It was twenty-five years ago that the Family and Medical Leave Act (FMLA) was passed by a Democrat-controlled Congress under Bill Clinton. Although it had minimal Republican support, current efforts to expand the FMLA’s provisions are being spearheaded by Republicans.
According to the U.S. Department of Labor, the FMLA “entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.” Covered employers include private companies with 50 or more employees and all government agencies and public schools. Eligible employees are entitled to 12 work-weeks of leave in a 12-month period for the birth or adoption of a child, to care for someone in the employee’s family who is seriously ill, or because of a serious health condition of the employee.
Ever since the passage of the FMLA, Democrats, liberals, and progressives have been calling for the unpaid leave in the FMLA to be changed to paid leave. Since the passage of the FMLA, some states have enacted similar statutes that broaden its scope, including mandating that employers offer paid maternity and paternity leave. But according to the Labor Department’s Bureau of Labor Statistics, only about 15 percent of full-time workers receive paid family leave.
It was no surprise back in 2014 that the Obama administration hosted a White House Summit on Working Families at which one of the topics discussed was paid family leave. Barack Obama himself addressed the issue in a speech at the Summit. Soon after Donald Trump was sworn in as president, Democrats in the Senate introduced a bill (S.337), the Family and Medical Insurance Leave Act (the FAMILY Act), to establish the Office of Paid Family and Medical Leave within the Social Security Administration (SSA) and the Federal Family and Medical Leave Insurance Trust Fund. The bill would entitle individuals to receive two-thirds of their income for up to 12 weeks in order to care for a new child, their own health needs, or a sick family member. The family-leave benefit would be funded by a new payroll tax of 0.4 percent, split between employers and employees, on “wages received in any calendar year.”
What was a surprise was Trump’s first proposed budget, for fiscal year 2018, which he released last year. According to a budget “fact sheet,”
The Budget proposes a fully paid-for proposal to provide six weeks of paid family leave to new mothers and fathers, including adoptive parents, so all families can afford to take time to recover from childbirth and bond with a new child without worrying about paying their bills. Building on the Unemployment Insurance System as a base, the Budget proposes to allow States to establish paid parental leave programs that are most appropriate for their workforce and economy.
In a letter to the Wall Street Journal, which was critical of Trump’s family-leave plan, Trump’s daughter Ivanka defended her father with the oldest Democratic play in the book — defining an entitlement as an investment: “Providing a national guaranteed paid-leave program — with a reasonable time limit and benefit cap — isn’t an entitlement; it’s an investment in America’s working families.” In his 2018 State of the Union address, Trump mentioned paid family leave:
We can lift our citizens from welfare to work, from dependence to independence, and from poverty to prosperity. As tax cuts create new jobs, let’s invest in workforce development, and let’s invest in job training, which we need so badly. Let’s open great vocational schools, so our future workers can learn a craft and realize their full potential. And let’s support working families by supporting paid family leave.
In Trump’s proposed budget for fiscal year 2019, a “fact sheet” says that the budget “includes a proposal to provide six weeks of paid family leave through the Unemployment Insurance system to new mothers and fathers, including adoptive parents, so all families can afford to take time to recover from childbirth and bond with a new child.”
But it’s not just the president who is proposing that the government enable all businesses to provide paid family leave; other Republicans and conservatives have jumped on the bandwagon as well.
Conservative proposals
In 2016, the right-leaning American Enterprise Institute joined with the left-leaning Brookings Institution to form the AEI-Brookings Working Group on Paid Family Leave. After a year of examining the “benefits and costs of paid leave” and considering “potential designs for federal paid family and medical leave policies,” the joint venture issued, in June 2017, a report titled, “Paid Family and Medical Leave: An Issue Whose Time Has Come.” According to the report’s Note from the Directors (Aparna Mathur of AEI and Isabel V. Sawhill of Brookings, who have both “written extensively about issues relating to single mothers, women’s labor force participation, and economic opportunity”), the working-group members “represent a diverse group of experts from different organizations, backgrounds, and perspectives.” Although “some have conservative leanings, and others are more liberal,” at the end of the day they all came together because of “a common interest in an improved system in the U.S.” And although there are “disagreements about the policy’s design,” how to “fund it,” “how long the leave lasts,” who “pays” for it, and who is “eligible,” all members of the group “believe the United States needs a paid parental leave policy.” The working group maintains that
polls show overwhelming public support for paid family and medical leave. Support for the concept is bipartisan, with almost 71 percent of Republicans and 83 percent of Democrats in favor of a paid parental leave policy. Yet the United States is the only advanced nation that does not have a paid leave policy at the national level. The federal Family and Medical Leave Act, passed in 1993, offers 12 weeks of job-protected, unpaid leave, but only about 60 percent of the workforce is eligible for its protections.
According to the report’s Executive Summary, the working group “developed eight principles to guide policymaking in this area”:
- preventing family hardship when a baby is born or adopted,
- maintaining long-term attachment to the labor force,
- supporting the healthy development of children,
- encouraging gender equity,
- minimizing costs to employers,
- ensuring access for the less advantaged,
- incorporating a shared contribution on the part of workers,
- and fully funding any new benefit.
Note that fidelity to the Constitution and the principles of federalism, limited government, and free enterprise were not included. In the end, the working group settled on a compromise paid family-leave proposal, the key elements being
- benefits available to both mothers and fathers,
- a wage-replacement rate of 70 percent up to a cap of $600 per week for eight weeks,
- job protection for those who take leave, and
- financing in part by a payroll tax on employees and in part by savings in other parts of the budget.
None of the group found the compromise to his liking. A majority wanted “something more generous” and a minority wanted “to limit any new benefit to something like $300 a week and to make it available to low-income families only.” In the end, because of these “partisan times,” the group felt obligated “to work toward a compromise” that they all “could support to some extent.” That was “better than doing nothing when the U.S. is the only developed nation without a national paid leave policy.”
Although AEI’s Mathur has continued to call for a national paid family-leave policy, the AEI-Brookings Working Group plan has been overshadowed by the recent proposal touted by some conservatives that would allow new parents to tap into their future Social Security benefits to pay for family leave.
In early January, Kristin Shapiro, a lawyer and visiting fellow with the Independent Women’s Forum (IWF), authored a “Policy Focus” for the IWF titled “A Budget-Neutral Approach to Parental Leave.” In it we are told that despite the widespread bipartisan support for paid family leave, “the United States is the only industrialized nation that does not mandate or subsidize at least some form of paid parental leave.” Although cost is an impediment, “There is a way for the federal government to provide paid parental leave to every worker in the United States at no additional cost: offer new parents the opportunity to collect early Social Security benefits after the arrival of their child in exchange for their agreeing to defer the collection of their Social Security retirement benefits.”
Here is how the Social Security proposal would work:
The amount of a new parent’s parental benefits under the proposal would be calculated by using the Social Security disability benefits formula.
Under this formula, recipients’ Social Security parental benefits would amount to 90 percent of the first $895 of their average indexed earnings to date, 32 percent of earnings between $895 and $5,397, and 15 percent of earnings over $5,397, up to a maximum of $2,788 per month. For example, the program would offer an average-wage worker approximately $1,175 per month in Social Security parental benefits.
New parents could receive up to 12 weeks of Social Security parental benefits under the proposal.
Both parents, assuming they work and qualify for parental benefits, would be entitled under the program to take the 12 weeks of paid leave any time in the first year of their new child’s life.
Preliminary estimates suggest that in order to obtain 12 weeks of parental benefits, new parents would need to defer their retirement benefits by only six weeks.
Participation in the program would be “strictly voluntary.” Shapiro maintains that enacting her proposal “would not require an expansion of the federal bureaucracy.”
The Social Security Administration “could readily administer the provision of Social Security parental benefits,” since it “already collects individuals’ earnings data, can process applications for benefits online, and routinely calculates and issues benefits to tens of millions of individuals.”
What is so surprising about this proposal is that the IWF claims to be “dedicated to building support for free markets, limited government, and individual responsibility.” The IWF seeks to “encourage women to join us in working to return the country to limited, Constitutional government.”
In late January, Shapiro, along with Andrew Biggs — a resident scholar at the AEI and former principal deputy commissioner of the Social Security Administration — wrote a short article on paid family leave for the Wall Street Journal (“A Simple Plan for Parental Leave”) that was adapted from, and echoes, the study for the IWF. On the same day, Ramesh Ponnuru — a senior editor for National Review and a visiting fellow at the AEI — termed Shapiro’s approach to be “superior to other ideas for expanding paid parental leave.” A few days later, also writing for National Review, Yuval Levin termed the Shapiro proposal “brilliant.” Ponnuru promoted the proposal again in February, this time as a columnist for Bloomberg View: “Shapiro’s idea, in short, is a good one. I still haven’t seen a better plan, or a valid criticism of her idea.” A research fellow at the AEI calls the idea “a conservative approach to paid leave.” Another writer for the IWF, anticipating the objections of “libertarians and small-government types,” asserted,
Even libertarians and small-government types should appreciate that in this proposal, no one is asked to bear responsibility for another person’s choices or leave time. It’s the working parent who decides to make a tradeoff that affects him or her alone. The government is already collecting Social Security payroll taxes from every worker; this plan would simply offer workers another option for how to get some of their hard-earned dollars back. And because of how it’s designed, this plan is not likely to disrupt the paid leave arrangements that many employers offer on their own, but it targets the most relief to those who currently lack on-the-job benefits.
The “Social Security Parental Benefits” plan is a “truly creative solution” that is the “best we’ve ever seen,” she concluded. Republican senators Mike Lee, Marco Rubio, and Joni Ernst have also expressed support for the plan.
The problem
There are a number of problems with a federal paid family-leave policy and the arguments for it — whether the federal government mandates that employers offer paid family leave or whether the federal government pays for it.
To argue that the United States is the only advanced nation without a national paid family-leave policy is ludicrous. The United States doesn’t have a value-added tax. Should it adopt a VAT because the European Union member states all have one? The United States doesn’t have a national health-care system. Should it institute one because most countries in the world have one?
To argue that paid family leave has widespread public support is meaningless. Of course it does. People always prefer to receive, or have others receive, benefits that cost them nothing. The public also generally supports food stamps, Medicaid, WIC, and other welfare benefits for the poor, disadvantaged, and underprivileged. Does that justify the existence of those programs? Social Security and Medicare have wide bipartisan support. Does that mean they should be “saved” for future generations of senior citizens even though they are not authorized by the Constitution? There is widespread public support for marijuana legalization. Does that mean that conservatives think the government should legalize marijuana nationwide?
Does it make sense for the government to make employees more expensive to employers? Does it make sense for the government to impose a one-size-fits-all, top-down national policy on all businesses in every state?
Government-paid family leave is a middle-class entitlement program that subsidizes parents who leave the workforce to raise children.
If you subsidize something you will get more of it. More workers will have incentives to take off more time and longer periods of time. That will prove to be especially disruptive for small businesses that don’t have the means to forgo an employee for twelve weeks at a time.
Government mandates and policies often have unintended consequences. It is inevitable that businesses will be leery of hiring women of childbearing age because of the legitimate fear that they will be absent for long periods of time or use more benefits.
Once an entitlement is codified it expands. When Democrats eventually regain total control of the government, they will certainly expand any paid family-leave entitlement. And, of course, Republicans rarely, if ever, roll back the bad policies of Democrats, and often come to embrace them. Not only can the benefit amount and time off be increased, the program could be expanded to include paid time off to take care of sick friends, paid time off for grandparents to spend time with new grandchildren, or just paid time off period.
If a new payroll tax is to be imposed to fund a paid family-leave program, then where does it end? Why not an additional payroll tax to pay for universal college education or a guaranteed minimum income?
Funding a paid family-leave program with Social Security has additional problems.
Social Security is underfunded. Since 2010, the cost of Social Security has exceeded its income from payroll taxes and taxes on Social Security benefits.
The government doesn’t have a Social Security account with every American’s name on it. The Social Security trust fund — which is expected to be depleted in 2035 — is a government accounting fiction. There is no money for people to withdraw to pay for their family leave. All Social Security benefits are paid from current taxes collected.
By the time today’s new parents reach retirement age, Social Security could be significantly changed. Those who received benefits to pay for family leave might end up not being penalized at all, thus making government-paid family leave just another welfare program.
It is naïve to think that once the government begins to dip into Social Security to pay for a parent to care for a new child, that will be the end of it. It might actually be just the beginning. Why not allow people to use their future Social Security benefits to take leave from work to care for elderly parents or a sick family member? Or what about just using their benefits to pay for college or make a down payment on a house? As long as they agree to defer their retirement then it’s not costing the government anything, right?
Conservatives are proposing to pay for one government program that shouldn’t exist with another government program that shouldn’t exist.
There is no such thing as a free lunch. No government program ever pays for itself. And that brings us to the main problem: the government’s getting involved in the matter of employee benefits.
The solution
There is no question that having a paid family-leave benefit can make employees happier and therefore more productive. There is no disputing that paid family leave is good for young children, families, the sick, and elderly parents. But those things are not the issue. The issue is simply the purpose of government. As Future of Freedom founder and president Jacob Hornberger recently explained,
What is the purpose of government? The Declaration answers the question: The purpose of government is to protect the existence and exercise of people’s natural, God-given rights. That was the reason for calling the federal government into existence with the U.S. Constitution — to protect people’s natural, God-given rights that preexisted the federal government.
The Constitution nowhere authorizes the federal government to have anything to do with child care or any role in family life. It is also an illegitimate function of government to have anything to do with fringe benefits or employer-employee relations (and, for that matter, retirement benefits and health care).
Paid family leave should be left to the market — just like vacation pay, sick pay, paid time off, holiday pay, and jury-duty pay. Whether an employer offers leave, whether it is paid, what its duration is, and how often it can be used is a matter between employers and employees — it is not the concern of government. There should be no government-mandated or government-funded family leave any more than there should be any other government-mandated or government-funded fringe benefits.
Not only should Social Security be left out of any discussion of paid family leave, the federal government should not concern itself in any way with employee benefits, and the Family and Medical Leave Act we already have should be repealed. Government-paid family and medical leave: an issue whose time should never come.
