The Paternalism of Paid Parental Leave

Written by Robert Verbuggen

The center-right American Enterprise Institute and the center-left Brookings Institution have a new report about paid parental leave. The members of their working group disagreed about much, but they were able to put forward a compromise plan. In this plan, new mothers and fathers would be able to take eight weeks off, with 70 percent of their usual compensation paid to them by the government, up to $600 per week. The program would be funded by a small payroll tax on all workers.

The working group was aiming for a mix of centrism and hard-headed policy analysis, and in that they succeeded. Seventy-one percent of Republicans and 83 percent of Democrats support paid parental leave, so the compromise is in line with public opinion. And the report comprehensively details the various tradeoffs posed by different parental-leave plans.

But is parental leave something that conservatives can get behind? That is a more difficult question, and an important one considering that President Trump, at the urging of his moderate daughter Ivanka, is a supporter of the idea.

Hardline free-marketeers have a simple answer: Hell, no, conservatives shouldn’t impose a new tax for the purpose of creating a new entitlement. The market can sort this out. If employers find they’re more competitive without offering leave, then that’s what should happen.

But there are also those of us who’d like conservatism to make more of an effort to address the concerns of working-class families; the election of Donald Trump suggests we have a point, at least politically speaking. And for these “reformocons” — or at least from this reformocon — the AEI-Brookings proposal gets one thumb up and one thumb down.

I like that the think tanks are looking at ways to make life easier for working parents and better for their kids. (I’m hardly unbiased: My wife and I both work full time, and we’ve had two kids in the past three years.) I also like that they strongly reject the idea of simply requiring employers to provide leave at their own expense. That idea, while it polls well, would impose unpredictable costs on businesses and give them a huge incentive to discriminate against people likely to have kids soon, especially young women. But some of the group’s premises are a hard pill to swallow for anyone who calls himself a conservative.

The hardline free-marketeers do have a point: The government is big enough. If we’re going to create a new benefit, it should be paid for by reforming, consolidating, or cutting other programs. (Apparently, some members of the working group agree with me here.) It’s not necessarily a problem to levy a new payroll tax to create a dedicated funding stream for parental leave, but that should be paired with tax and spending cuts elsewhere so that neither the government nor the deficit grows.

Also, the group seems quite confident in its ability to decide which work-family arrangements are best for everyone. They push studies claiming that parental leave is good for kids’ development in any number of ways; they want to see “gender equity” in work and child-care responsibilities; they tout the economic benefits of keeping women from leaving the work force to become stay-at-home moms. (Who do these people think they are, raising their kids instead of contributing to economic growth?)

These aren’t just broad arguments in support of helping working parents — they inform the structure of the policy the group proposes. It pushes new parents along a specific path. They will pay for the benefit through higher taxes whether they like it or not, for the entirety of their working lives, and when the time comes along that they’re eligible to take leave, it’s “use it or lose it.” A deep problem with the proposal, and indeed with the very concept of paid parental leave, is that it blunts the natural incentive for parents to go back to work promptly.

A deep problem with the proposal, and indeed with the very concept of paid parental leave, is that it blunts the natural incentive for parents to go back to work promptly. Let’s say you’re entitled to 70 percent of your pay for staying home; but if you work instead of staying home, you get this 70 percent plus the remaining 30 percent (for full pay) — so you’re really working for a mere 30 percent of your pay (minus commuting expenses and the like). The point here is not that families should make one decision or the other. The point is that people should have the option of going back to work early and getting paid to do so — i.e., that they should evaluate the tradeoff themselves rather than watch helplessly while the government slams its fist on the scale.

There are a few ways one could restructure the policy to make it more conservative-friendly. One approach, embraced by a few members of the working group, is just to shrink it. A benefit that topped out at $300 a week would be a great help to a minimum-wage earner while just offering some starter funds to those in the middle class and higher, who are more likely to have paid leave from their jobs and more able to save money ahead of time if they don’t. (Frankly, if you’re making a middle-class income and can’t be bothered to save up for leave, that is your problem.) As the report notes, a skimpier government plan would also reduce “crowd-out,” the tendency for private employers to drop their plans when the government starts providing one.

Another option is to make the benefit contingent on having a child rather than on taking leave: You get the same amount of “leave” money no matter when you go back to work, and your employer can start paying you again whenever you return. This would avoid “nudging” working parents to take the time off while still enabling them to if they wish — the government would remain neutral as to whether parents should take leave and for how long, but would provide funds that parents could use for that purpose if desired.

Still another option is my personal favorite: Fold this reform into a broader effort to boost the Child Tax Credit, the kind of measure embraced by Samuel Hammond and Robert Orr of the Niskanen Center. (Their proposal involves consolidating a bunch of child-related benefits into a single refundable credit worth $2,000.) Just one tweak is needed: Give new parents the credit right away when the child is born. Current law already allows most parents to take unpaid leave if they want; parents could decide whether to take unpaid leave and use the credit to help cover their expenses, or keep the money and go back to work earlier.

The policy wouldn’t leave out stay-at-home moms, either, keeping the government neutral as to that decision as well. This policy is based, in other words, on the simple premise that kids are good and parents deserve support and encouragement — not the presumptuous idea that the best course for all new parents is to take a specific amount of time off.

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