The family leave issue is a tough one. While most businesses offer full-time workers paid leave benefits (which typically can be used for maternity leave or other situations that fall under the “family leave” category), many workers—particularly part-time workers and those with lower-incomes—don’t have any paid leave. And even those who do often don’t have benefits generous enough to cover the recommended minimum of six weeks for recovering from the birth of a child.
That’s a real problem, and can create tremendous hardship for women and families.
Yet solving this problem isn’t as simple as declaring that all businesses must provide six weeks of paid leave to all workers, or even creating a government program to provide benefits directly. That’s because such mandates and programs change the expected employment costs associated with workers, particularly female workers. Family leave mandate advocates often seem to want to shrug off such boring economic concept as mere excuses not help women. But these dollars-and-cents considerations really do matter and ignoring that reality can harm those who we all want to help.
All businesses consider how much workers will cost, and make adjustments when employment costs change. Some businesses can easily absorb the higher costs that would occur from new mandates (whether it’s a new leave benefit or a higher minimum wage). But not all of them can. Most have to figure out how to compensate for those costs, by raising prices on consumers or cutting other spending, which can include cutting base pay or consolidating jobs. As a result, while some workers are winners from these progressive proposals, others are losers who see their wages cut or jobs disappear. Ironically (but unsurprisingly), people with the lowest pay and fewest benefits before the introduction of a new mandate are the ones most likely to suffer after its imposition. We’ve seen how this works with the minimum wage, as well as with the introduction of other employment mandates and family-friendly programs intended to help women, but that ultimately make women more expensive to employ.
This economic reality check doesn’t mean that there is nothing that policymakers can do to help workers who lack family leave benefits.
The Independent Women’s Forum recently released a report calling for the creation of “Personal Care Accounts” (PCAs), which would allow workers to save pre-tax income, which could then be used when they take time off for situations eligible under the Family and Medical Leave Act. The Washington Post’s Danielle Paquette wrote this even-handed article that laid out the issue, including this critique:
Jeffrey Hayes, program director of job quality and income security at the Institute for Women’s Policy Research, questioned the effectiveness of IWF’s proposal, saying more attention should be paid to young parents with the least financial security. Some work part time or for small firms that supply no benefits. Others carry thousands of dollars in student debt.
“Pregnancy tends to happen early in the life course,” Hayes said. “You don’t have time to build up much money.”
This is certainly a fair point: Workers scraping by day-to-day aren’t going to contribute to a PCA. Yet that doesn’t mean that those with lower incomes couldn’t benefit from such a system since private charities could be set up to open and fund PCAs for lower income workers in need.
Consider that there are four million babies born each year in the United States. About two-thirds of the women giving birth are in the labor force. A $5,000 PCA for the poorer half of those mothers would require about $7 billion. That’s a big number, but not so incredible when you consider that charitable giving in the United States exceeded $350 billion in 2014. Family groups and progressive philanthropists could make this a charitable priority.
This isn’t a magical solution and won’t ensure that everyone has the time off that they need. Yet it would help many workers and won’t backfire on low-income workers by pricing them out of the labor market. And unlike sweeping one-size-fits-all mandates and government programs, it wouldn’t discourage companies from offering their own benefits or flexible work arrangements that can be win-wins for businesses and women. It’s an issue worth exploring further to help more people have the time off they need, without putting their jobs in jeopardy.