Paid leave has emerged into the policy spotlight for 2018, both in Congress and within the Trump administration. The question is how to provide such a benefit without burdening employers, raising taxes or creating a new entitlement.
Thus far, Sens. Marco Rubio, R-Florida; Mike Lee, R-Utah; and Joni Ernst, R-Iowa, are contemplating an innovative proposal to reform Social Security by allowing employees access to paid leave benefits after the birth or adoption of a new child, in exchange for a short delay in retirement benefits to compensate for this cost.
The words "reform Social Security" may set off alarm bells for some, and opponents of this proposal are sure to stoke fear among seniors by falsely suggesting this plan would cut their retirement benefits and put the entire Social Security system in jeopardy. Nothing could be further from the truth.
The proposal is designed to preserve the Social Security Trust Fund and would have precisely zero impact on anyone who is retired or near retirement. The only people who would be affected would be those who elect to take parental leave in exchange for delaying their retirement benefits. Participation would be entirely voluntary.
The concept is simple: People working and paying into Social Security today would have the option of receiving a parental leave benefit — much like a Social Security disability benefit — after the birth or adoption of a child. Those who take leave benefits would then have to wait a few additional months to be eligible for Social Security to offset the cost.
Actuaries are still evaluating exactly how long retirement benefits would have to be deferred, but it's likely to be about an equal trade. For one week of paid parental leave people would delay their Social Security benefits by one week. That means someone who takes 12 weeks of parental benefits in 2018 would have to wait until about three months after his or her 67th birthday to receive full Social Security benefits, rather than being eligible at age 67.
Many young people in today's workforce, who can expect to live well into their 80s and 90s, will welcome the option of working a few extra months in exchange for paid family leave. It is at this time in their lives when young families really need help during the joyful — but also stressful and financially difficult — time of welcoming a new child.
But what does that mean for retirees and the Social Security program's overall health? The proposal would have no impact at all on current Social Security enrollees and could actually help in the long term. Currently, nearly half of low-income women who lack access to paid family leave go on public assistance after having a baby, meaning they do not pay into Social Security. Allowing these women to tap into their Social Security at such a critical moment in their lives will result in less reliance on other social programs, saving taxpayers money. Others in the workforce who have paid leave benefits are also less likely to quit their jobs after having a baby, meaning they are more likely to return to work and resume paying into Social Security.
At least four states have paid leave programs and many others are considering that option. Democrats and some conservative groups, like the American Enterprise Institute, are advancing proposals to create an entirely new entitlement program with a new payroll tax of its own. This is a wrongheaded approach.
Having a new tax on top of the payroll tax already levied to pay for Social Security and Medicare will lower people's take-home pay today and make it more difficult for taxpayers to shoulder these burdens in the future. It would be far wiser to more efficiently use the programs we already have in place, and focus on keeping them financially solvent, rather than creating another entitlement program competing for resources.
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Seniors want what is best for future generations and should welcome modernizing the Social Security program to help their children and grandchildren. And by promoting continued participation in the workforce, it means Social Security's retirement program will remain protected.