Americans know that workers—particularly women—need to be able to balance work and family life. Flexibility is a good thing.
Yet laws mandating a certain set of benefits for workers aren’t providing flexibility. In fact, they are doing the opposite.
Proponents of government mandates for paid maternity or sick leave, for example, ignore the costs associated with those benefits and the tradeoffs that employers and workers face when considering compensation packages.
Of course, we all recognize that sometimes employees need time away from the job. That’s why the Department of Labor data shows that the overwhelming majority of businesses offer leave time, and most offer paid leave.
However, there is a reason that not all businesses offer these benefits. Leave benefits come with real costs for employers. There is the cost of administering the leave program and covering for the absent worker. The extra costs associated with benefits affect how much workers receive as take-home play. And in fact, the Department of Labor estimates that on average less than 70 percent of total cost of compensation goes toward take-home pay. The other 30 percent goes to taxes (such as Social Security’s payroll taxes and unemployment insurance) and benefits. Paid leave benefits account for an average of 7 percent of overall compensation.
That is something for workers to consider. Of course, everyone likes to have paid vacation time. But would you trade in your paid leave benefits in exchange for a raise of 7 percent?
People will vary on their answer to that question. Yet I bet we can all agree that it’s a legitimate question to ask, and that people should be free to come down on either side of it.
Similarly, the outdated Fair Labor and Standards Act creates arbitrary distinctions about how different classes of workers should be compensated, particularly when it comes to over-time. Such government attempts to micromanage our dynamic work world is a barrier to flexibility and a needless drag on business and job creation.