The Birth of a Compromise on Paid Parental Leave
Major social policy achievements in this country have never been easy. Yet, history shows that when both sides express a willingness to compromise, great policies can emerge. Our elected officials are now facing one such historic opportunity. It is time for them to pass legislation that creates a national paid parental leave program.
Why now? Because both Republicans and Democrats in Congress have demonstrated an openness toward it, and President Trump supports it. Senator Kirsten Gillibrand (D-NY) reintroduced the FAMILY Act last week. Senator Marco Rubio (R-FL) in conjunction with Representative Ann Wagner (R-MO) offered a counterproposal last year in the Economic Security for New Parents Act. Other Republican Senators have hinted that they are considering alternative new bills on paid parental leave. Perhaps most importantly, President Trump, with the encouragement of Ivanka Trump, signaled in his State of the Union a desire to move forward.
This is an unprecedented opportunity that must not be squandered. Not only do the Democrats have a plan, but we also have several Republicans competing with each other for a better plan. Who could have imagined that a competition of ideas on paid leave across the ideological spectrum would emerge, even just a few years ago? Not us. When you look at how long it took the United States to reach this point, it is extremely important not to overlook this historic moment.
Despite public support for a federal paid leave policy, there are of course substantial differences on both sides. Republicans, who are typically averse to new government programs and new taxes, no doubt feel uneasy. Moreover, Democrats, who have long supported these policies, may find a program limited in scope to be inadequate. Over the course of two years, members of the AEI-Brookings Working Group on paid leave, of which we were members, hotly debated these same issues.
In the end, our paid parental leave plan called for eight weeks of leave with a 70 percent wage replacement rate, up to $600 per week. Some wanted six months or more, and others wanted an even shorter period. Some had concerns about a new entitlement program, and others thought the plan wasn’t generous enough or should include medical and family leave too. In the end, we came together because we agreed that no policy at all was far worse for many American parents and children than having to compromise on the specific details of a policy.
We know that the lack of paid parental leave hurts the most vulnerable workers the most. No one likes to hear about mothers returning to work a few days after childbirth out of economic necessity, or about the inability of parents to bond with a new child because of work. While certainly not all parents and children are harmed by a lack of a federal paid parental leave policy in the US, enough are that we felt it imperative to act. We also recognized the benefits from an economic perspective. Parents often want or need to work. How can they actively engage in the labor market when their own children need care, and they are not able to take time off?
For those concerned about the costs of paid parental leave policies, we were too. The AEI-Brookings cost calculator, constructed by modelers from across the ideological spectrum, gives us a better understanding of the monetary costs. It shows that a national paid parental leave policy along the lines we proposed would cost roughly between $8.3 billion to $10.5 billion per year, depending upon how many employees take up the program. The costs are not inconsequential, but it translates to a payroll tax increase of less than $100 per year for the average worker. We encourage lawmakers to balance them with the benefits of paid parental leave, from the perspective of the economic and health and wellbeing of American parents and children.
Finally, we understand that compromise is hard for both sides. We wish that employers could provide paid leave to all new parents. We wish that more parents were in a position to save for their own parental leave. And we wish that more states could offer their own programs without federal intervention. Yet, that is not the reality. A national paid parental leave policy is needed, and now is the time for a compromise, even if it means supporting a policy that falls short of what either side considers ideal. It is time to help struggling parents and children reach their true potential.
Aparna Mathur is Co-Director of the AEI-Brookings Paid Leave Working group. Abby McCloskey is the founder of McCloskey Policy LLC, a research and consulting firm, and a member of the AEI-Brookings Working Group on Paid Leave. Angela Rachidi was previously a research fellow in poverty studies at the American Enterprise Institute and a member of the AEI-Brookings Working Group on Paid Leave.