Thursday, March 23, 2006

Working Women: What are you Actually Making?

Lately, in many different forums, I've heard the "tuition crisis" blamed on homemakers, more popularly known today as stay-at-home-mothers (a term I personally loathe). I hate the blame game because it is unnecessarily divisive and focuses attention away from the real issue: the rising costs of tuition. Instead of looking at what could be realistic ways to impact the "tuition crisis," we waste our energy pointing fingers and creating ill feelings. Ultimately, no worthy ideas are produced and an environment of sinat chinam is created.

In addition, it is absolutely ridiculous (I repeat, absolutely ridiculous) to assume that forcing women, especially women with small children in the home, to work outside of the home will do anything to solve the tuition crisis. Working is not cost-free and it is also possible that a woman would only break even or even loose money by going out to work at the cost of raising her own children.

This post is not going to get into the advantages of women being at home. In my opinion the advantages are great. But, discussing those advantages is clearly beyond the scope of this post. (Incidently, I also realize that there are needs to work to possibly to maintain a skill that could be lost). The only purpose of this post is to delineate the costs or working, and to let people plug in their own information so they can crunch their own numbers and make their own determinations.

My calculations are, unfortunately, somewhat simplistic. But, I still believe they are quite telling. The missing pieces of information that I have been unable to include are the child tax credit and the dependent care tax credits (only those with legal day care need apply), as well as a dependent care savings account that some employers facilitate that allows the taxpayer to pay up to $5000 in (legal) child care costs with pre-tax dollars. So, for simplicities sake, take a look at the credits you are receiving on your most recent tax form and add them back to your "bottom line."

I am also unable to value benefits, since they vary so much. Some benefits have long term benefits (e.g. tuition reductions, stock options, 401(k) matching). Other benefits may just be plain necessary if your husband does not get them through his work (e.g. health care).

But, if the benefits of your job don't entitle you to practically free Yeshiva tuition, and your husband's job provides the all important health care coverage, this method of evaluation is pretty reliable.

The unavoidable costs of working:

-->FICA OSADI is 6.2% of your salary.
-->FICA Medicate is 1.45% of your salary.
-->The marginal rate that you will pay in federal tax (varies: anything from 0% to 35%).
-->The marginal rate that you will pay in state tax (varies by state: anywhere from 0% o 10%).

For example: A woman goes to work and defers no pay for retirement. Her husband's salary places them firmly in the 25% federal tax bracket and an 8% state tax bracket. She earns a $50,000 salary. After taxes she brings home $29, 675.

Possible Costs of Working:

On top of unavoidable taxes (at least for the honest and for those without the ability to shelter their earnings, they are unavoidable), there are other costs of working. These costs vary by family, so I'm only listing some possibilities below:

-->Child care that you would not use otherwise
-->Pre-school and camp that you would not take advantage of otherwise
-->Transportation that you would not use otherwise
-->Business Clothing and Dry Cleaning that you would not use if you weren't working
-->Household help that you would not use otherwise
-->Increased costs of food and dining out that are attributable to working
-->Formula for a baby, assuming the mother would otherwise nurse.

For example: Our working woman has three children. Child One is 5 years old and is in kindergarten. Child Two is 2 years old. Child Three is 3 months old.

Because the mother works full time, she hires a (legal) nanny . The nanny takes care of Child Three and Child Two during working hours and Child One after school. Fortunately, this nanny is also willing to do some basic shopping and household chores. But, due to the halachot of kashrut and bishul yisrael, the mother does not want the nanny to cook for the family.
Cost: $22,000

Because the nanny is not Jewish, the mother decides that Child Two will benefit attending part-day pre-school program 3 days a week. This is a choice she would not make if she was home.
Cost: $3,500

Because the mother is working and her job does not let out for the summer, she believes that it will benefit Child One to spend the summer around other children in a Jewish environment and enrolls her in summer camp, a choice she would not have made if she was home.
Cost: $2,500

Total cost of child care, pre-school, and camp that would be completely avoidable:

Our situation before the increased prices of food from having the time to shop around, the increased price of transportation to to and from work, dry cleaning, and the cost of formula:
$29, 675-$28,000=$1,675.

I am sure that the little amount that is left will easily be eaten away by the extra costs listed above. But, even if it is not, it shouldn't be hard to find enough work to do from the home to make $1,675 dollars or more.

Looking forward to hearing the discussion. And, just in case:
I am perfectly aware that many people are in lower tax brackets (and higher tax brackets to, bli ayin hara, may you live and be well), that many people find less expensive day care options (I know people paying as low as $4 and $6 and hour for illegal day care, but don't expect your husband to ever become attorney general if you are trying out that option). And, yes, I am also aware that some people would choose to send their kids to nursery or camp even if they were home (just in case you have not figured this out: I am not of those people).

The scenario I presented assumes a husband who is out of the home the same hours as the wife and can't reduce child-care costs.

So, in conclusion, just because a woman works, doesn't mean the family has extra money. And, just because a woman works, doesn't mean that there will be more money to pay tuition (there might even be less, as not every women can make the right salary). Pointing fingers at homemakers is a waste of time and unproductive. The problem is tuition!


Anonymous said...


Some of the schools have the GALL to tell families that they should send the mom to work so that they can pay more tuition? I'm all for paying full tuition---- what I plan to do is live in a community where I can afford the tuition, or choose to homeschool, rather than expecting special treatment because we don't make as much as we'd like. But frankly in our new community I think we're considered higher income than most. Weird. But if the family can't afford the tuition at that school without nannys and daycares so that mommy can go out to work, maybe that school isn't right for them.

But....don't forget those of us who work at home! I always knew I'd be a "SAHM" (more like a drive the kids everywhere kind of mom--- stay at home, yeah RIGHT!) but didn't know how I would afford it. Baruch HaShem for working at home! I make more money working at home than I did using my masters degree out in the (extremely non-lucrative) field.

There's also definitely something to be said, for those who have a heter for birth control like we did, to wait until you can AFFORD to raise your own children to HAVE them. If you're going to have a child and be hiring a "nanny" and be back in the office ASAP, why have the child? Why not wait until a better decision can be made?

I get very discouraged when I see families who beg for extra help from the school for tuition money who have kids long before they're financially ready, while we were being patient and waiting until we were at a better financial point in our lives. NOW we're trying to have children and nobody would argue that we're rich, but we're not struggling to put food on the table either and a lot of frum families with too many kids are.

Off my soapbox now. Thanks for the awesome blog--- it's a great read, and you read my mind. I don't have to blog. :)

Anonymous said...

I think it's sad that some would crticize frum families who don't wait to have children. Children are an extremely high priority in our society. If you want to use birth control, it's okay, but those who choose not to shouldn't be disparaged for their decision.

Anonymous said...

The decision whether to go to work is a personal decision and everyone should be respected for their decisions. However, I believe your simplistic example is flawed.

Many of the benefits that you left out, dependant care accounts, stock options as well as future growth in a position, are precisely things that in the long run could certainly make going to work financially beneficial.

When my oldest son was born I met the profile you described above, where much of my salary was going to pay for the babysitter who came to our house every day. (A lovely Jewish woman who did a great job caring for them.) However, my salary grew over time, at a rate faster than childcare and even yeshiva tuitions. Therefore, when my children started yeshiva high school (which next year will cost, in its entirety, approx $27,000) we were able to afford it. And those stock options that have been accumulating while I have been working are paying for college -- which makes yeshiva look like a bargain at $45,000 per year.

Orthonomics said...

To Anon #3 above, I specifically wrote, "I am also unable to value benefits, since they vary so much. Some benefits have long term benefits (e.g. tuition reductions, stock options, 401(k) matching). Other benefits may just be plain necessary if your husband does not get them through his work (e.g. health care)."

If you have a job that has great potential for salary growth (my didn't without going to a less family friendly schedule) or if you have a job with stock options (also not applicable to my line of work), than you might come to a different conclusion.

I specifically said I could not take into account the value of everything. I'm glad your job paid off. I'm sure I'll be fine re-entering later, especially since I'm not loosing out on any great benefits.

Yitzchak Jakobi said...

The issue really isn't that black and white though - what about part-time work or work that you can do from home (both of which my wife does)?

Although I agree that it is ideal to have a mom who is able to be home for the kids, it is in the best interest of the family if the mother maintains a valuable skill.

What if the father loses his job (and benefits)? What if, G-d forbid, the father passes away and the mother has to jump-start her career again from scratch? Clearly, it is advantagious for the mother of a family to maintain her skills and provide an extra safety net for the family.

Orthonomics said...

The isue certainly is not black and white. I currently do work from home to maintain some of my skills. Hopefully I will even be able to build some new skills that are more "family friendly."

Part time work is a nice in between and a person working part time may even be able to net more than a person working full time because you are not on your own for day care.

Since you did mention the sad subject of death, chas v'shalom, I should definitely mention that life insurance should be a top priority for every family with children (especially frum families). I will keep this idea in mind for a future post. But, if you take out sufficient life insurance, a homemaker or mother who works at home can ease back into the job market, rather than be thrown back whether or not that is the best thing for the children.

As for job loss, you make a very good point.

Orthonomics said...

>>are paying for college -- which makes yeshiva look like a bargain at $45,000 per year.

Your kids must be headed to really pricy private schools. My entire degree probably never amounted to $45,000 even with living costs.

My husband's undergrad probably cost half of that (he was able to live at home).

Jak Black said...

Good post. Wow, things really are different over here in Eretz Yisrael.

To those above who posted about delaying kids for monetary factors, you have to realize that the question is really halachic in nature. Rav Moshe Feinstein, who was known as being rather "meikel" in general, wrote that there is absolutely no heter to delay having kids for money.

Anonymous said...


Re: Life Insurance, I saw somewhere (can't recall) that it is a halachic requirement for the primary breadwinner to have life insurance. (Might have been rhetoric, but maybe not.)

I'm with you. I have a boatload of insurance to ensure that my wife need not work if I die, chas v'shalom, unless she chooses to. It's worth every penny. And we've insured her (much less) to make sure we can pay for child care, since I can't quit my job if she dies, God forbid.

I think your post accurately summarizes much of the issues. Stock options are great. As a lawyer, I don't get them. As a psychologist, my wife wouldn't get them. Health bennies? Comes with my job. The stuff mentioned in one of the anons is great, if you can get it, which generally means working at corporation. many of us in the service industry (accountants, lawyers, consultants, computer types) don't have access to any of that.

I think you did an excellent job summarizing the issue.

But you left out one key factor: Kids do better with a parent in the house. (Note I said parent, not mother.) There is a value to that that can't be measured.

And as to birth control - - to the critical Anon, I say, you made your choices and that's your right to do so, others made their choices. The tuition crisis has nothing, nothing, nothing to do with people have children young. I'm glad your career took off the way it did, but for many, that will never happen, so a $17,000 tuition bill will be huge regardless of whether they had kids at 22 or 32 or 42.

Yisroel Reiss said...

About life insurance, Yonason Rosenblum just wrote a whole article about why everyone should have it in Mishpacha magazine. I saw a teshuva by the steipler that say its an aveira not to have life insurance because it puts the "ol" on the community to take care of a family if the breadwinner dies. I also saw a teshuva from rav moshe in response to a question about whether its against emunah and bitachon to get life insurance and Rav Moshe gives a resounding "no."

Either way, I wanted to give you a yasher koach for this blog. Its really great! I put a link to this posting on my blog, This is definetely an issue that needs to be addressed.

Anonymous said...

Your post is very flawed. You count taxes mutliple times - dependant care costs are usually tax deductible. Also, once the kids are in school - say 3 kids ages 11, 9, and 7, there ARE no day care costs. There are no nanny costs or formula costs. Also, much of the clothing and dry cleaning would occur anyways. So if the kids are already in school, the net earnings are useful. And even if there's child care, please don't double-count tax - you're taking away 25% of her earnings in some cases.

Orthonomics said...

Anon--Obviously once there are no day care costs than you keep more of our money. But, until then, working mothers with small children who need day care are often not even making enough to justify their absence (at least in the short term).

And, I included the deductibility of day care costs here: "The missing pieces of information that I have been unable to include are the child tax credit and the dependent care tax credits (only those with legal day care need apply), as well as a dependent care savings account that some employers facilitate that allows the taxpayer to pay up to $5000 in (legal) child care costs with pre-tax dollars," but did not value them in the bottom line because it is hard to value them with incomplete information.

And, I definitely did not include double tax rates. You cannot escape the marginal rates, nor can you escape SS and Medicare tax. The second income is always taxed at a higher rate. That is just life!

Anonymous said...

The reason why I find your post to be flawed is that you merely demonstrate that in one particular situation it does not make sense for the wife to work (or at least work outside the home). However tweaking any of the variables could lead to a situation where the wife should work.

1. She has a professional degree, and brings in $75k before taxes so that the after taxes benefit are $43k and not $29k.
2. She is a public school English teacher, doesn't have to worry about summers or afternoons.
3. As one other poster noted she may have older kids.

Orthodox Jews believe that a day school/yeshiva education is probably the most important thing we must give our children. So now we have a question of policy. How do educate and train our girls? Do we tell them that in the ideal they should aspire to be stay at home mothers but it's nice to supplement the income when possible either doing part time or at home work. Or do we say that choosing to live in America (and especially the NY area) means that since day school/yeshiva education is for the forseeable future privately funded, pursuing good career options for those that are able, should be the norm. We must also remember that child bearing years (22-38) represent less than half of a woman's money-earning life. Having women not prepare for careers and stopping their careers in the middle impovershes our community versus the general population and imperils our ability to fund the schools and institutions that we need as Orthodox Jews. Obviously the other extreme, focusing exclusively on careers, or choosing careers that require 12-16 hour work days in order to support religious insitutions would be absurd. But I think the argument could be made that we should not stress stay at home motherhood considering the predicament that golus has put us in.

The only other real options besides relocation would be to say that we want mediocre schools. Large class sizes, less competent teachers, and less in-school social services (no guidance counsellors and no college counselors). Somehow I can't imagine that would fly.

Charlie Hall said...

Remember that if you are subject to the alternative minumum tax, as we are, almost nothing is tax deductible. Not even state and local taxes.

The assumption in most of middle class America is that if a parent is to stay home, it is to be the wife; in our case it is the wife who makes more money. I might get to be a stay at home dad for a bit if HaShem blesses us with kids.

FrumGirl said...

I am not up to that yet as my baby is still just a baby... but... I hear this complaint over and over.

What I want to know is where is tuition money REALLY going? Whose pocket?

I also remember going to a well known Bais Yaakov type school and only getting breakfast on a day that the school was going to have certain "visitors". And we were all informed (by memo, no less)in advance to make sure to come to school early and to eat. Where did the breakfast money go the rest of the year? Certainly not to buy the daily breakfast like it should have. This is but one example.

Orthonomics said...

Anon--Bli ayin hara that some women are making so much money. Bli ayin hara if they teach and are available for their teachers.

But, as my regular reader jdub pointed out, this is not the usual situation for those in the service industry (which I believe he is part of and I only freelance in now).

If your situation is different, plug in $75K instead of $50K and live and be well. I've never made $75K and am happy to work up to that level at a later date.

Charlie--May Hashem bless you with children. You deserve it! In the meantime, may the AMT get revoked by congress. The AMT is a terrible curse for those that it hits.

Frumgirl--Welcome. You school apparantely was part of a scandal that put some frum people in jail for a while. The scandal was discovered as part of an audit a number of years back where some Yeshivas and Bais Yaakov abused a free breakfast and free lunch program. I'll refrain from naming names.

May Hashem free us of these scandals and cause those involved to do teshuvah. There are so many scandals in the frum community sadly enough and many of them have changed the landscape of audit procedures and are taught in accounting and law schools all over. (I remember wanting the earth to swallow me up during the class that dealt with how the "Crazy Eddie's" fraud changed the audit procedures for inventory).

Orthonomics said...

>>>But, as my regular reader jdub pointed out, this is not the usual situation for those in the service industry (which I believe he is part of and I only freelance in now).

I need to clarify that the usual situation for those in the service industry is that we work full days all year, vacation is eaten away by yom tov, and climbing ahead often requires long and unpredictable days. Until you have the freedom to do these things, taking a break can be just as well financially.

JDub--You are correct that my post does not address the benefits of children being with a parent (I'm also equal opportunity, so a father at home, while unconventional, is fine by me). But, this post is just on the financials.

Also, all the anons (take some names because I don't know who is who). But, to the last anon, I think that we can blame just as much "impovershement" on the fact that many, many men are getting an extremely late start on their careers after they have a family.

Anonymous said...

I'm the very first anon poster and you can call me "soapbox" because I definitely stepped up on one. This is an issue which is very close to my heart. Blog owner, you know exactly who I am, but of course I posted anonymously because I know darn well that my views are not popular. In response to the second anon comment, I can just say that vacations are a high priority in my life but I don't take them until I'm financially ready. Buying a home is a high priority in my life but we still haven't done that because we're not financially ready. Kids are ABSOLUTELY a priority--- all I'm saying is don't have them until you're prepared to raise them. Heck, staying in one place and not spending 8 thousand dollars to move across the country is a priority--- BUT we moved across the country so that our financial situation could dramatically improve before we have our first child. I love the lively discussion here---- I know my views are harsh, and please know that I don't mean to offend at all. We each have the right to our own views and I love reading all of yours! Good Shabbos!!


Orthonomics said...

Everyone defines financial readiness for having children differently. I think including tuition as part of the package is not a particularily good policy. If we waited until we were sure we could afford tuition for every child, who would have children but the wealthy?

That being said, I think that it is important to teach fiscal responsbility to our own children from a decently young age and to be fiscally responsible ourselves. Bitachon is important, but so is hishtadlut and throwing caution to the wind in the name of bitachon is certainly not a good policy.

Anonymous said...

sephardilady you are right that financial rediness is a personal decision. However many young couples have begun having children before they have finished schooling at all, and before either of them have a job. That is most definitly iresponsible by anyones definition.

Anonymous said...

I would add to the prior basic definition of financial readiness Husband or Wife working and covering a large percent (say,50%)of basic monthly expenses without help from parent. I think I am reasonable in suggesting that parents, relatives, etc. should help support, not largely support.

Orthonomics said...

I would say that 50% support is LARGELY supporting. A couple should be able to cover their own monthly living expenses.

Anonymous said...

"I would say that 50% support is LARGELY supporting. A couple should be able to cover their own monthly living expenses."

Now you're getting personal: true, if supporting your married children is not an option for you, than you're right, they should be able to cover their own living expenses. But what if I want to support my kids through grad school, the way my parents helped me and my husband?
B"H, I am able to do it, and I am happy to do it, and my kids are not suffering from any sense of entitlement.
According to your above statement, it's somehow morally wrong. To which I say, (shrug) too bad you don't approve.

Orthonomics said...

If you or Bob want to support your working children, that is certainly your right.

I was defining "largely" and 50% is large.

Bob suggested that parents and relatives should help support. That seems fairly personal too.

Anonymous said...

Its not a matter of gettin permission- I am cutious what % os support is reasonable in people mind, and will avoid the sense of entitelement that many young people have. Do we insist husband or wife drop out of school to support at more than we feel comfortable doing?If 50% is too much, what is reasonable?

Orthonomics said...

I wasn't thinking your first post was suggesting support for (two) married students or grad students. I thought that you were referring to working people.

Maybe we should have an open forum on where the sense of entitlement of some many young people is coming from. It would be interesting to hear what people have to have.

Anonymous said...

To the poster who said, what if mom is a public school teacher: have you noticed that the public schools have a different calendar than the Jewish day schools? Who takes care of the kids on the days when mom has school but the kids don't? Also, did you know that in some districts you get fired for taking off the chagim (pesach and sukkot)? Typically, teachers do not receive vacation days on top of school vacation.