Politics & Policy

Paid Parental Leave, Sensibly Applied, Benefits Working Mothers the Most

(Photo: Valuavitaly/Dreamstime)
The evidence shows that short periods of it help parents, children, and the economy.

Some of the biggest critics of President Trump’s plan for paid parental leave have been conservatives. It is “a new national entitlement . . . potentially costing hundreds of billions of dollars a year,” the Heritage Foundation warned in a recent paper. Others on the right have pointed out how paid leave could hold women back economically, result in discrimination, and burden businesses.

To be sure, these are possible if not probable effects of expansive paid-leave programs, the consequences of which are too often overlooked or minimized by the Left. But there’s little if any evidence that such effects would accrue from a limited paid-parental-leave plan such as the White House has proposed.

Take the most common critique of the administration’s paid-parental-leave plan: that it will harm the very people it is likely to help, working women. Two studies are oft cited on this front. Economist Jenna Strearns finds that expanded paid leave resulted in “fewer women holding management positions and other jobs with the potential for promotion.” And in a 2013 study, economists Francine Blau and Lawrence Kahn found that paid leave and other family-friendly policies “leave women less likely to be considered for high-level positions.”

But details matter. Stearns was researching the impact of a year’s worth of job protection and six months of wage replacement. Blau and Kahn were assessing labor-market consequences in OECD (Organization for Economic Cooperation and Development) countries, whose paid-leave policies average 57 weeks. Both packages of benefits are a far cry from the six weeks of paid parental leave proposed by the Trump administration.

In our bipartisan AEI-Brookings paper on paid leave, we document data from currently implemented state-based paid-family-leave programs, the longest of which runs six weeks — a more apples-to-apples comparison with the Trump plan. The research reveals that the biggest beneficiaries of paid leave are indeed working mothers.

Short periods of paid leave have been found to boost work and wages for mothers by as much as 10 percent, significantly increasing their economic opportunity and even reducing reliance on other government benefits such as food stamps, while helping to improve the health outcomes of children and parents. There is no evidence of compromised promotion potential with short periods of paid leave.

Others have pointed out the risk of discrimination, especially for women of childbearing age. The logic is that a firm is less likely to hire young women in the first place if it thinks they might take extended time off.

Discrimination is a possible and concerning outcome of extended periods of leave. But again, it has not consistently shown up in the research for shorter periods of parental leave, despite over a decade’s worth of data on public programs in the U.S. Rather, paid family leave is associated with higher labor-force participation rates and wages for women, which is good news for their professional advancement.

Others have focused on the consequences of a new business mandate, the burden of which falls on employees, that reduces wages and employment. These effects should be avoided, which is why the AEI-Brookings working group unanimously rejected an employer mandate that would force businesses to provide and pay for paid leave.

It’s also likely why the administration decided not to pursue an employer mandate. The plan is structured as a public benefit — a safety net for people who don’t have access to paid leave from their employers — with no additional job protection beyond that provided in the Family and Medical Leave Act of 1993. That’s a big difference.

Of course, with a public benefit, significant effects on employers still remain, such as the increased likelihood that employees will take time away from work. But there are data to rely on here, too. Polling from California reveals that 90 percent of employers have reported a positive impact or no impact from the introduction of the policy, and many have benefited from reduced turnover costs as workers have returned to their same jobs.

That said, we have almost no evidence about the effects on employers for paid-family-leave plans extending beyond six weeks. We will eventually know more with the implementation of the policies of New York and Washington states. They stretch to 12 and 16 weeks respectively, but our ability to assess their impact is years away. That should serve as a caution to anyone trying to advance longer periods of leave as a national minimum.

As for disrupting existing employer paid-leave policies, only 12 percent of private-sector employees have access to paid family leave from their employer, meaning that it is not a widespread benefit to begin with. And the average private-sector policy runs six weeks, which is what the Trump administration has proposed. A federal (or state) plan more generous than this would greatly increase the risk that employers would drop their plans for the public option.

After years of crusading for paid leave, some have managed to portray six weeks as barbaric, even though it is a clear improvement over the status quo.

Lastly, there’s the argument that paid leave is the beginning of a downward fiscal spiral — “a bidding war for government family benefits,” the Wall Street Journal editorial board writes. The effect of this slippery-slope logic is to handcuff politicians so they can’t put forward any new policy, regardless of its economic benefits or of the needs of today’s work force. Instead, they need to do the hard work of reprioritizing spending or reforming existing entitlements that are structurally unsound.

The fight should be to block benefit expansions beyond what the evidence supports, not to block any new benefit to begin with.

Especially a modest one. The Trump administration’s proposed plan is estimated to cost $25 billion over ten years, or $2.5 billion a year. This is 0.1 percent of existing entitlement spending and approximately 3 percent the size of the Democrats’ Family Act, which is the likely outcome if Republicans don’t provide a convincing alternative.

There’s no reason a policy of this size couldn’t be paid for out of reforms to existing spending, not by growing the size of government or levying new taxes. Moreover, as Federal Reserve chair Janet Yellen recently noted, paid leave and other family-friendly policies could help to counter some of the biggest economic challenges that face our country — weak economic growth and low work force participation — and that are exacerbating our fiscal issues.

Of course, liberals, too, have introduced plenty of bogeymen to the paid-leave debate. After years of crusading for paid leave, some have managed to portray six weeks as barbaric, even though it is a clear improvement over the status quo and closely resembles the length and the average wage-replacement rate in the longest-running paid-family-leave program, in America’s largest blue state.

And some on the left have continued to push the Family Act as the only reasonable solution, despite little evidence of the economic effects of such an expansive policy on workers and business — all while tending to rely on cost estimates well below what’s reasonable, hiding the true necessary tax hike for workers.

The majority of American parents have access to zero days of paid family leave upon the birth or adoption of a child. Most people on the right and on the left want that to change. The question is how.

There is plenty to debate about Trump’s paid-parental-leave plan and crucial details that are missing, which I’ve written about on these pages and elsewhere. But these conversations are best had based on evidence. Fortunately, there’s plenty to go by.

READ MORE:

The Paternalism of Paid Parental Leave

Don’t Force Employers to Provide Paid Parental Leave

The American Dream Hinges on Family

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