The U.S. is the only industrialized nation without a law guaranteeing workers paid parental leave. The idea has broad public support, but how to pay for it? One idea is to mandate that employers fund it, but economists find employers offset the cost by reducing wages for female employees. Workers could save, but the average first-time mother is 26, so most young households have neither the time nor the resources to follow this approach.
What if the government could affordably provide paid parental leave to every worker in the U.S.? Our proposal is simple: Offer new parents the opportunity to collect early Social Security benefits for a period—say, 12 weeks—after the arrival of their child. To offset the cost, parents would agree to delay collecting Social Security retirement benefits, probably for only about six weeks.
Consider an average woman, who enters the workforce at 21 and has her first child at 26. At 25 she would have a salary of about $31,100, according to Social Security Administration data. Using the same formula used to calculate Social Security disability benefits, she would be eligible for a Social Security parental-leave benefit of $1,175 a month, equal to 45% of her earnings at 25. That amount is comparable to the paid leave provided by many other countries. Because of Social Security’s progressive benefit formula, lower-income workers would receive a higher benefit relative to their earnings.
We estimate that to make the Social Security program financially whole, a parent who claimed 12 weeks of benefits would need to delay claiming retirement benefits by only around six weeks. The cost is low because parental-leave benefits claimed early in life would be low relative to retirement benefits claimed later, as earnings typically rise considerably from one’s 20s to one’s early 60s. The average-wage worker who’d collect $1,175 a month at 26 would be entitled, by our estimate, to a monthly retirement benefit of $2,923 in inflation-adjusted dollars. While we would welcome a more precise calculation by Social Security’s actuaries, we think the federal government could provide Social Security parental-leave benefits without endangering either Social Security’s already precarious finances or the income security of future retirees.
Nor would we need to expand the federal bureaucracy to administer this program. The Social Security Administration already has individuals’ earnings data and can process applications and payments online.
Paid parental leave can be provided on an affordable, self-financing basis by allowing new parents to claim early Social Security benefits, paid for by delaying benefits once they reach retirement age. This idea should be considered as Congress turns to entitlement reform. It’s a fiscally responsible opportunity to help parents and children.
Ms. Shapiro is a Washington lawyer. Mr. Biggs is a resident scholar at the American Enterprise Institute and former principal deputy commissioner of the Social Security Administration. This article is adapted from a study for the Independent Women’s Forum.