Leave plan hurts more than it helps Ilya Somin
President Trump’s budget includes a proposal for six weeks of mandated paid family leave for new parents. Despite its superficial appeal, this idea is likely to harm families more than it helps.
The initial Trump proposal, floated in September, would have limited mandated leave to mothers, thereby likely engaging in unconstitutional sex discrimination. Key aspects of the new plan are still unclear. But it avoids legal problems by covering fathers, too.
Yet it has serious flaws, nonetheless.
Mandatory paid leave is not a free lunch. It must somehow be paid for. Any mandated benefit makes the workers in question more costly to employers, who will try to offset the expense in some way. Potential beneficiaries are likely to end up with lower salaries, fewer benefits of other types, or both. Many workers who prefer higher salaries, and non-leave benefits, will lose out.
By limiting choice, government-mandated family leave hurts female workers more than it helps them. It also makes it more costly to hire women of childbearing age. This is true even if the benefit is financed by taxpayers (as will be at least partially the case under the Trump plan). Employers will still bear the cost of having workers absent for several weeks. States might be able to avoid the Trump mandate, but not workers and employers in participating jurisdictions.
The Trump plan would also impose costs on taxpayers ($19 billion over 10 years). That burden may increase if employers who currently offer paid leave cut benefits and shift the costs to Uncle Sam.
Fifty-eight percent of large U.S. employers already offer paid maternity leave. Many of the remainder forbear because employees value other benefits more, or because the absence of key workers imposes unusually high costs.
As between two equally costly benefits, employers have obvious incentives to offer the one workers like better. In a diverse society with a wide range of employers and workers, Trump’s one-size-fits-all mandate is the wrong way to go.