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President Obama and members of Congress have offered numerous proposals to expand the Family and Medical Leave Act (FMLA), or create new federal mandates or programs to provide workers with more generous leave benefits.
While everyone understands the need for workers to take time off from work for events like personal illness, a family members’ illness, or the birth of a child, it is important to recognize the costs and unintended consequences of government mandates and programs to create leave benefits.
Government mandates represent a significant loss of freedom for individuals: they limit an individual’s ability to enter into a contract with another party for employment. We should question why the federal government would consider making it illegal for one to offer or accept an employment contract that does not include certain leave benefits.
Leave mandates also raise the costs of labor for business, discouraging employers from creating jobs and encouraging outsourcing. They create new administrative burdens for employers, including an increased potential for costly litigation. As the costs of benefits go up, workers’ take-home pay will go down or will increase more slowly than it would absent these mandates. Government mandates or government programs to provide leave can also have the unintended consequence of discouraging employers from voluntarily offering more generous leave programs. In some cases, they may encourage employers to reduce their leave policies to comply with mandates, reducing employee flexibility in the process.
Instead of creating costly, potentially counterproductive leave mandates or programs, policymakers ought to reduce workplace regulations so that employers and employees have the freedom to negotiate mutually beneficial work arrangements. Encouraging a more robust, growing, dynamic economy (for example by reducing government mandates and their tax burden) is the best way to ensure that workers have a wide range of employment options available, including access to arrangements that provide for leave.