Paid Leave's Non-Effect on the Economy

Paid Leave's Non-Effect on the Economy

Over the weekend we linked to a helpful Bloomberg piece about how California's economy fared when the state implemented paid leave in 2004. (All workers contribute a payroll tax to fund the program, and those taking leave are paid 55 percent of their wages up to a limit.) Short version: Businesses aren't reporting any major problems, and employment growth in the state has if anything been strong.

This seems about right. It's no shock that employers aren't complaining, because they're basically held harmless — they're not the ones paying for leave, and federal law already required them to let workers take unpaid leave anyway. Also, since the tax on workers is relatively small (a 1 percent tax funds both paid leave and the state's disability-insurance program), few would expect it to hurt the overall economy so much that you'd notice it in aggregate statistics. The good argument against the law has more to do with the fact that it requires everyone to pay for leave whether the benefit is worth it to them or not.

Nonetheless, I thought it would be interesting to look closer at two subsets of California workers: Women with young children, who might be encouraged to stay in the workforce if paid leave eases the process of having kids while employed; and other women of childbearing age, who might suffer discrimination if employers worry about them taking leave. (Men matter too, of course, but the simple reality is that mothers take much more time off after the birth of a child.)

It turned out to be not so interesting after all. Here are the employment statuses (from the Current Population Survey) of California moms living with kids under 5:

Not a whole lot going on, once you remember that the downturn started in 2007 and allow for some random fluctuations. (The sample size for each year above is about 1,000.) It's interesting, however, that non-participation in the labor force fell even after the recession hit.

And here's the same breakdown for women age 20-35 who were not living with any of their own children (the picture is basically the same when I include all women in this age range):

Once again: Not much besides the recession.

To be sure, the policy might have had some subtle effects — here's a complicated analysis, cited by a source in the Bloomberg article, arguing that paid leave kept California women in the labor force but also increased their unemployment rate. But painting this as an economy-killer is probably not the best approach for paid leave's critics.

Past RealClearPolicy coverage of this issue here and here from yours truly, and here from David Gray of the New America Foundation.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

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