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The Case Against Government-Provided Paid Parental Leave

A government solution won't result in the proverbial free lunch that supporters hope for.

In recent months, a vocal group of conservatives has joined with Democrats in arguing that it's time for the government to correct a blatant market failure: the private sector's inability to provide sufficient paid leave. A new study suggests otherwise.

The study by the Cato Institute's Vanessa Brown Calder is called "Parental Leave: Is There a Case for Government Action?" Before diving into the report findings, I want to question the timing of the conservative interest in government-provided paid leave. The economy is doing well and growing fast; unemployment rates, no matter how you measure them, are pretty low; and companies that have to compete for the better employees are expanding benefits, including paid leave. In other words, it's an odd moment for conservatives to shift their position on government-provided paid leave, no matter how light the intervention.

The first issue Brown Calder tackles is the question of what the private provision of paid leave looks like. It's meant to answer a recurring talking point from those who advocate for a federal paid leave policy that states that the United States is the only developed nation without a national paid family leave policy, though a few states have created their own programs. Because some of these supporters understand that the lack of federal provision doesn't mean that the private sector isn't providing the benefit, they add that the Bureau of Labor Statistics shows that only 15 percent of women benefit from paid leave.

Brown Calder then unpacks these notions. First she looks at the BLS number and finds that it doesn't come close to including all paid leave options and benefits provided by private employers. Using more comprehensive government metrics, she shows that without the government mandating or paying for a paid parental leave benefit, between 45 percent and 63 percent of women report already having access to paid leave. The best part of this story is actually that the data show how the private sector has steadily increased its provision of paid leave to first-time mothers from 16 percent since the 1960s to over 50 percent in 2008 (the last time data were available). If you add disability (which is often used as paid leave), that number grows to 61 percent, which is a 280 percent increase over the period.

As a result, the share of first-time mothers who quit working declined "from over 60 percent in 1961 to just over 20 percent in 2008." As Brown Calder writes, "This represents a 66 percent decline in first-time mothers who quit their jobs, in the absence of federal government supported leave."

Even in the absence of updated data, we can assume this upper trend is continuing. She writes, "Over 100 large name-brand companies have created or expanded paid family leave policies over the last three years, and a long list of major companies, including Walmart, Walgreens, Home Depot, Target, Starbucks, Amazon, FedEx, and McDonald's, have created or expanded paid leave programs since late 2017 alone."

Better news yet is that this expansion benefited low-wage and hourly workers, too. This is important since the data is clear that the women or men who don't benefit from paid leave are historically lower-income women and hourly wage workers. Many of these workers don't even qualify for the current 12 weeks of unpaid, job-protected leave through the Family and Medical Leave Act of 1993.

Unfortunately, as her report shows too well, as much as we would love for everyone to get paid leave, a government-provided solution to the issue won't result in the proverbial free lunch that supporters hope for. It's likely to have minimal effect, as the new benefit will be offset over time by lower wages. It could also give an incentive to employers to discriminate against childbearing-age workers for the benefits of older workers.

The study offers more evidence that government-provided paid leave results in fewer women in leadership roles, higher unemployment, and lesser pay for women. Brown Calder concludes suggesting that policymakers "think broadly about improving workers' lives and focus on removing barriers to workers' career choices and improving economic efficiency." This can be done, for example, by eliminating licensing requirements and other regulations that increase the cost of child care—or implementing the 2017 Working Families Flexibility Act, allowing employees to bank overtime compensation and use it as future time off. Read it for yourself; you will be inspired.

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  • Scarecrow Repair & Chippering||

    I sometimes (well, often) wonder what kind of economics these people believe in, or what kind of brain fairy imbues people with altruism and efficiency just because they get a government paycheck.

    Anytime you add a new layer of bureaucracy, you make things more expensive and more inflexible; harder to adjust as society adjusts. Is it their goal to create the conditions for the next market failure?

    An employer tried once to go to an odd "9-80" work schedule which gave every other Friday off, in return for 8 9-hours M-Th and the one Friday an 8 hour day. It was great while it lasted, everybody liked it, but they ran into one obstacle after another with labor relations and threats from the state, due to previous fixes which defined the work week as 5 8-hour days; it was overtime for any day more than 8 hours or any week more than 40 hours.

    I just don't understand people who can't conceive of unforeseen consequences or even Bastiat's unseen. Blinders on, they charge ahead with some spiffy plan, and are astounded when it doesn't work and creates new problems.

  • sarcasmic||

    I guess there are some advantages to being overtime exempt. As long as I get my 80 in over two weeks, it doesn't matter how. If I want to work twelve hour days and take long weekends, I can do so. The only problem is that if I work more than 80 I get paid for 80, and if I work less than 80 I must pad it with PTO. I guess that's a fair trade off for a ridiculously flexible schedule.

  • Cynical Asshole||

    An employer tried once to go to an odd "9-80" work schedule which gave every other Friday off, in return for 8 9-hours M-Th and the one Friday an 8 hour day. It was great while it lasted, everybody liked it, but they ran into one obstacle after another with labor relations and threats from the state, due to previous fixes which defined the work week as 5 8-hour days; it was overtime for any day more than 8 hours or any week more than 40 hours.

    What state was that in? I work a 9/80 schedule right now and it's not an issue. I have to "flex" 4 hours of my "on Friday" to the next week because some states have defined a work week as "40 hours," but other than that there's no problem. And I work for a large company with offices in multiple states. Pretty much all salaried employees work 9/80 schedules. Maybe it was more of an hourly and/or union thing? I know out union trades people work 5 8-hour days, so I think that's probably the issue.

  • Scarecrow Repair & Chippering||

    30 years ago in California, 100 employees.

  • Rossami||

    You 'flex' your 4 hours as in "you lie on your time sheets". In most states, that's a violation of law for you to do it and for your employer to allow it. At least, if you're a non-exempt employee.

    It shouldn't be against the law but it is.

  • aistamn||

    Salaried employees are not required by law to report hours worked, only exception time. As a manager, I have to make sure my non-exempt employees record their work and break time accurately every week and are paid overtime as outlined by prevailing state law. As a salaried employee, I am free to work whatever hours it takes to do my job, at my supervisor's approval, even if that results in 40+ hours in a single week or less than 40.

  • loveconstitution1789||

    Taxpayers should not be paying for bureaucrats who are not working.

    If you want to have a baby, ask for a period of unpaid leave or quit.

    The exception would be women in the US Military, since that is just the price you pay for paying military for 24/7 service and having women in the Armed Forces.

    This would be self-correcting anyway, if the US and state governments had their work forces cut by 50%+

  • Bill||

    Why no link to the study? I know it is easy enough
    to find but it's kind of lame to not have a link when
    you give the title and a link at the end where it says
    go read it.

  • Cynical Asshole||

    What's with the weird carriage returns?

    Was that a haiku?
    Wrong number of syllables.
    This is a haiku.

  • CDRSchafer||

    The message to employers will be, don't hire anyone with young children. Message to those seeking out a job is, never mention your children in an interview or until you feel very safe in your job.

  • ||

    [I]t's time for the government to correct a blatant market failure: the private sector's inability to provide sufficient paid leave.

    Here's a fact for all the economically illiterate backers of this policy: Employers don't pay employees to do nothing. That goes for vacation time, sick time, personal time and paid leave. They underpay for the hours employees are productive to have an accrual for paid time away from work.

    As usual it never ceases to entertain that the "keep your laws off my body" crowd can't ask for a law fast enough that tells them what they can do with their body when it doesn't involve abortion. So two women with the same salary, one who uses paid maternity leave and the other who does not, have dramatically different compensation for the work they do. One would think progressives who believe in mandating equal pay would have a problem with that.

  • CLM1227||

    I wonder what it would look like if employees could choose benefit packages...

  • Longtobefree||

    It would look like everybody gets paid x dollars for each hour worked.
    No pay for hours not worked.
    You must work enough hours in a time period to complete an agreed upon level of accomplishments.
    You take the money you earn and buy whatever things, insurance mostly, that used to be called "benefits".

  • CLM1227||

    There's as much a reason for government involvement in paid parental leave as there is for government involvement in marriage.

    Might be birth rates among the educated and/or employed is a problem.

    I think cost of living and dispersed extended families are more detrimental to family formation than paid leave, though - especially since the birth rate problem is really only a problem among the educated.

  • Cynical Asshole||

    the birth rate problem is really only a problem among the educated

    Seems apropos.

  • Cynical Asshole||

    It's likely to have minimal effect, as the new benefit will be offset over time by lower wages. It could also give an incentive to employers to discriminate against childbearing-age workers for the benefits of older workers.

    Surely you're not suggesting that private actors may react to government policy in ways the Top. Men. didn't anticipate, leading to unintended consequences? Their intentions are good, what more do you need to know?

  • Sevo||

    Sevo's law:
    Any time a third party sticks its nose in a free transaction between two other parties, one and likely both will suffer.

  • vek||

    As swillfredo pareto says above, it all works itself out in the end.

    More leave = lower wages for everybody. The fact is that women are generally worse employees, especially if they're the kind who might bail to have a baby. I'm not against having kids, but we live in this delusional world where someone that is objectively a worse employee for a business, is somehow contorted into being just as good by magical thinking.

    Women that don't leave to have kids still take more vacations, use more sick days, tend to work fewer hours, and a host of other stuff according to studies. Throw in baby time, and you have a BIG gap. Since wages are largely mandated by governments in the western world to be equal for the same jobs, men largely are already subsidizing this stuff via lower wages for themselves, because on paper the chicks have to make the same to avoid discrimination lawsuits.

    If you go in and make this all official, damn right companies will avoid hiring 25 year old women who just got married... As they should. It's a bad investment as is, let alone with some massive leave thing on top of.

    In a sane world they could just be honest and offer a benefits package that did or did not include leave, with a variable wage... But this type of stuff is verboten too. But any which way, you can never get something from nothing, so the system will find balance in the end.

  • PubliusVA||

    The best case for government-provided family leave, IMO, is as a "sweetener" for a broader program of entitlement reform. For example, some conservatives have proposed a family leave benefit as an advance on Social Security. At the same time, AEI has proposed converting Social Security old-age benefits to a flat-benefit program (set just above the poverty level), while Heritage has similarly proposed converting Social Security disability benefits to a flat-benefit program. It might be possible to garner support for such a radical imagining of Social Security by repackaging it as a "universal social insurance" program with a flat pension benefit that can be drawn in advance for parental leave or temporarily disability. You could even potentially fold unemployment benefits and education benefits into the same universal program.

  • Lester224||

    Maybe the Republicans want to keep the white birthrate from slipping as fast as it is and keep the overall birthrate higher so that they have people to wipe their ass when they are 90:

    https://www.vox.com
    /science-and-health/2018/5/22/17376536
    /fertility-rate-united-states-births-women

  • CDRSchafer||

    Not for me, I'm going out in a blaze of glory, maybe plowing through an Antifa protest. Make it rain.

  • AD-RtR/OS!||

    TANSTAAFL!

  • MoreFreedom||

    " vocal group of conservatives has joined with Democrats in arguing that it's time for the government to correct a blatant market failure"

    Obviously, like 85% of the GOP, they aren't conservatives. The establishment of both parties wants more control over commerce, because that's where the real money is (Willie Sutton was short sighted - banks just have a lot of cash on hand). And no, there is no free market failure, just governments failing to allow and defend free markets.

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  • perlchpr||

    Why don't we try fixing the problems that make it so hard to raise kids in this day and age, instead of leaving the problems in place and trying to bondo over them with more government handouts?

    Like, we could try reducing taxes to a point where you don't have to have two jobs just to keep 'em fed.

  • CDRSchafer||

    If we reduced taxes than how could we afford all the free stuff?

  • ranjchandra||

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