Paid parental leave should be universal — and actually focused on parents

Paid parental leave should be universal — and actually focused on parents

Democrats’ universal paid parental leave program isn’t either

By Matthew Yglesias

Nov. 9, 2021. 

You’ve probably seen some version of this map from The New York Times arguing that the United States and Papua New Guinea are the only countries in the world that do not have a universal paid leave program for new mothers.

The sense that this is both true and outrageous has driven a lot of the outrage about the possibility that paid leave will be dropped from Build Back Better legislation or shrunk down to a very tiny program.

And I don’t think advocates are wrong that a universal paid leave program would be desirable. But if you want to understand the fight in Congress, it’s important to understand that the thing Democrats are considering including (or not including) in BBB is not a universal paid parental leave program. It’s a program that would expand paid leave to give benefits to many people who don’t have it, but it would also leave lots of people out. And many of the people who would get paid leave under the program are people who already have it.

It’s also important to understand why the proposal Democrats coalesced around is so disappointing — it’s a microcosm of a larger issue. A large minority of the American population looks at various aspects of the European social model and says, “we should do that, too.” And that minority is currently large enough that the Democratic Party sometimes adopts this kind of thing as a national policy goal.

But nobody in American politics — from Joe Manchin to AOC — wants to raise taxes on the majority of the population. It’s not like European countries have these benefits by magic; their taxes are higher across the board!

The international paid leave situation

Back to the map. Advocates clearly disagree, but I don’t think it’s a smart idea to tell people that new mothers in Chad, Honduras, and Laos have great social welfare benefits when that’s clearly not how the economies of poor countries work. A majority of the population in Laos works in agriculture, primarily rice cultivation, and people in that line of work don’t get “paid time off.”

Even in a dramatically richer country like Mexico, about half of all employment is informal, so people aren’t covered by whatever laws are on the books.

If the United States did create a universal paid leave program, I think we would make a meaningful effort to enforce it, which is clearly not the situation in many of these countries. But we definitely could approach the issue by simply passing some kind of unfunded, unenforced mandate or saying we’re doing a universal leave program, then exempting every employer with fewer than 1,000 workers.

But advocates are correct that if you compare the United States to other rich countries, we really are an outlier. Northern European countries like Finland, Norway, Sweden, and Germany provide a minimum monthly benefit for new parents that is more generous for parents with higher earnings but levels off at a maximum benefit. That’s a universal parental leave system.

We had a weird moment a week and a half ago when a report emerged that the women of the Senate Democratic Caucus were trying to convince Joe Manchin to back their paid leave plan, and one of his concerns was about fraud and the need for a work requirement. A bunch of people dunked on Manchin’s alleged ignorance in not realizing that a paid leave program by definition has a work requirement because if you’re not working it’s not paid leave. But Matt Bruenig is right that this is not how foreign leave systems work. One reason for that is whether or not you were working the day before your child was born, the basic rationale for leave is still present: your recovery and child-rearing responsibilities are such that you should not be coerced into the paid labor force on pain of indigence. The other is administrative. If you ask people to provide verification of prior earnings to qualify for a minimum benefit, you will inevitably either make some improper payments and create fraud narratives or else avoid improper payments by denying payments to some people who deserve them.

But to put Manchin’s concerns to rest, what House Democrats are proposing is not a German-style universal leave program but rather a fairly narrow program with a tight work requirement.

(Paul Morigi/Getty Images for PL+US)

Richard Neal’s paid leave plan

Democrats’ plan differs from universal parental leave in three critical ways:

Even though it’s normally discussed in a parental context, the leave program is actually quite a bit broader and also covers leave to deal with an illness or to care for a sick family member. That’s not a bad idea, but it is a different idea. CBO estimates that about 30% of leave would be for the purpose of caring for a newborn or newly adopted child versus 63% for people taking leave to deal with their own illness.

The plan has a multi-part work requirement: you must have worked for at least six quarters of your life, worked for either half of the quarters since your 21st birthday or else 20 total quarters since your 21st birthday, have worked at some point during the 12 months prior to taking leave, and have earned at least $2,000 in the two years before taking leave. CBO says that at least 30% of new mothers would not meet these conditions.

Rather than having the federal government make direct leave payments the way most foreign systems do (and the way Senate Democrats’ FAMILY Act worked), the program is structured to subsidize employer purchase of leave insurance to facilitate employers establishing their own paid leave programs.

Let’s put a pin in point three for a minute because it’s really sort of nutty.

Points one and two are not necessarily crazy, but they do add up to a program that is very different in reality than the one I hear people arguing about in the media and on Twitter. Most of the benefits of the plan do not accrue to new parents, and a huge share of new parents do not benefit from the plan. Public understanding of the debate would probably be greatly enhanced by discussing this as essentially a paid sick leave bill that has some application to new parents, rather than a universal parental leave bill since it is neither universal nor particularly focused on parental benefits.

Now the insurers. Here the issue is that lots of employers already have paid leave programs as an employee benefit.

Paid leave costs employers money, but it also introduces an aspect of unpredictable risk into their budgets. Unless you’re operating at the scale of Walmart, it’s pretty hard to know how many of your employees are going to want to take leave in any given year. Insurance companies exist to manage unpredictable risk, so a lot of employers buy disability insurance plans from life insurance companies. If something like the FAMILY Act passed, that would provide paid leave to workers who don’t currently have it, but it would also undermine the need for employers to buy insurance to run their existing leave programs.

Insurance companies don’t like that idea, so they successfully lobbied Neal to turn this into a program for the subsidized purchase of private disability insurance to expand leave programs.

It’s conventional at this point to accuse Neal of being on the take and note that he’s raised a lot of cash from insurance companies. But I think that kind of money in politics story typically reverses the causation. If Neal wanted to be more progressive, he could raise funds from other sources instead. The issue is that one of the biggest players in this industry is MassMutual, based in Springfield, Massachusetts, which is the largest city in Neal’s district.

It annoys progressives to no end that politicians tend to do the bidding of their hometown industries, but that’s how it works. Meanwhile, Neal chairs the relevant committee in the House, and Democrats’ majorities are very slender.

This is fundamentally why I think twisting Manchin’s arm over paid leave is misguided. With Neal in the way, the prospects for passing a good paid leave program are very bad. And with moderates insisting on an overall spending cap in BBB, every dollar that goes into paid leave comes out of some other worthy program. Paid leave is good, but so are clean energy investments and the Child Tax Credit, so leave is going to have to fight another day. But if the fight ever is rebooted, I hope it’s rebooted on different terms.

Building on cash benefits

As I’ve argued before, “Cash Benefits are the Best Family Policy.”

One reason is that you can think of a cash benefit for children as a platform on which you can build other social policy objectives. The way that Democrats’ Child Tax Credit proposal works is that kids aged 0 to 5 get a larger payment than kids aged 6 to 17.

If you could enact a program like that, then your next step might be to add a large lump-sum payment upon the birth of the child plus an extra enhancement to the monthly benefit for kids aged 0 to 3. The lump-sum payment, combined with the unpaid leave guarantee offered by FMLA, would in effect be a minimum parental leave benefit. Except FMLA exempted smaller companies from its rules, so about 40% of workers aren’t covered. The reasoning here is that mandatory leave is more burdensome to smaller employers, an idea Democrats seem to have changed their minds about since they passed FMLA in 1993, as the current proposals don’t exempt small businesses. But if you want to amend FMLA to remove that exemption, you could, and then appropriate the cash as part of the CTC.

A flat CTC payment would strike higher-income parents as laughably inadequate, but those are exactly the sort of people who are in a position to bargain for paid leave as a fringe benefit at work. Meanwhile, the higher monthly payments for 0- to 3-year-olds would play the role of a child care subsidy. Except the money would be flexible and could be used not only to defray the cost of center-based child care but also for home care and other informal or family arrangements.

Then if you wanted to save money, you might say that in addition to tapering down at age 6 when the kids become eligible for school, there should be a further taper at 14 when kids are allowed to get part-time jobs. Or maybe we like the 21st-century trend away from part-time teen jobs and don’t want to do that.

Obviously, this approach won’t address the paid sick leave issue that Democrats’ proposals cover. But as a journalist, I think it’s odd to have this big national conversation about parental leave and then try to smuggle a different program under the door. And not only is it odd, but it also doesn’t seem to be working.

What’s more, I think these two kinds of programs actually pose very different issues. Manchin’s concern about benefit fraud, for example, is pretty ridiculous in the case of parental leave, but it’s a legitimate and difficult question for sick leave. We already have tons of systems in place (for taxes, for other welfare benefits, for school enrollment) where you need to demonstrate that a child exists and you are her parent. And conveniently, it is hard to fake a kid. A sick leave program poses real verification concerns. We also already have a very stingy Disability Insurance program, so the right approach if you have tens of billions of dollars to throw around might be to improve existing DI.

The perils of giant lumps of legislation

I fully understand the various exigencies related to both logrolling and the filibuster that have led Democrats to pair climate initiatives with health care initiatives with senior-focused initiatives with a whole suite of new family benefits and try to pass them all simultaneously.

But a downside of this approach is that it creates a very confusing situation in which a lot of people engaged in this debate — including some Democrats on Capitol Hill — don’t seem to know precisely what their proposals are doing.

There is clearly a substantial constituency in the United States for the creation of universal paid leave for new parents. I also know this polls very well in naive issue polling, though seemingly much less well when you suggest it might come at a cost. But Democrats’ actual parental leave bill is neither universal nor particularly focused on parents, and while you can reconstruct the set of path-dependencies that led to them to juncture, universal support for new parents is just not what’s currently being argued about.

What’s more, while pairing the climate stuff and the family stuff is awkward, I think it’s also basically unavoidable. But subdividing the family stuff into a leave component, a pre-K component, a childcare component, and a cash component but then not actually having enough money to make any of these things permanent or truly universal is an unforced error. If you have limited funds, you can’t do everything that you might want to do. So pick something and try to do it well.