Wednesday, February 23, 2011

We can do better with parental leave

Human Rights Watch, which usually focuses on human rights issues in other countries, has weighed in on family work supports in the U.S.
Around the world, countries have responded to the massive growth of women in the workforce over the past century by crafting public policies to help reconcile work and family obligations. These supports, which workers and employers in most countries have come to accept as standard and necessary for working families, include paid leave for new parents, flexible scheduling, breastfeeding and pumping accommodations, paid sick days that can be used for family care, and prohibitions on workplace discrimination based on family responsibilities. One of the most common work-family supports, paid maternity leave, is practically universal: academic research covering 190 countries shows that as of 2011, 178 countries guarantee paid maternity leave under national law. In nine of the 190 countries, the status of paid leave for new mothers was unclear. Just three countries definitively offer no legal guarantee of paid maternity leave: Papua New Guinea, Swaziland—and the United States.

This lack of paid leave under law in America is at odds with a workforce revolution in which female participation in paid labor skyrocketed over the past century, especially among those with young children. In the US more than 19 million families with children now have a mother as the primary or co-breadwinner, and 70 percent of children live in households in which all adults are in the labor force. Married women with children under age six were almost four times more likely to be in the paid workforce in 2008 as they were in 1950.

Yet US law provides only the most meager supports to enable workers to fulfill their work and family obligations, leaving the availability of such provisions largely up to employers’ generosity. The idealized notion is that private markets will foster such supports as employers compete for good workers. In reality, however, huge swaths of the workforce have no such supports, and there are enormous disparities in access.
Parental leave policies have not evolved much in the U.S. since the passage of the 1993 Family and Medical Leave Act (FMLA). The FMLA gave workers the right to 12 weeks of unpaid leave following the birth or adoption of a child or to care for a sick family member. The FMLA was recently updated to add care for service members and to apply to domestic partners.

The FMLA is limited in several ways. Besides only providing unpaid leave, the law also only applies to companies that have at least 50 employees and workers who have worked at least 12 months and for at least 1,250 hours for the company. About 30 percent of U.S. private sector jobs are in firms with fewer than 50 employees, meaning that a substantial fraction of workers are not covered by the meager benefits of the FMLA.

Even with those limitations, the FMLA is burdensome to companies who have to come up with strategies for temporarily replacing the services of a worker. Leave policies might be even more burdensome to small businesses. Paid leave would make these policies even more costly.

Somehow 178 other countries make this work. We hear a lot from conservatives about American Exceptionalism; however, here America only seems exceptional in its inability to support working families.

In the current political climate, universal paid leave doesn't seem to be in the cards. However, policymakers could take two modest steps forward.

The first step would be to make the right to unpaid leave universal by extending the FMLA to all employers, regardless of size. The costs to such an extension seem modest, especially in the present slack labor market where so many people are available to pick up temporary assignments. At the same time, the extension would level the playing field between firms, especially those small firms that already responsibly offer leave benefits.

An even more modest second step would be to create tax-deferred savings accounts for families to save and eventually pay for their own leave, if their employers don't offer this benefit. The accounts would work much the same way that IRAs or HSAs work with payments not being taxed until they are withdrawn from the accounts. The accounts would be portable, meaning that employees wouldn't be locked into a particular employer. At retirement, proceeds from the accounts could be transferred to IRAs or HSAs, so workers wouldn't face "use or lose" incentives.

A family that regularly put aside five percent of one of its earners' salaries would accumulate enough to cover a 12-week "paid" leave within five years. With the tax break, the up-front cost to the family might be much lower.

The policy would effectively create defined-contribution family leave benefits.

While the second step would be much more modest, look for howls of protest from businesses who would face the prospect of more workers actually being able to take the leaves they're entitled to. Look also to derisive cries of the "nanny state" from the Tea-party cranks. For any intellectually consistent conservative, however, support for HSAs or more generally personal responsibility should imply support for family leave accounts.

Helping families to finance their own family and medical leaves seems like a sound middle-of-the-road policy. Is America really so exceptional that it even rejects win-win solutions?