Hilary Clinton is on a lot of magazine covers and news articles lately. She’s promoting her book, “Hard Choices” and giving a lot of interviews about her future decision about running for President. Some commentators are quite excited about the possibility that she proposes paid family leave (as she did in her 2007 Presidential campaign) as part of her future campaign platform. Any federal legislation would expand upon the 1993 Family and Medical Leave Act (FMLA) which requires employers with >50 employees to provide job protection and unpaid leave for certain family and medical reasons (including family or personal illness, the birth of a child, adoption, etc). FMLA was hard won legislation: efforts to enact government-supported paid leave for family and illness date back to at least 1919. Three states have gone further than the federal laws require them to: California, New Jersey and Rhode Island provide cash benefits for people taking care of new babies or sick family members. That is, they provide paid leave benefits.
So why does the U.S. rank last compared to all OECD countries on this issue? Well, the main case against paid family leave is that its too costly for business to bear. CA (in 2002), NJ (in 2008) and RI (in 2013) have paid for their paid leave benefits by exacting a payroll tax on employees, so the actual cash outlays have been provided by workers themselves. The cost on businesses in those states is in having to hold the employee’s job or finding replacement help, to the extent the leave exceeds the duration of whatever the FMLA would have required. The second case against paid leave is the taxes that it imposes on workers themselves.
Is it as simple as that? Basically, yes.
So if its about money, how much money does paid family leave really cost, and who bears this cost? Do the net costs to “society” go up or down with paid leave when you include the impact on jobs, child healthcare and welfare, and even potentially discrimination or enforcement costs associated with hiring/firing of women of child-bearing age? Do the net costs to taxpayers go up or down? Do the net costs to employers go up or down when you account for employee turnover reduction and potentially cheaper replacement labor in the form of temporary staff? None of these things are straightforward to analyze — and as I peruse the academic and economic research on this topic, it seems there is little solid data to hang one’s hat on. Unfortunately, its not empirically clear cut one way or another. Which means lots of arguments will be made, but none will be particularly based on the facts. This makes paid leave a tough campaign issue for Hilary or anyone else unless a clear majority of voters and Congress are supportive.