing, two areas where rising costs have outpaced inflation,” Vogtman said.
Another recent poll found that 91% of single moms worry about their financial future.
Many women and families are still struggling
Although inflation has eased, many women struggle to get by with paychecks that cannot keep up with costs for housing, groceries, child care, health care and other expenses, the National Women’s Law Center also found.
At the same time, “the child care crisis, which was simmering prior to the pandemic, has come to a boil,” according to a separate KPMG analysis.
Between 1991 and 2024, the costs for child care rose at nearly twice the pace of overall inflation.
Now, “existing federal programs designed to support child care access among low-income families suffer from chronic underinvestment and structural limitations, leaving many parents and caregivers with impossible choices to make ends meet for their family,” Hailey Gibbs, associate director for early childhood policy at the Center for American Progress, said in a statement.
Poverty is higher for female-headed households
The American Rescue Plan of 2021 temporarily boosted the maximum child tax credit to $3,000 from $2,000, with $600 extra for children under age 6, and families received up to half via monthly payments.
As a result of the expanded child tax credit, the child poverty rate dropped to a historic low of 5.2% in 2021, according to a Columbia University analysis.
However, in 2022, the rate more than doubled to 12.4% once pandemic relief expired, the U.S. Census Bureau found.
The poverty rate for families with children headed by single women rose even higher, jumping from 11.9% in 2021 to 26.7% a year later. In 2023, it reached 28.5%, the National Women’s Law Center found.
Notably, the terms of the current child tax credit are set to expire at the end of tax year 2025. At that time, the child tax credit is scheduled to drop to a maximum $1,000 per child.
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