Many single mothers have financial reserves of water for example, about a third will not be able to handle an emergency expense of $ 400 in 2019. This is problematic because savings, even small cash balances, are critical to withstand financial crises.
One such crisis came in the form of the COVID-19 recession, which highlighted the financial vulnerability of mothers. Single mothers have high unemployment rates and are more likely to drop out of the labor force than single fathers and women without children. Single mothers face increasing child care issues, including access, availability and affordability, which exacerbate their situation. Their small savings also mean that single mothers feel these economic pressures more than groups with greater resources.
Identifying the issues facing these vulnerable women can inform private and public responses to help mothers and their families increase economic resilience and encourage upward mobility.
Dropping out of the labor market and experiencing high unemployment
During the first months of the pandemic, schools and daycare centers were widely closed. Virtual learning, reduced hours of operation of schools and daycare centers, and periods of isolation had a lasting impact on working parents. Single mothers were particularly affected: According to the Federal Reserve’s Household Economics and Decision Making Survey, one in five single mothers who experienced such disruptions said they would no longer be working in November 2020, a rate roughly double that of other parents. However, single mothers are half as likely to leave their jobs voluntarily as single women without children (7%), suggesting that their higher unemployment rate is unlikely to be purposeful.
Losing jobs and leaving the labor market is particularly detrimental to single parents, who are the sole breadwinners and primary providers for children in their families. Many find it more difficult to pay for child care (which is already unaffordable for many), which in turn makes it more difficult to find new jobs. Childcare is necessary because it allows mothers to participate in the workforce while their children are still young and is central to equitable recovery. However, in 2019, the vast majority (97%) of single mothers cannot afford the average cost of caregiving per child.1 This lack of affordability and engagement with the workforce force is of concern as many mothers struggle to remain in the workforce due to the burden of caregiving.
Slim financial cushions
Among 2019 singles (i.e., those who have never been married, divorced, widowed, or separated), the median wealth of mothers with minor children is by far the lowest, with household wealth of only about $7,000, as shown in the chart below. There is no significant difference in median wealth for other single individuals, ranging from about $57,000 to $65,000. The wealth penalty for mothers is clear: the median wealth of single women without children is more than nine times that of single mothers, while the median wealth of single men without children and single fathers with minor children is not significantly different, indicating that there is no corresponding wealth penalty in order for fathers.
Single mothers have little wealth
Bar chart showing median household wealth for single women and men with and without children based on 2019 dollars
Source: Federal Reserve Board’s Survey of Consumer Finances and authors’ calculations.
Note: Wealth is rounded to the nearest $1,000; 95% confidence intervals are shown by error bars. Differences in median wealth between the three groups with overlapping error lines do not reach a statistically significant level. Median wealth was significantly lower for single mothers than for the other three groups.
Wealth is important for housing and food security and more generally for financial well-being, although it varies widely by race and ethnicity.In 2019, the median wealth of single white mothers was $46,000, while the median wealth of single black and Hispanic/Latino mothers was about $4,000. Thus, the median wealth of single white mothers is about 11 times the median, which provides them with a more comfortable cushion when dealing with unexpected events such as pandemics. in 2020, black and Hispanic/Latina women (ages 25-54) are more likely to be single mothers of children ages 0-17 compared to white women; the likelihood of being such a mother is 26%, 19% and 11 percent, respectively.
Supporting Women to Advance the Workforce and Expand Economic Growth
While the recovery is well underway, there is still an opportunity to move beyond the return of single mothers to pre-pandemic levels of unemployment, labor force participation, and wealth. Society can better imagine how to engage mothers fully and equitably in the economy.
Many mothers face powerful headwinds, including a motherhood penalty on wages and wealth, lower labor force participation rates, and unaffordable child care costs. Hyperinflation is a new hurdle to cross, and it is a particularly heavy burden for those with limited incomes, such as single mothers. Addressing these issues, bringing more mothers into the labor force and increasing their financial resilience can translate into broad economic and social benefits, including potential gains in gross domestic product.
