What a Bipartisan Plan for US Paid Leave Might Look Like

June 6, 2017
Both mothers and fathers after the birth or adoption of a child should be entitled to a 70% wage-replacement rate up to a cap of $600 per week for eight weeks, the joint report stated.

Two Washington research organizations that often lean in opposing political directions are teaming up to advocate for more generous paid parental leave in the U.S., drafting a bipartisan template for making the policy into law.

Both mothers and fathers after the birth or adoption of a child should be entitled to a 70 percent wage-replacement rate up to a cap of $600 per week for eight weeks, and guaranteed job protection during the leave, according to a joint report released Tuesday by the American Enterprise Institute and Brookings Institution. 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.

“In the end, we did not agree on such questions as the generosity of the benefits, how to pay for them, whether they should be focused on low-income families or made available to the middle class, how strict the eligibility rules should be, and how much job protection should be provided,” the authors wrote. “But it is worth noting that we all agreed a paid family leave policy is needed in the U.S.”

The research organizations convened a working group over the past year that aimed to incorporate a range of views and backgrounds, led by AEI’s Aparna Mathur and Isabel V. Sawhill of Brookings. The group also included Douglas Holtz-Eakin, a former Republican-appointed Congressional Budget Office director, and former Obama administration Council of Economic Advisers member Betsey Stevenson.

President Donald Trump’s fiscal 2018 budget proposal included a call for $25 billion over 10 years to implement nationwide paid parental leave, echoing daughter Ivanka Trump’s calls to support women in the workplace. Trump’s pitches on paid leave and childcare have kept alive advocates’ pleas for more discussion after presidential candidates including Republican Senator Marco Rubio and Democratic contenders Hillary Clinton and Bernie Sanders also gave the issue greater exposure during the 2016 election campaign.

“We have a very powerful advocate in the White House -- her name is Ivanka Trump,” Sawhill said Tuesday at a forum on the report in Washington. “They are very, very committed to this politically and very open-minded about what this should look like.”

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.

Labor-force participation has long been the economist’s primary target in encouraging more generous paid-leave policy. Workforce participation among all Americans declined in May to 62.7 percent, close to the lowest since the 1970s. While part of the decline in recent years is attributable to retiring baby boomers, it still reflects a decades-long slump among men and a stalling in women entering the workforce since the late 1990s.

The AEI-Brookings report cites Labor Department figures showing that last year, 65 percent of mothers with children under the age of 5, and 58 percent of mothers with children under one year old were in the labor force. A boom in women, including mothers, entering the workforce between 1970 and the early 1990s benefited economic growth, standards of living and gender equity, the authors conclude. Since 1965, fathers have taken on a much greater share of childcare and housework responsibilities as more women took on paid work, other Labor Department data show.

The AEI-Brookings report focused on parental leave while recognizing the need for a paid-leave policy that could be expanded to Americans without children who need emergency time off.

Existing law allows U.S. workers 12 weeks of unpaid leave for certain purposes and with some limitations, under the Family and Medical Leave Act of 1993. Disability benefits also might overlap with some workers’ needs for emergency time off, so those benefits should be considered in conjunction with changes to paid leave, the authors argued. California, Rhode Island and New Jersey each have started implementation of paid family and medical leave legislation, while other states have approved similar bills that haven’t yet taken effect.

The report’s analysts noted that relatively low take-up rates among these local policies might in large part be alleviated by a federal statute that makes workers more aware and more comfortable taking advantage of such benefits.

The group outlined eight goals for paid-leave policy-making:

  • Avoid family hardship amid birth or adoption
  • Maintain long-term labor-force attachment
  • Support child development
  • Encourage gender equity
  • Minimize employer costs
  • Ensure access for less advantaged include a shared contribution from the workers
  • Fully fund new benefits
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