In Sunday’s Washington Post, author Sharon Lerner laments the continued lack of mandated maternity benefits in the United States. Today, only employers with more than 50 workers must comply with the Family and Medical Leave Act (FMLA), and FMLA only provides unpaid leave. Most other countries around the globe either provide paid leave or require companies to do so.
Lerner details the harmful effects (on both mother and child) of mothers having to return to the workplace soon after giving birth. Few would question the contention that it’s preferable for women to have sufficient time to recover physically from giving birth and to care for their babies. (Interestingly, however, those who tend to push for paid maternity leave also push for government day-care subsidies, which effectively drive women out of the home and into the workforce, in spite of similar evidence that suggests that children are better off being cared for by a parent during those early years).
Yet, in making her case, Lerner all but ignores the costs associated with mandated maternity leave programs. In an Alice-in-Wonderland way, she writes:
Another challenge [in passing paid leave] will be to explain to businesses that they aren’t expected to bear the financial burden. In California and New Jersey, the states that already provide paid family leave, benefits — in both cases, up to six weeks off, partially paid, for workers to care for either a sick family member or a new baby — are funded entirely by employee contributions through an extension of the states’ temporary disability insurance plans.
The real challenge for Lerner will be explaining to states, many of which face record deficits, how they can raise taxes on employees for a new government program, when so many existing programs are already in the black. Even if those higher taxes are born solely by workers, it will mean that they will have less take-home pay, at a time when many have family members who are out of work and face other rising tax bills.
Lerner will also likely find herself challenged by businesses, whose executives will explain that even if they are spared the direct cost of paying wages while a worker is on extended leave, they will still face real costs from a mandated leave program. When workers take time off, businesses have to seek, hire, and train temporary replacements, or shift work to existing employees, which means that productivity is likely to suffer.
The Congressional Research Service evaluated the impact of created paid family-medical leave and noted that workers are likely to pay the price in lower wages. The CRS wrote:
If Congress were to pass either of two proposed paths to paid family-medical leave — a mandate, or a TDI program funded in part through a payroll tax on employers — one would expect the compensation costs of employers to increase. Because employees generally are no more valuable (i.e., productive) to businesses after imposition of a benefit, however, they have no economically sound reason to raise their workforce’s total compensation as a result of either congressional action. Economists therefore theorize that firms will try to finance the added benefit cost by reducing or slowing the growth of other components of compensation.
CRS might have added that higher employment costs are also associated with fewer job opportunities.
This type of proposal is bad news for anyone in the job market, but women especially are likely to bear the brunt of labor-market effects. A study by MIT’s Jonathan Gruber, for example, found cost-shifting to women (in the form of reduced wages) when states mandated benefits related to pregnancy.
It would be great if everyone could have lengthy paid maternity leave, as well as generous sick leave, vacation time, retirement benefits, etc. But, as a growing number of debt-ridden countries in Europe are realizing, there is a real trade-off between cradle-to-grave government subsidies and a sound economy.
If the administration’s top priority is really job creation, it shouldn’t just ignore calls for new paid maternity leave programs. It should move in the opposite direction and seek ways to lower employment costs.
– Carrie Lukas is vice president and director of policy at the Independent Women’s Forum.