Paid parental leave is a great benefit for new parents like me, and it makes a lot of sense for employers of higher-end workers (like Vox Media!) to offer it. But plenty of Americans aren't so fortunate in their current employment arrangements, and recently lots of Democrats have talked about getting the government involved in making sure more people can take leave. I've argued in the past that trying to accomplish this purely through a regulation can be a trap that ultimately leaves part-time workers, small-business employees, independent contractors, and other classes of vulnerable workers out in the cold.
Rep. Rosa DeLauro and Senator Kirsten Gillibrand already have a bill to do it the right way, with tax dollars and public spending — it's like Social Security, but for family leave. They call it the Family and Medical Insurance Leave Act, which they assert they can turn into an acronym and call the FAMILY Act even though there's clearly no Y in the title (maybe add a "Yeah!" to the end). It's a correctly designed, properly transparent version of a universal leave program. Parental leave is associated with significant benefits in terms of early childhood education and public health, meaning this is an investment comparable to public education that rightly makes a claim on public money.
Up to 12 weeks of leave at 66 percent pay
The basic benefit established by the FAMILY Act is a right to take as many as 12 weeks of leave, with the government paying you 66 percent of your normal wages (up to a maximum of around $1,500 a week) until you go back to work. Leave would be available for the birth or adoption of a new child or to care for a sick parent or spouse, but it would also be flexible enough that you could use some of your time as pregnancy leave if your pregnancy situation leaves you unable to work for some of that time.
The burden on your employer would be that you are guaranteed to get your job back on nondiscriminatory terms when you are done with your leave.
But the cost of financially supporting you during your time off would be borne by taxes rather than by a specific regulation on your employer. The upside of that is it lets Gillibrand and DeLauro posit a truly universal program. The self-employed are covered. There's no exemption for small businesses. There's no incentive for companies to duck the rules by relying on contractors or perma-temps. It's like Social Security or Medicare — a program that is truly around for everyone who needs it.
Financed by a small increase in Social Security taxes
Right now, Social Security is financed by a 12.4 percent tax on the first $118,500 in wages earned (split formally into a 6.2 percent tax paid by employees and a 6.2 percent tax paid by employers).
The FAMILY Act would raise that to 6.4 percent on each side. Gillibrand and DeLauro argue that having the program run through the existing Social Security administration means it could be done without adding much in the way of new bureaucracy or infrastructure, with the vast majority of the taxes paid going to finance new benefits.
A continued role for employers
Right now, paid parental leave is something offered by employers as a way to attract talent — it's the same as paying above the minimum wage, offering a 401(k) match or paid vacation days, or any other job perk.
In a FAMILY Act world there is still room for employer-side action if you want to go out of your way to establish yourself as an unusually family-friendly workplace. For starters, there's that other 34 percent of your usual wages. Taking FAMILY Act leave with no further assistance would still be a significant financial sacrifice, and it's likely that many families would be unable to realistically use the full 12 weeks. Generous employers could offer to put leave-taking workers on one-third pay to supplement the two-thirds FAMILY Act benefit.
There is also the matter of the cap. In order to piggyback on Social Security infrastructure, the new taxes are only levied on the first $118,500 in wages (the same as Social Security taxes), which means the FAMILY Act only brings in enough revenue to make the two-thirds match for workers who earn less than $118,500 a year. If you earn $250,000 or $2.5 million you get the same weekly benefit as someone earning right at the cap. Obviously this is not a large segment of the workforce, nor one whose welfare the public needs to spend a lot of time worrying about, but employers of highly paid workers may well want to offer supplemental leave as a job benefit.
A subsidy for parents
The political peril of the FAMILY Act is that by structuring paid leave as a transparent, universal, tax-financed program it clarifies that universal leave is a subsidy to parents paid by non-parents. This, naturally, may not sit well in some quarters. On the one hand, a healthy share of the population is determinedly child-free. More important, a very large share of the population has had children in the past but has no plans for future children.
Older Americans are more politically conservative in general and more hostile to redistributive taxation in particular. Combine that with the fact that very few older people would benefit personally from a universal leave program, and you can expect plenty of public opposition.
But a subsidy makes sense. Paid leave polices are statistically linked to lower infant mortality rates, better cognitive test scores, and fewer behavioral problems for children, as well as fewer negative labor market consequences for mothers. Which is to say that, like the existence of public schools, a paid leave program isn't just a financial benefit for new parents — it's an investment in the longer-term success of the economy and the country's ability to thrive.
For American society to continue on into the future, people need to have children, and clearly on net, even in a FAMILY Act world it would be financially savvier to be childfree.
Sounds great — any chance of this happening?
Lol, no. Congressional Republicans are not going to agree to the creation of a broad tax hike to finance a massive new job-killing entitlement program.
The only politically interesting question is whether Democrats will be willing to sign on to a proposal that takes them out of their political safe space of taxing the rich and saddling large companies with unfunded mandates. The success of Social Security and Medicare show that universal programs funded through broad taxes can be political winners, but it's a bolder move than what the party's generally been willing to endorse in recent years.
Still, Hillary Clinton will presumably want to run on some kind of policy agenda at some point, and the leave issue is an excellent fit for her interests. If she's looking for a technically sound approach to leave for which to rally support in the longer term, she could do a lot worse than this proposal (her friends at the Center for American Progress like it).