IMPLEMENT A FEDERAL POLICY THAT GUARANTEES

WORKERS PAID TIME OFF TO CARE FOR THEIR

NEW BABIES OR FOR A SICK FAMILY MEMBER

America needs a federal policy that guarantees workers paid time off to care for their new babies or for a sick, immediate* family member.  The U.S. is only one of two countries that does not already have this (Papua New Guinea is the other!).  This is long overdue.  The Family Medical Leave Act (FMLA) of 1993 provides unpaid leave for several things, including new babies, but there are stiff requirements that must be met to take advantage of the leave.  

 

Plus, as The Economist points out, "Whereas small businesses are generally loth to offer paid leave, larger companies have started to do so voluntarily, especially large ones that can afford to foot the bill, such as Deloitte, Nike, Lowe’s, Walmart, and many of Silicon Valley’s technology firms.  But only 16% of private-sector employees nationally have access to paid family leave through their firms, and that access is unequal.  It is available to only 6% of people working in the lowest quartile of paid jobs, compared with 25% of those in the highest quartile."

In the 1787 plan, workers can either opt-in or opt-out of this benefit, but cannot change their decision for at least ten years.  For Americans who opt-in, there will be an additional payroll tax, with employers and employees each contributing 0.25% of wages.

According to the OECD, the average paid leave among their member countries is 18 weeks.  1787 believes 16 weeks is more appropriate. 

 

This is a tricky balance.  One study says that "leave entitlements of moderate duration (especially when paid) operate to raise employment levels.  Labor force participation rates are also higher in countries mandating short to intermediate durations of leave, although this increase is larger for unpaid than paid time off work."  HOWEVER, "Worker rights to lengthy absences from jobs are associated with less favorable labor market outcomes."  Read more here.

It's also important that this not back-fire on employees, particularly women.  Right or wrong, companies will weigh the cost of potentially long absences to their business and it could ultimately effect hiring decisions.  One study warns that "more generous leave policies and a higher incidence of part-time entitlements may lead employers to engage in statistical discrimination against women as a group, anticipating that women will take advantage of such opportunities."  Read the entire study here.

This policy is great news for the Americans who take advantage of it, but there are broader benefits to our overall society as well.  The Economist again:  "Research from California, which was the first state to pass a paid family-leave policy, in 2002, shows that most firms found the impact either neutral or positive. Allowing employees to take paid time off increases the chances that they will stay, which is especially valuable in such a competitive job market. Offering paid leave also reduces the likelihood of workers going into debt and drawing on public assistance.  There is also greater understanding of the health benefits of paid leave for babies and parents.  Fewer babies are admitted to hospital, and both breast-feeding and vaccination rates increase.  Mothers who take some time off are also less likely to suffer from depression."

This policy could also greatly enhance and strengthen our labor force.  According to a letter from the Federal Reserve Bank of San Francisco, "The decline in labor force participation of U.S. men and women ages 25 to 54 stands in stark contrast with other industrialized nations, where participation rates for prime-age workers have increased over time.  Labor force participation rates have diverged for men and women in the United States and Canada.  We find that three-fourths of the difference in participation between the two countries can be explained by the growing gap in labor force attachment of women.  Our findings suggest that policy interventions to reduce the structural barriers that keep many women on the sidelines could bring millions of prime-age Americans into the labor force...The contrast between the incentives Canada and the United States offer prime-age workers to remain attached to the labor force is clear.  A large pool of skilled potential workers could be encouraged to join the labor market with the right set of policies.  By reversing the trend in participation of prime-age women to catch up with Canada’s labor market participation rate, the United States could add as many as 5 million prime-age workers to its labor force."  Read the entire letter here.

 

Evidence:

"America is the Only Rich Country Without a Law on Paid Leave for New Parents."  Economist.  18 July 2019

Christopher J. Ruhm and Jackqueline L. Teague.  "Parental Leave Policies in Europe and North America."  NBER Working Paper No. 5065 NBER Program(s): 
   Labor Studies.  March 1995

Francine D. Blau and Lawrence M. Kahn.  "Female Labor Supply: Why is the U.S. Falling Behind?"  NBER Working Paper No. 18702.  January 2013

Mary C. Daly, Joseph H. Pedtke, Nicolas Petrosky-Nadeau, and Annemarie Schweinert.  "Why Aren’t U.S. Workers Working?"  FRBSF Economic Letter 2018-
   24.  Federal Reserve Bank of San Francisco.  13 Nov 2018

* Defined as spouse, parents, grandparents, children, grandchildren, brothers and sisters, mother-in-law and father-in-law, brothers-in-law and sisters-in-law, daughters-in-law and sons-in-law  (adopted, half, and step members included).