Expanding access to paid family and medical leave is a noble goal. The real question is: how best to do so?
Voters in Colorado now have before them Proposition 118, which would create a new government paid-leave program, funded by a new payroll tax on all workers.
Although many Coloradans will support Prop 118 with the best intentions, they should also be aware of its downsides — particularly for lower-income Coloradans who are already struggling to make ends meet. According to the evidence from other states and countries with similar paid-leave programs, Proposition 118 is likely to be a Robin Hood in reverse, taking from the poor to fund benefits for those who are already well off. It will also reduce overall economic opportunity, especially for women. Voters should reject Prop 118 and instead support better approaches to expand access to paid leave.
First, government-paid family and medical leave programs have been shown — in studies from California, New Jersey, Canada, Sweden, Iceland, Belgium and Norway — to distribute money from low-income workers to those with higher incomes. As scholars concluded in Norway, these programs constitute a “pure leisure transfer to middle- and upper-income families … at the expense of some of the least well off in society.”
This is regressive, not progressive. Given that the problem of a lack of paid family/medical leave is most pronounced among low-income people, lawmakers should not establish a program that disadvantages this group further.
Furthermore, Prop 118 is unfair to childless families and those with stay-at-home caregivers who would pay this tax and be less likely ever to receive benefits.
Secondly, Proposition 118 would backfire on workers, particularly women, by reducing the incentive for employers to provide paid family and medical leave benefits on their own and increasing the incentive for workplace discrimination. Prop 118 prescribes a one-size-fits-all, taxpayer-funded paid family/medical leave benefit. This would discourage employers from offering their own paid leave benefits or workplace flexibility and displace myriad private arrangements. Employers will focus on compliance with a government program rather than individualized, customized leave and flexibility benefits. At a time when our businesses and families are more diverse than ever, we should be encouraging more flexibility, not more standardization of benefits.
Paid leave is taken more often by women, elderly workers, and workers with significant medical issues. Despite an individual’s propensity for leave taking, the availability of government-provided benefits will make employers more likely to assume that workers in these groups will take longer and more frequent leaves from work.
This will encourage discrimination in the workplace and widen the gender wage gap. Pew Research has documented the strong positive correlation between paid family leave and the gender pay gap. Pew points to OECD data, saying, “Some countries that offer more liberal parental leave policies have higher pay gaps among men and women ages 30 to 34, according to analyses of 16 countries…OECD theorizes that this link may be driven by the fact that women are more likely than men to actually use their parental leave, and that time out of the workforce is associated with lower wages.”
Thirdly and finally, Proposition 118 will burden workers with a new tax and reduce overall economic opportunity. The funding mechanism is a new payroll tax, a regressive tax, which, regardless of how it is split between employers and employees, will ultimately be borne by workers in the form of reduced wages. In a year with so much economic uncertainty, this is the last thing we need.
And the funding mechanism for the program is not the only economic cost. Businesses also face a real burden when employees are not present at their jobs. While we want workers with family/medical emergencies to have the option to take time away from work, the flip side for employers is increased absenteeism and turnover. Employers and fellow employees alike will take on the burden of covering for workers who are out on leave.
Coloradans should reject Proposition 118 and instead support other, more targeted and flexible approaches to expanding paid family and medical leave.