The American Enterprise Institute, a conservative think-tank, and the Brookings Institution, its counterpart on the center-left, don’t see eye to eye on most issues, but on Tuesday, the two organizations released a joint report proposing a bipartisan compromise solution on the question of a paid parental leave mandate. According to Bloomberg, the report proposes to entitle both mothers and fathers to eight weeks’ leave paid at 70 percent of their wages for eight weeks after the birth or adoption of a child, with guaranteed job protection:
While calling for an independent study to explore the effects of such a policy move, the group proposes a payroll tax on employees and savings in other parts of the U.S. budget could finance the benefits. The report wasn’t without its partisan fissures, however. The authors noted that “none of us found this compromise entirely to our liking,” but that the group felt obligated, in a particularly charged U.S. political environment, to offer some concrete policy solutions as the U.S. remains the only advanced economy without a federal paid-leave statute. …
The authors acknowledge that while employers usually accommodate workers who must take time off for the birth of a child or their own or a family member’s illness, a federal mandate could help ameliorate the weakness in U.S. women’s labor-force participation. Almost a third of the gap between that rate and that of other countries is due to a lack of family-friendly employment policies including paid leave, the authors suggest.
US President Donald Trump, at the urging of his daughter Ivanka, included a proposal for a federal paid family leave policy in his recent budget proposal that would guarantee six weeks of paid leave to both mothers and fathers, which states would be expected to fund through existing unemployment insurance programs. A Pew study earlier this year found that the American public was broadly supportive of parental leave for both mothers and fathers, but split on whether the federal government should mandate it. Pew also found that Americans mostly think employers, not the federal or state government, should be responsible for the cost of parental leave.
Indeed, the question of who should pay is at the heart of the controversy over this policy. As Claire Cain Miller observes at the New York Times, the main sticking point among the experts convened by AEI and Brookings was how to fund this entitlement without increasing the federal budget:
The group of experts said the most realistic option to keep the plan budget-neutral would be a combination of a tax increase on employees and cuts in government spending in areas that benefit high earners, though many of them initially rejected the tax increase.
In general, Republicans “simply didn’t want a new payroll tax or a new entitlement, but they came on board if we said this will be matched by spending cuts elsewhere,” [AEI’s Aparna] Mathur said. Also, they supported the idea of workers paying to earn the benefit.
Pew’s survey in March found that most people preferred to fund universal parental leave through tax credits for employers or by allowing employees to set aside pretax funds in flexible savings accounts, though 60 percent said they would favor a program that included tax increases. “The research group considered those ideas and others,” Miller adds, “but most members rejected them for various reasons”:
- Tax credits, because they would end up subsidizing businesses that already offer leave.
- Savings accounts, because they would not help many low-income families that couldn’t afford to contribute to them.
- Cash benefits in a fixed amount for low-income families, because middle-class families also need financial help to take leave.
- Mandates that employers pay for the leave, because it would be expensive for businesses and might encourage them to discriminate against young women when hiring.