Sens. Bill Cassidy (R-La.) and Kyrsten Sinema (D-Ariz.) just introduced the first bipartisan bill for a federal program supporting paid parental leave. Their plan would offer new parents an advance of up to $5,000 against their future Child Tax Credits, the cost of which would be offset by partially reduced tax credits over the next 10 to 15 years.
This proposal is a promising step forward in the effort to enact federal paid leave legislation. Many paid leave proponents, however, were quick to criticize. Sen. Kirsten Gillibrand tweeted that it “isn’t paid leave.” The National Partnership for Women and Families declared that “[n]ew parents should not have to forfeit their [tax credit] to be able to welcome a new child.” In their view, families need #RealPaidLeave, not a loan.
Progressives should not dismiss the Cassidy-Sinema plan simply because they prefer more ambitious legislation that would fund paid leave benefits with a new payroll tax on all workers. New research raises serious concern that such a program could redistribute income away from low-income families—disadvantaging those who need the most support.
In California, multiple studies have shown that low-income workers are disproportionately less likely to receive paid leave benefits from the state. For example, a survey of working women in San Francisco revealed that only 36 percent of new mothers with household incomes under $32,000 received benefits, compared to 79 percent of those with household incomes above $97,000.
California is not alone. In Canada, only approximately 45 percent of low-income mothers receive benefits, compared to approximately 75 to 85 percent of high-income mothers. As scholars put it, “parental leaves paid for by all employers and employees are unevenly supporting the social reproduction of higher earners.” Similar patterns appear in other countries, leading scholars to conclude that the United Kingdom’s parental leave program “compounds the financial bias in current arrangements that favour higher income families” and that expansion of Norway’s program constituted a “pure leisure transfer to middle and upper income families … at the expense of some of the least well off in society.”
Why do these programs fail low-income families? They typically replace only a percentage of workers’ wages, making them an unattractive option for workers living paycheck-to-paycheck, and often have rigid eligibility criteria that exclude many low-income workers. Notably, California recently amended its law to provide more generous benefits to low-income workers.
But there are other reasons for the class disparity that would be difficult to address through (expensive) legislation. For example, a lack of awareness of the programs is a significant issue: despite notice requirements, low-income families in California are about half as likely to be aware of the state’s program than high-income families. And women with household incomes under $32,000 were over ten times more likely than women with household incomes above $97,000 to respond that they would take less than twelve weeks of maternity leave even if it were fully paid.
Low-income men also appear less inclined to take paid leave: nearly a quarter of male claimants in California had incomes in the highest bracket, whereas only 10 percent had incomes in the lowest two brackets. Perversely, well-intentioned policies aimed at encouraging men to take leave may be exacerbating the class divide.
Progressives should therefore be open to alternative ways to fund paid leave, such as the Cassidy-Sinema plan. Because the plan does not require a new payroll tax, it would not force low-income families to fund a program that makes regressive transfers to higher-income families. The plan is therefore a more progressive approach to paid parental leave than a traditional paid leave program. This should be welcome news for progressives, because unlike a traditional program, the Cassidy-Sinema plan could actually pass Congress.