When a heterosexual relationship breaks down, women are at a much higher risk of falling into poverty than men – especially if they have children to care for.
Our new research suggests that while a break up on average reduces men’s disposable household income by five per cent, on average women’s household income decreases by almost 30 per cent.
We also found that a woman’s most important defence against falling into poverty after a separation is having a stable job and income before the break up.
Policies aimed at better supporting women to be employed, like promoting equitable access to childcare and flexible work hours, are therefore crucial to reducing the higher risk of poverty women are facing.
In our study, we followed 947 women and 807 men who were legally married or in a de facto partnership before breaking up, and we looked at their income for up to five years after the split.
For comparison, we also analysed the incomes of 5,496 women and 5,369 men who were very similar to the separated couples before the split – but who stayed together.
We used a measure of household income that is adjusted, or equivalised, to reflect the needs of the household since a larger household needs a higher income than a smaller household to sustain the same living standard.
Being in poverty was defined as having an equivalised household income below 50 per cent of the median across the country.
The study found that in the first year of separation the risk of being poor more than doubled for women (increasing from nine to 22 percentage points), while for men, the risk of poverty increased from nine to 13 percentage points.
The least vulnerable were women who were employed before the break up and those with a tertiary education. The most vulnerable were women without a job before the break up, and older women with school-age children.
We also found that not having a job before the break up left women in a “poverty trap” since being separated decreases these women’s chances of being employed compared to the women who remained partnered. This effect is especially large when the woman has children.
This is likely due to an unfortunate interplay between childcare costs and the income support system where the loss of support payments and the extra cost of childcare erode the increased income gained from having a job.
This makes employment unattainable for exactly the group that needs it the most – those who have been plunged into poverty by a family breakdown.
Imagine a mother who lives with her two preschool-aged children and her husband. She takes up casual employment as a personal care assistant, and mostly works weekend shifts or occasional night shifts while leaving the children in her husband’s care.
This provides relief to the previously tight family budget, and she will likely extend her hours further when the children are a bit older.
Compare this to a mother who now lives alone with her two children of the same age, after separating from her partner.
When she thinks of taking up employment again, also as a personal care assistant, she finds that her wage reduces the parenting payment that’s currently her primary source of income. And that what little is left afterwards hardly covers the cost of childcare for her two children while she is at work.
This interplay of the income support system and childcare costs means a financially viable employment option for a partnered mother can easily become out of reach for a separated mother.
When separation creates poverty and therefore an urgent need for employment, the current system actually makes it harder for mothers to attain employment.
The result is a poverty trap that can be hard to escape. And this trap looks worse for older women.
Our analysis showed that women with very young children who had no job before separation, have usually been out of the labour force for only a relatively short time, which could be expected to make it relatively easier to return to employment.
But women with older children and no job at separation have typically been disconnected from the labour market for longer.
As a result, their job prospects are likely to have declined, or they may have to accept a pay which is too low to overcome the hurdles created by childcare cost and lost income support.
This advantage of younger women over older women is also reflected in the poverty rates. While women with children under the age of five suffer the largest spike in poverty rates immediately following separation, this effect largely disappears within three to five years.
In contrast, while for women with older children the increase in poverty risk is somewhat smaller, it is much more persistent over time.
So how do men fare after separation? Are they better off? The answer is yes and no.
Men are also less well off after a relationship breakdown than before but the decline, as we show, is much less severe and men’s incomes aren’t pushed below the poverty line as often.
One reason why men’s household income falls less than women’s is because they often live in smaller, and therefore cheaper, households after separation – as any children are more likely to remain with their mothers.
In these situations, men may lose their partner’s income and have to pay child support, but fewer people need to be sustained by this reduced income.
However, it is important to note that while men’s income losses are smaller than women’s on average, both men and women lose out compared to their pre-separation household income.
This is because two households simply need more resources than one – the most obvious being the need for two places to live instead of one.
If a household was already on a tight budget before the separation – even if not below the poverty line – it may be impossible to keep one or even both new households out of poverty without additional income sources.
The income support system then is vital to fill that gap. However, the current rates of income support are below the poverty line.
Combined with the barriers to employment that stem from higher childcare costs and reduced support payments, it means Australia’s welfare system is ill-equipped to prevent poverty after a family breakdown.
It’s important that we remove policy hurdles that are standing in the way of women’s financial independence, and that we also provide sufficient support when their income still falls short of preventing poverty.
The research for From Partnered to Single: Financial Security Over a Lifetime, was supported by funding from the Paul Ramsay Foundation.
A version of this story appears in The Conversation.
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