Everyone loves the party game/icebreaker “two truths and a lie.”
Can you identify which of the following is NOT true about paid family leave and low-income families?
A. Low-income families are significantly less likely to receive paid family leave through their employers.
B. Studies of existing entitlement-based family leave programs have found that these initiatives typically redistribute income from high- and middle- income families to low-income families.
C. There are alternatives to existing entitlements that would provide support without backfiring on the most vulnerable families or unfairly burdening those with no plans to use the benefit.
Let’s take these statements one at a time:
Many families don’t have the time or resources they need to welcome a new baby. Today, most workers in the U.S. live paycheck-to-paycheck, so for many, taking unpaid time off from work or leaving the workforce is not an option.
Access to paid time off can be especially challenging for low-income families who are significantly less likely to have access to employer-provided paid family leave.
Evidence from other countries and U.S. states shows that entitlement-based programs tend to transfer wealth away from low-income families to high- and middle- income families. That’s likely due to the fact that workers in middle- and upper-income families are far more likely to use the benefit than low-income workers.
In California, for example, 79% of high-income mothers receive benefits under the state’s family leave program while just 36% of low-income mothers do. Despite offering paid parental leave since 1971, in Canada, only about 45% of low-income mothers receive benefits while at least 75% of high-income mothers do.
Studies show similar results in New Jersey, Rhode Island, The United Kingdom, Norway, Sweden, Iceland, and Belgium.
An entitlement-based paid family leave program would unfairly force low-income people to bear the burden of a program that disproportionately benefits high-income families. It is also unfair to ask those who plan to never use a paid parental leave benefit such as childless workers, older workers, and families with a stay-at-home parent to fund a federal program.
Policymakers should consider solutions that focus on targeting support to those who really need it, not a one-size-fits-all approach.
As Kristin Shapiro writes in IWF’s most recent policy focus, policies such as “Earned Leave,” reforms to tax-preferred savings accounts, and creating a voluntary family and medical leave insurance program all could expand access to paid family leave without disadvantaging low-income families. With all of these proposed solutions, participation would be completely voluntary and would not impose any costs on those who choose not to participate.
For more information, read IWF’s policy focus.