Leave paid fam­ily leave to em­ploy­ers and states

The Washington Times Daily - - POLITICS - ● The mother of five, Rachel Gres­zler is a re­search fel­low spe­cial­iz­ing in eco­nom­ics, bud­get and en­ti­tle­ments for The Her­itage Foun­da­tion’s In­sti­tute for Eco­nomic Free­dom and Op­por­tu­nity. BY RACHEL GRES­ZLER

Pres­i­dent Trump’s lat­est bud­get in­cludes a pro­posal to give fam­i­lies six weeks of paid leave af­ter the birth or adop­tion of a child. First daugh­ter Ivanka Trump has since been mak­ing the rounds, on the Hill and off, drum­ming up sup­port.

But there are at least three rea­sons to re­ject a fed­eral paid fam­ily leave (PFL) pro­gram.

First is the crowd­ing-out ef­fect. A fed­eral man­date would cur­tail or de­rail some ex­ist­ing and ex­pand­ing non­fed­eral pro­grams.

A 2016 Kaiser sur­vey found that 34 percent of Amer­i­can work­ers work for firms that of­fer paid parental leave. Many oth­ers have ac­cess to in­for­mal paid leave through va­ca­tion and sick days or short-term dis­abil­ity in­surance.

Some large firms are com­pet­ing to see who can pro­vide the most gen­er­ous leave ben­e­fits, while more and more smaller firms are fol­low­ing suit as best they can.

More­over, a hand­ful of states have en­acted paid fam­ily leave pro­grams. While not ideal, at least the costs are trans­par­ent. The states pay for the ben­e­fit by levy­ing a tax on work­ers, rang­ing from 0.34 percent in Rhode Is­land to 1.2 percent in New Jer­sey.

But states would be crazy to keep their own pro­grams when their res­i­dents could get sim­i­lar ben­e­fits for “free” via fed­eral tax­pay­ers. And even if fed­eral leave ben­e­fits were less gen­er­ous, busi­nesses would be tempted to drop their ex­ist­ing PFL pro­grams, shift work­ers onto the fed­eral pro­gram and use the sav­ings to gain an edge up against com­peti­tors.

The sec­ond prob­lem with any fed­eral paid fam­ily leave pro­gram — even Mr. Trump’s lim­ited pro­posal — is that it could eas­ily snow­ball into a mas­sive new en­ti­tle­ment. That’s what has hap­pened with ev­ery other U.S. en­ti­tle­ment pro­gram.

So­cial Se­cu­rity’s Dis­abil­ity In­surance pro­gram started out about the same size as the en­vi­sioned PFL pro­gram. It has since ex­ploded in size, scope and costs (as well as in fraud, abuse and mis­use). To­day it sends monthly ben­e­fit checks to one of ev­ery 20 work­ing-age adults.

Al­ready, PFL ad­vo­cates have blasted the pres­i­dent’s pro­posal as “am­a­teur­ish, in­ad­e­quate, in­sult­ing.” “On lit­er­ally ev­ery as­pect,” they com­plain, “it falls short.” If a fed­eral PFL pol­icy be­comes law, it will face im­me­di­ate pres­sure to ex­pand, and each ex­pan­sion would drive up tax­payer costs.

The Amer­i­can Ac­tion Fo­rum es­ti­mated that a fed­eral PFL pro­gram pro­vid­ing up to 16 weeks of paid leave (the goal of many PFL ad­vo­cates) would cost up­wards of $300 bil­lion per year.

Fi­nally, a PFL pro­gram would en­trench con­flicted in­ter­ests into fed­eral law. Whether to work or stay home with their chil­dren is a per­sonal choice all par­ents must make. The fed­eral gov­ern­ment should nei­ther sub­si­dize nor pe­nal­ize those de­ci­sions.

But a fed­eral PFL pol­icy would do just that. It would pay work­ing par­ents to stay at home with their new chil­dren, but not stay-at-home par­ents who do the same thing. That’s like say­ing that work­ing par­ents’ time with their chil­dren is more valu­able than that of stay-at-home par­ents. That’s sim­ply not true.

Al­though PFL poli­cies can in­crease women’s like­li­hood of re­turn­ing to work and thus their longterm earn­ings, there are also ben­e­fits of par­ents stay­ing home with their chil­dren, in­clud­ing pos­i­tive ef­fects on chil­dren and stay-at-home-par­ents’ vol­un­teer work in schools and other char­i­ta­ble roles.

With con­flict­ing eco­nomic and so­cial ben­e­fits and con­se­quences, the ideal role for the gov­ern­ment is to re­main neu­tral, nei­ther sub­si­diz­ing nor pe­nal­iz­ing par­ents, whether they choose to stay home with their chil­dren or to work out­side the home.

That doesn’t mean fed­eral pol­i­cy­mak­ers can’t help work­ing fam­i­lies in other ways. They could ac­tu­ally do a lot more to in­crease fam­i­lies’ eco­nomic well-be­ing and ac­cess to fam­ily leave. They could, for ex­am­ple, en­act pro-growth tax re­form that in­creases work­ers’ take-home pay. They could pro­mote — rather than im­pede — flex­i­ble work ar­range­ments. They could cut costly reg­u­la­tions so that em­ploy­ers can bet­ter af­ford to pro­vide ben­e­fits — such as paid fam­ily leave — that their work­ers de­sire.

Bet­ter yet, law­mak­ers could do all three.

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