Jamee Herbert, Co-Founder and CEO
Originally published August 7th
We’ve all heard that women in the workforce earn an average of 80 cents on the dollar compared to their male counterparts. This statistic has been repeated over and over for the last few years through a succession of elections, policy discussions, and high profile celebrity pay negotiations.
One important contributing factor to the pay differential for women is motherhood and the fact that too many women feel forced to put their careers on hold due to the unaffordability of childcare. In too many cases, especially for middle-income families, it appears to make better financial sense for a parent to pause their career to care for their children than it does to keep working and pay the high monthly cost of childcare. For a variety of reasons (some biological and others not), this responsibility more often than not falls on mothers.
The problem with the decision to stay home is that it only makes financial sense in the short term - especially since full-day childcare is only needed until the child is old enough to begin kindergarten. While it may save a family $20,000 to $50,000 per year in childcare and preschool tuition, its cost in earning potential for a mother over the span of her career is much higher.
If we throw some numbers out, we can see how the economics work. If a 29-year-old woman earns $60,000/year at the time her child is born and gets a 4% annual raise, she’ll earn about $325,000 (before taxes) over the course of five years. And, if tuition for her child costs $1,500/month, that equals $90,000 over the same time period. This means over a third of her take-home income is going toward childcare alone.
These economics are challenging and leave most families financially stressed during the early learning years. However, the woman in our example (now 34-years-old) can continue her career and maintain her prospects for advancement and earnings growth. In comparison, had she left the workforce to care for her child, she may struggle to reenter at her original $60,000 salary once her child goes to kindergarten. In the end, with this loss of income and the compounding effect it has, this career interruption may cost her over $1,000,000 in the course of her lifetime.
This is a fairly sunny scenario. In many urban areas, childcare costs can top a whopping $2,000 per month. That means if you have two children, the total cost is nearly $50,000 per year. Combine that with the fact that a $60,000 salary is well above average in much of the US, and you can see why so many families are forced to make difficult decisions.
Even for a mom who continues working, the untold story is the impact of childcare costs on her family’s lifestyle, retirement savings, and the ability to cover emergency expenses that arise during that time. This is where childcare costs hurt a lot of families, forcing them to rely heavily on expensive credit card debt to keep their cars running, maintain their homes, and buy groceries.
These are the problems that brought me to start BridgeCare Finance. I saw a big problem with a simple solution: get more capital to parents for the relatively short period of time they need it. That’s why our product is a simple financing solution that will cut a family’s monthly childcare payments in half (or lower), at a rate more affordable than a credit card and with better long-term financial outcomes than a suspended career.
Of course, not every parent who leaves their career to care for their children does so strictly for financial reasons. I fully believe each family should make decisions about their careers and childcare that they feel are right for them. Our goal is to create a world where middle-income parents have real options to help them and their children reach their highest potential.
I left my career in the corporate world to build BridgeCare Finance because I found myself and my brilliant, female friends evaluating the same frustratingly limited options. I believe it is time that mothers and their partners had better options for childcare during the most important years of their careers and their children’s lives. I’m a woman and passionate crusader for gender equality, and our solution is a common sense solution for women and families.
I’m excited to tell you more about our journey and why our mission matters. Please visit https://www.bridgecarefinance.com/ to learn more and apply!