The ostensible goal of government paid family leave is to promote equity. Like triage, there seem to be three broad groups of need among working caregivers.
- Some workers are struggling to manage even minimal leaves of absences for caregiving.
- A vast number of workers can manage without a formally defined benefit for that purpose.
- And workers in higher-skilled professions and working in industry sectors that have comfortably integrated these benefits are well-served by their existing employer plans.
Instead of focusing primarily on those with the most need, many believe we should do more. We should spread the responsibility and costs of unpaid caregiving across society. Some claim that no cost is too much to support families. The thinking is that a government-managed fund will also support the neediest caregivers.
Not only do we risk overtreating the problem at a great cost to workers in all three categories above, but it is doubtful that we will have provided a viable solution.
What not enough people are willing to talk about.
Closer examination reveals that these programs are failing to meet the needs of low-income workers. Flaws in the policy structure and its unsound assumptions are preventing these workers from using the benefit. What’s more, they are burdening them with a payroll tax for a benefit that other workers, those who may already have had access to paid leave, are more likely to use.1
Results do not indicate that paid leave is promoting equity.
The below observations are from an evaluation of California’s Paid Family Leave (PFL) Program from 2004-2018 using data from the California Employment Development Department, U.S. Census Bureau, U.S. Centers for Disease Control, and the California Department of Public Health.
Note: In California, paid family leave is a distinct component from paid medical leave which covers employees under circumstances due to their own health disability. It is PFL that covers leave for a growing range of family relationships., including infant bonding and kincare. Colorado is considering a newer model that bundles a number of leave programs into one.
Use of PFL is concentrated among large firms.Bay Area Council Economic Institute, Evaluation of the California Paid Family Leave Program
Just 7% of firms employing 25 or fewer workers ever
had any workers use PFL, compared to 93% of firms employing 250 or more workers.2
Further, claims are made predominantly by workers in higher-paying industries.
PFL use varies by industry with the most use in public administration (62% of all firms), utilities (25%), education services (23%), manufacturing (22%), mining (21%), and management of companies and enterprises (21%). These are generally industries with higher wages.
Virtually no workers earning less than $20,000 annually took PFL.Bay Area Council Economic Institute, Evaluation of the California Paid Family Leave Program
Fixing a flawed policy on this scale is like trying to patch up an enormous balloon. It keeps blowing holes as the program’s use accelerates and its results reveal serious flaws.
A California Task Force convened to address these unfortunate and embarrassing results. They identified insufficient benefits as the primary reasons for a lack of more broad participation in the PFL Program.
In an effort to address these disappointing findings, advocates hope to push the use of the government-enforced right to leave down to the employees of smaller firms through modifications to the law. CA lawmakers recently passed an expansion that includes expanding the allowed duration of leave twice – once from 6 weeks to 8 weeks, and then a short time later from 8 weeks to 12 weeks, effective January 1, 2021. Of interest to small firms is one to add broad job protection for all firms with 5 or more employees. This will move PFL claims toward broader use but also lead to negative consequences as discussed above.
Modifications and expansions will raise costs but are unlikely to result in significantly better outcomes
Because this is not a targeted solution, but blankets all workers, it is doubtful that flaws will respond well to efforts to fix them. A modification of terms such as progressive wage replacement, expansions, or relaxing eligibility will not only facilitate use for low-income workers but will carry implications for all workers. Many modifications expand program use across the board – even among workers who most likely enjoyed benefits before PFML was implemented.
What is not acknowledged by advocates is that PFML cannot succeed in isolation. It is hitched to many other labor policies and economic influences. By taking on a benefit that is tangled up with the operations of wildly diverse business models, outcomes may not be what they intended.
That’s because the program is essentially incompatible with the realities of many work environments that cannot sustain these expansive terms. Imagine a spectrum along which paid leave fits well with some business models in certain contexts at one end but is a terrible fit for others at the opposite end. By mandating the same terms on all businesses, the law selects which taxpaying workers can realistically use the benefit.
Unequal impacts to job opportunity
We can force higher costs on employees with a law like PFML, but ultimately, we cannot force businesses to hire employees that they can no longer afford. The growing advantages of automation (robots don’t get sick) make labor alternatives more feasible.
Long-term paid leave program success will be elusive.
Paid leave is an ambitious program built on what is an outdated and overextended policy model. It is doubtful that it can ever be modified to lead to higher use by lower-income workers unless it moves more heavily in the direction of an entitlement supported by other workers.
Whack a Mole
These efforts to fix one problem always seem to lead to another. An expanding program drains earnings and imposes secondary consequences on higher-productivity workers. It risks slowing productivity system-wide. At the same time, we push less productive workers out of the workplace.
Advocates of government paid leave claim, “We’re not doing anything new here.” That is only partly true. Prop 118 rests on this assumption to reassure taxpayers of affordability. Yet recent expansions have yet to prove themselves sustainable.
On the other hand, they are right – and that is precisely the problem. We are not doing anything new here – the policy model is an old one. The Universal Social Insurance Mandate has already shown that it is a poor policy for long-term success. It is outdated, relies too heavily on government, and is a bad fit for a rapidly changing economy.
Contrary to bold claims, we do not have this application of that government model – for paid family leave – all “figured out.”
There are always better solutions.
There are growing options in both the private and public sectors. Employer are addressing the demand for paid leave and offering benefits increasingly to front-line workers or that extend to part-time workers. In the public sector there are options to target the workers who need help rather than overtreating a problem and spreading risk to all workers.
We must continue to stretch our thinking and explore multiple paths. These currently proposed pfml models force all workers into one solution that is doomed to disappoint or worse, fail.
The bottom line is that this approach, Prop 118, is wrong for Colorado.
1 Hadley Heath Manning, Policy Director at IWF, Independent Women’s Forum has done extensive work on this topic. Her recent opinion on Prop 118,Paid leave proposal is ‘Robin Hood in reverse,’ was published in Colorado Politics.