The Corner

Politics & Policy

Paid Leave Will Disrupt Businesses and Hurt Workers

Funding paid parental leave by allowing new parents to collect early Social Security benefits in exchange for delaying the collection of their retirement benefits decades in the future has been gaining traction in conservative circles. GOP senators Marco Rubio, Mike Lee, and Joni Ernst have signaled support, along with Ivanka Trump, as have writers here on the Corner.

I’m not sold. In my latest Bloomberg column I criticize the idea. For one, projected Social Security spending should be cut, not redirected for other purposes. In addition, using anticipated Social Security benefits from, say, 2048 to finance expenditures in 2018 is a Pandora’s box conservatives shouldn’t want to open. (Why not use tomorrow’s Social Security benefits to pay for today’s college tuition? Or pre-K?) Furthermore, Social Security is underfunded. So using benefits anticipated to be received decades in the future is imprudent, since those benefits likely won’t be there in full.

More generally, I’m skeptical of any plan that delivers benefits today with the promise that they will be paid for decades from now. In the 2040s, Social Security will hopefully look a lot different than it does today. For example, it might be means-tested, or it might feature private accounts. Given that Social Security’s structure will likely be changed, it’s far from certain that those who would collect early benefits when they welcome a new child will ever pay those benefits back.

On balance, then, we should think of this new approach as another middle-class entitlement program. It goes without saying that given our projected debt and deficits, we don’t need another entitlement.

And while this new approach to paid parental leave doesn’t require employers to foot the monetary cost of their workers’ leave, it does create other significant burdens. Both the number of new parents who take long periods of leave and the length of leave taken will increase under this plan. That will considerably disrupt business operations, especially for small firms, which will likely respond to that disruption by hiring fewer less-educated women of child-bearing age and promoting fewer women into management positions.

This paid-leave scheme would be another instance of a government program creating adverse unintended consequences.

Check out my column for more. And your comments are very welcome.

Michael R. Strain — Michael R. Strain is the director of economic-policy studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute.  

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