The Corner

San Francisco’s New Family Leave Mandate: Another Barrier to Job Creation

San Francisco is celebrating a new law that will require all employers with twenty or more employees to provide six weeks of paid leave time.   As I explain in Forbes, this certainly will benefit some employees, but it will create real hardship for many others. 

Higher employment costs mean lower wages and fewer jobs, particularly for those with fewer skills.  Women also tend to pay the highest price in terms of lost economic opportunity from such “family-friendly” policies.  Research shows that in Europe costly employment mandates tend to be associated with lower wages, fewer jobs, and less career advancement for women. 

Such mandates are simply anathema to true flexibility.  Some workers may prefer higher take-home pay instead of more generous paid-leave benefits.  They should be free to negotiate compensation packages to match those preferences.  San Francisco should also note that not everyone wants to be a parent.  Many childless workers are bound to resent benefits directed solely at parents, and childless women should rightfully be frustrated with how they end up suffering from the expectation that women will disproportionately use such benefits. 

If we want workers to have the compensation packages that they want—including higher wages and better benefits—then policymakers should focus on facilitating job creation so that workers have a variety of employment opportunities and bosses have to compete to keep them.  Unfortunately, this type of employment mandate takes us in the opposite direction and will be another barrier to job creation. 

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