Feminists are celebrating New York State’s recent move to establish a government-run paid family leave program for all workers, and they are fighting for a similar law in Massachusetts and at the national level. But those who value workplace flexibility and economic liberty shouldn’t cheer; this one-size-fits-all “solution” will come with serious consequences for women both as workers and as taxpayers.
Advocates of government-mandated family leave like to portray the United States as backward and grim, noting that in international comparisons of government-guaranteed paid-leave benefits, the U.S. often ranks last, behind much less-developed countries. But these comparisons overlook the fact that most full-time American workers today enjoy paid-leave benefits at work without government mandates, and they are free to work out the details of their leave directly with their employer in a way that satisfies all parties.
For instance, in 2006-2008, the Census Bureau studied the experience of women having their first child and found that working mothers reported using a variety of leave options: 56 percent of full-time working mothers took a paid leave, 42 percent unpaid leave, and 10 percent disability leave. Nineteen percent of first time mothers quit their jobs after the birth of the child, while nearly 5 percent reported being let go (the numbers total more than 100 percent because women often used more than one type of leave).
Government interference threatens to replace these customized leave arrangements with an inferior option. In New York, the new government-mandated program will initially pay out benefits of 50 percent pay for 8 weeks of leave in 2018, increasing to 67 percent pay for 12 weeks in 2021. For many women who enjoy full paid-leave today, 50 percent or 67 percent pay represents a significant cut.
And workers will pay for these benefits themselves: The cost of establishing and maintaining this program will fall directly on workers’ shoulders in the form of a new payroll tax. Today reports are projecting the cost of this new tax will equal about one dollar per worker per week.
Massachusetts State Rep. Kenneth Gordon has introduced House Bill 1718, which would create a similar program in the Bay State; legislators are still debating the details. At the national level, U.S. Senator Kirsten Gillibrand (D-NY) has introduced the Family and Medical Insurance Leave Act, which would also work essentially the same way, creating a paid-leave insurance program for all Americans. The cost projections for this federal program are similar to the figure from NY, at $1.38 per worker per week on average.
We should take these cost projections with a grain of salt: Consider the government’s track record on other forms of insurance it offers, like retirement insurance (the Social Security program) and health insurance (the Medicare program). These programs are today the biggest drivers of our national debt and face unfunded liabilities of approximately $24.9 and $48 trillion, respectively.
Workers – and especially women – should be warned that the costs of a paid-leave program like the one in New York will be paid in more than dollars. Women will pay in terms of missed opportunities to be hired and promoted in their jobs. Rather than reducing gender inequality, this well-meaning law will do the opposite.
The state program in New York will require all employers to offer both male and female workers the same job protection during family leave, even though women are far more likely than men to take advantage of family leave. Employers will take this into account when making staffing decisions, especially at small businesses where the cost of replacing workers during times of leave is great.
We see this coming true in Europe. Some American women look enviously across the Atlantic where many countries mandate generous paid-leave periods of six months or even a full year. But data show that European women are far less likely than their American counterparts to be in managerial positions. In fact, 14 percent of American women workers are managers (compared to 15 percent of American men), while just 5.9 percent of European women workers are (compared to 12.2 percent of European men). This discrepancy may be due to the way paid-leave benefits increase employers’ costs for hiring and advancing professional women.
Government leave programs fail to recognize that different women have different needs and preferences when it comes to their work lives. Mandating and funding benefits through taxation is most unfair to women who do not plan to take family leave at all.
But all women are losers under a policy like this new program in New York State. We should not applaud the limiting of our economic freedom in this way, and we should not support efforts to replicate this program in Massachusetts, other states, or at the national level.