Paid Leave

Colorado's Paid Leave Proposal Ignores Trade-Offs

The unintended consequences of a one-size-fits-all plan.

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There are no valid free market arguments for a nationwide, one-size-fits-all federal plan to provide paid leave. But should experimentation with this policy be off-limits to states? The beauty of a federalist system is that states can experiment and innovate with their own policies. This diversity can teach us what works and what doesn't. In this sense, Colorado's commitment to implement a new state-level, paid leave entitlement program—the Family and Medical Leave Insurance (FAMLI) Act—is consistent with federalism.

The FAMLI Act would provide paid leave benefits to workers who have family events, such as the birth or adoption of a child or the need to care for a loved one, but the hefty price tag would be paid for by collecting a "premium" from employers and employees. So, while it's ill-advised for the state government to intrude in this way, depending on what the plan ends up looking like, the rest of the country will learn a valuable lesson at Colorado's expense.

After years of being dead on arrival, the FAMLI Act passed in the last legislative session. A task force was established to "study" the idea. According to Colorado's Department of Labor and Employment, the task force consists of "private employers, organized labor, worker advocates, labor economists and state agencies." Its final recommendations are due in January.

The legislators claim the reason for this policy is simple: Not everyone gets paid leave. That's true. As American Action Forum data show, between 66 percent and nearly 84 percent of middle- and high-income workers, respectively, already have paid leave through their employers. On the other hand, a little over 33 percent of workers in low-income families have access to this benefit. But is that a reason for the government to provide it?

Don't get me wrong. I'm fully in favor of the private provision of paid leave as a benefit. There's no denying the value of paid leave to families and young parents. Many companies understand that they will gain from providing this type of benefit to their workers. That's why the data demonstrate that a vast majority of employers accommodate their employees' desire for paid leave.

It's no secret why high-income workers are more likely to receive such leave than are low-income workers. Low-income workers are often part time and prefer getting all their compensation in the form of cash rather than fringe benefits. As a result, relatively speaking, low-income workers stand to lose the most from Colorado's FAMLI Act.

Moreover, we can only shake our heads in dismay that yet another state is willingly jumping in headfirst to provide a benefit that will impose a considerable tax hike. It will also reduce women's employment and promotion opportunities as an unintended consequence. We can predict these unfortunate results because of the large number of studies that have been done on the issue. From Norway to France, Canada to Sweden, California to New York, economists have found that government-provided paid leave leads to lower wages for women, fewer prospects for advancement, and overall reduced employment.

Worse yet, the trade-offs are more dire for lower-income employees, whom the legislation's sponsors claim they want to help. For example, consider that for 50 years, Canada has tinkered with its paid parental leave program, trying to design a program that doesn't simply redistribute from low-income workers to higher-income ones. But it has failed so far.

The truth of the matter is that nobody would oppose a world with more benefits and higher wages for everyone, as well as fulfilling jobs in which no one ever has to choose between one's vocation and family care. But that world doesn't exist when you consider the real costs, trade-offs, and economic reality. There's also no getting around the fact that a payroll tax—which will likely be used to pay for the benefit—is regressive, with its burden falling more heavily on lower-income earners. It defies logic that this tax will create a net benefit for low-income workers.

In fact, the government makes these trade-offs so much worse that when women are more fully informed, their support for any mandatory paid leave program collapses. Colorado can ignore these lessons and implement a punitive FAMLI Act, but it will be at their own citizens' expense.

COPYRIGHT 2019 CREATORS.COM

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  1. How can something that is free cost anything?

  2. “But should experimentation with this policy be off-limits to states?”

    Yes. The function of government is to defend liberty, period.

    1. You’re never going to get a whole nation to agree on libertarianism; all one can hope for is a few libertarian states within a federation that imposes few rules at the federal level.

      IOW, many people want to live in progressive shitholes and we should let them.

      1. Not with that attitude.

  3. Trade-offs are just part of the price you pay for anything and since when has government ever been honest about the price of anything?

  4. An outcome that is perfectly foreseeable is not “unintended”. The foreseeable good may outweigh the bad, but that is a trade-off. The bad is still intended.

    1. Exactly. One intended consequence is to keep women in positions where the socialist ruling elite can keep telling them they are being held down. While it is true they are being held down, it is by the socialists, not ‘evil white men’.
      A much better experiment would be to prohibit all ‘benefits’ and to require employers to just pay wages. Then each employee can buy such benefits as they wish. The child free would not need to be helping with scholarship benefits, single men would not be funding maternity benefits, women would not be funding men’s company baseball teams, etc.
      And no one would get that damn memo each year about how much the company ‘adds to your pay’ with all these benefits you do not need or use.
      Of course, that would require repealing a bazillion laws and regulations at the state and federal level, and God know we can’t have that.

      1. I’m on board with this just so long as employees get a tax deduction for what they paid to buy these benefits in the private sector.

        It’s sad that when a company “pays” for benefits (by taking money they’d have paid as salary and instead paying it to an insurance company) they get to write it off as a tax deductible expense, but when individuals do the same, they have to pay taxes on that money. It encourages the centralization of power in the corporation- the exact type of centralization of power I would expect lefties to dislike.

  5. Yes! Yes! Yes! Let’s put taxpayers on the hook for more tax funded benefits for people who want to have children. There are just too few of us on planet earth! Right? In only eighteen years we’ll be asked to pay for their college education. I’ll be dead before I have to pay for their social security benefits … thank you, Jesus!

    1. Oh, John! Be nice!

    2. In Hungary if you have 4 kids you don’t have to pay any income tax. That’s genius.

      1. Add payroll tax and it’s a deal.

  6. It’s done on a national level because that way the costs rise for all companies. If you do it on a state level then that state is disadvantaged in getting companies to startup in that state or move to that state.

    1. “If you do it on a state level then that state is disadvantaged in getting companies to startup in that state or move to that state.”

      Feature, not bug. At the national level, you are making companies less competitive with other parts of the world. At least at the state level, these transfers stay within the country and you can get a better apples to apples comparison about whether a state where it is more expensive to do business is offset by the happiness of 100% of people getting maternity bennies.

    2. Doing things on a national level is preferred because people have no way of escaping being guinea pigs for your plan.

      1. Besides that, it is much more efficient and cost effective to bribe the 535 national dictators than a half a gazillion state and/or local grifters.

        1. That too!

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