While there currently is no national conversation in the United States about parental leave and working time, there is some rumbling at the grassroots. A recent New York Times article profiled one organization, Take Back Your Time, which advocates paid childbirth and parental leave, improved protections for part-time work, and guaranteed minimum vacation time. Last year, California instituted the first paid parental leave system in the country – an entirely employee-funded system that costs the average worker $27 a year. Activists are lobbying at the state level to try to replicate the California model in other states, and have had some success in Washington State.
The experience of parental leave in other countries offers some lessons about its possible effects on the economy, employers, and women’s employment. Parental leave programs generally are not very expensive, amounting to at most one or two percent of GDP. Firms in Western Europe report that they face no major disruptions from parental leave, as long as the leave is not too long (more below). There also is a wide consensus that parental leave increases, rather than decreases, women’s employment (a lengthy OECD report offers details).
One potential downside is that, even though most countries make parental leave open to both men and women, women take the vast majority of leave days. When leave is long, this can have some consequences for women’s place in the labor market. In Sweden, for example, parents have the right to a parental leave of up to 18 months, but women take nearly 85 percent of parental leave days. Women also predominate among the ranks of part-time employees. As a result, the Swedish labor market is one of the most sex-segregated in the world, as women cluster in public sector jobs that are structured around the assumption of interrupted work schedules and part-time employment. Thus, one major goal of Swedish policy these days is to encourage men to take more parental leave; already there are two months of “daddy only” leave (in addition to paternity leave), that are lost to the couple if the father doesn’t take them. Yet, men working in private sector jobs report feeling pressured by their employers not to take a lengthy leave.
More generally, whether or not parental leave is costly, difficult for employers, and harmful to women’s employment hinges on the length of the leave. The current menu of family leave proposals in the US is unlikely to have these negative consequences. The California leave offers only six weeks of leave paid at 55% of wages – up to a maximum of $728/week — and is paid for by employees. This is unlikely to break the bank, sink the economy, or undermine the place of women in paid work.
{ 21 comments }
Nicholas Weininger 03.29.05 at 5:44 pm
Arguing that mandating paid leave is not going to “break the bank or sink the economy” doesn’t really settle the question, though. Granted, it’s not quite a strawman since you can always find people being as alarmist as you want about any given policy. But it’s basically cherry-picking a particularly weak counterargument to knock down, which is not much better.
Any of us could think of numerous hypothetical policies which would have an incrementally negative economic effect but not “break the bank”. Hell, there’s no need to go hypothetical: our economy manages to get along quite well despite being burdened with a vast mass of (for example) corporate welfare giveaways, farm subsidies, and general pork-barreling. Nevertheless these things are economically harmful and worth opposing. A small step in the wrong direction remains a step in the wrong direction.
yoyo 03.29.05 at 6:42 pm
If couples decide that they prefer the woman to stay home and not the man, why should the governmental policy aim at thwarting this decision?
Andrew case 03.29.05 at 8:14 pm
I’m not a parent, economist, employer or in any way qualified to comment on this issue, but that’s never stopped me before…
Two points:
(1) 1 to 2 percent of GDP is a huge amount of money. It may not break the bank, but the economic impact is still significant.
(2) Parental leave is harder on small companies than large ones, not just because a single person taking leave is a larger fraction of the workforce, but also because if the total number of employees is large enough the company can in effect average over the statistical fluctuations in number of employees. For a small company those statistical fluctuations can easily sink the company. I guess it boils down to the fact that employee number is quantized :-)
I think that changes have to be made in order to handle the facts of life in the new economy (not the BS “rational business plans are irrelevant” new economy – the economy as it has developed since the mid 1950s). Adjusting work expectations to accomodate parenting is one of them, but is mandating so much leave really the answer? Might it be better to handle this some other way, such as work from home, or subsidizing temp workers to fill in for the absent employee, or tax breaks for the employer, or some other approach?
One nice thing about parental leave as opposed to sick leave is that there’s usually some warning that it will be needed. I think that the optimal parental accomodation plan would take full advantage of this fact. Dunno quite how, though.
Harry 03.29.05 at 8:32 pm
Why don’t parental leave policies lead to hiring discrimination against women in their childbearing years (who are much more likely than anyone else to take up such leaves). I think, but haven’t checked, that Anne Alstott says this happens, and I can see why it would. Such discrimination is very hard effectively to counter.
1-2% of the economy, contrary to what the above commentators say, is peanuts. Its not as if this isn’t buying something: its buying people time with their kids (and their kids time with them). This is more valuable than what a lot of other 1-2%s of the economy purchase.
JoeO 03.29.05 at 8:34 pm
Andrew,
Maybe, we could require people to get their employeer’s permission before getting pregnant.
Laura 03.29.05 at 8:37 pm
I’m so glad you’re writing about these issues. I was just watching with dismay some European country–can’t recall now (maybe France?)–vote to increase the work week to 40 hours. It seems that many of these countries are moving towards a US model rather than the other way around.
joel turnipseed 03.29.05 at 8:56 pm
I would just like to point out, since no one else has, that many large corporations already have much more generous maternity/paternity leaves than the one Kimberly put on the table in her post: if you want to keep solid employees, ones in whom you’ve invested (and who’ve made an investment in you), a 6-12 week fully-paid leave that guarantees they’ll return to you is not that expensive. As anyone who’s had to hire knows, there’s an expected cost of one- to two- months’ salary involved in the most-basic hiring process, a number that grows rapidly with the technical and managerial talent of the worker.
Of course, we’re talking about benefits for professional & skilled workers here & they’re not really the ones who most need the extra head-start with their kids — which is why finding a way for the rest of society to pick up the tab is the answer (as it is with health care/education).
cm 03.30.05 at 1:15 am
yoyo: If people decide that they prefer to work for less than $5/hour and not for more, why should the governmental policy aim at thwarting this decision?
cm 03.30.05 at 1:27 am
harry: Hiring, pay, and job advancement discrimination is definitely occurring, roughly in proportion to the presence of gender, age, or group specific labor protections or mandated benefits. Women have it tougher because of the disruption and cost of maternal leave, and subsequent child sick absences (that often fall on the mothers because of gender roles and their jobs are less worthy anyway — in part because of the discrimination), older, pardon, mature applicants have it tougher because they are more difficult to discharge in layoffs, etc.
A similar effect is how protections against effortless dismissal promptly lead to very conservative hiring and increased workload & overtime pressure. (And in turn make it much tougher to change employers as you may not be readily hired.)
cm 03.30.05 at 1:35 am
joel: Money (i.e. the “paid” portion of the leave) is only part of the issue, albeit an important one. The real issue I believe is to get the leave approved to begin with. The entitlement of a leave changes the playing field — if you have enough leverage, you can always take an unpaid leave, but most people would probably hear “you must be dreaming” or “good luck in your next job”. Regardless how much they are paid or whether they are white-collar.
bi 03.30.05 at 1:35 am
cm: Why? Because it encourages employers to look for cheap employees who are willing to work to death for little pay. And it discourages employers from improving working conditions and pay. This is wrong.
Andrew Boucher 03.30.05 at 2:00 am
“Yet, men working in private sector jobs report feeling pressured by their employers not to take a lengthy leave.” I think the pressure is more subtle than this; it’s more a question of what other people do rather than what the employer says. In my company (in France) lots of men don’t take paternity leave, so that means less men consider it as an option for them.
Since the major point of these leaves is to continue the French race (keep up that birthrate!) rather than eliminating discrimination, I don’t see this changing, at least in France, any time soon.
john b 03.30.05 at 3:32 am
“Hiring, pay, and job advancement discrimination is definitely occurring, roughly in proportion to the presence of gender, age, or group specific labor protections or mandated benefits.”
When making such a contentious assertion it’s traditional (at least among people who aren’t dodgy partisan hacks) to back it up with evidence – particularly as the OECD study that Kimberly cites in the original post implies the opposite.
Andrew Reeves 03.30.05 at 8:31 am
I have one brief thought. Paid leave in itself is not going to be a huge drag on an economy. The thing about a full-on European style social democracy is that it’s not one single benefit that causes them to have higher rates of unemployment than the U.S. Rather, it’s the collected totality of the free stuff, employer obligations, regulations and the like that put Europe a few percentage points behind the U.S. of A. in certain economic numbers.
One can indeed make the argument that yes, social democracy causes higher unemployment, but high unemployment doesn’t matter in a country where unemployment benefits are generous enough that being out of work is basically a vacation.* But one should be upfront in noting that social democracy is not free.
*I am pretty sure that I am oversimplifying the nature of European unemployment benefits, but I have an image in my head of Europe as “The Paradise Across the Ocean Where You Don’t Have to Work if You Don’t Want to,” and would rather not have any unpleasant facts get in the way of this characterization. :P
Thorley Winston 03.30.05 at 3:08 pm
Really now, do you have anything other than an AFL-CIO press release that backs up that rather dubious claim?
nikolai 03.30.05 at 3:55 pm
I’ve been thinking about Parental Leave quite a bit, mostly from a UK perspective, where the issue is currently very high on the political agenda (as well as related issues such as family tax credit and publically subsidised childcare) and is being increased (both in the amount of money per week and in duration).
Specifically, I think these measures are completely unjust. It’s basically a subsidy which redistributes wealth from people who do not have children and people who have children but are not in work, to people who work and have children. Currently in the UK redistributing wealth from the rich to the poor isn’t on the agenda, but redistributing wealth from those without children to those with them is (and isn’t facing much opposition).
What’s the ideological justification for these policies? There doesn’t really seem to be one, it seems to be a targeted bribe made to people who are by and large already well off. There are currently wealthy people being given quite large sums of public money. When the amounts they receive is compared against the level of the state pension, or unemployment benefit, it’s obvious that the whole system is an absolute joke – and an abandonment of the Beveridge roots of the welfare state.
Uncle Kvetch 03.30.05 at 4:08 pm
Really now, do you have anything other than an AFL-CIO press release that backs up that rather dubious claim?
Really now, Thorley, have you ever heard of a little website called Google? It took me about 180 seconds to find this:
http://www.edd.ca.gov/fleclaimpfl.htm
Uncle Kvetch 03.30.05 at 4:26 pm
More specifically, from the above-referenced State of California website:
“For calendar years 2004 and 2005, the Paid Family Leave insurance contribution rate will be .08 percent (.0008) of the taxable wage limit.
The taxable wage limit in 2004 will be $68,829. This means that wages above this amount are not taxed for SDI. Therefore the maximum contribution for Paid Family Leave insurance would be $55.06 in 2004, in addition to the existing SDI contribution.
The taxable wage limit in 2005 will be $79,418. This means that wages above this amount are not taxed for SDI. Therefore, the maximum contribution for Paid Family Leave insurance would be $63.53 in 2005, in addition to the existing SDI contribution.”
cm 03.30.05 at 6:31 pm
bi: This point was implied in my (rhetorical) question.
cm 03.30.05 at 6:42 pm
john b: I admit that this is based largely on (educated?) hearsay — those things are notoriously hard to measure, as there is not a simple one-way causal relationship, but feedback loops. For example, people who perceive themselves (rightly or wrongly) as targets of discrimination are probably less likely to even pursue careers where their success will be stunted. Then you will hear the argument — how can you say we don’t hire women, they are not applying for the positions.
And as for general protections from casual firing, German industry representatives routinely make the case that they are hiring very cautiously specifically because of those protections, and are asking for the protections to be removed.
I’m not arguing the protections shouldn’t be there (why should their removal be asked if not to prepare for mass firings or firing threats), but you cannot force people into certain behavior patterns by controlling just one degree of freedom. With unemployment at 12% and outsourcing being all the rage, employers perceive themselves in the position to pick & choose, and make demands.
battlepanda 03.31.05 at 11:13 am
(idea lifted shamelessly from “Naked Economics”)
It’s true that families choose to have children for ‘selfish’ reasons, but they are also doing an essential job (raising the next generation of citizens/workers) without which society cannot continue. I see no reason why we can’t compensate them a little for that, especially if it can be shown that it increases the welfare of the kids.
However, companies are penalized twice when they hire women of childbearing age — first they have to provide the maternity package, then they have to cross their fingers that the woman wouldn’t just “take the money and run” rather than come back to work. In addition, young women are penalized because of the perception, based in reality, that they are likely to cost the company a lot of money if they decide to have babies.
What is the solution? First, if we decide maternity leave is a social good, we should put our money where our mouth is and pay for it as a society, thus lifting the burden from our businesses. Secondly, we should make this generous maternity leave package returnable, that is contingent on the woman actually coming back to work. If she decides to stay at home full time and bake wholesome snacks for her sprogling, she should give the money back.
Where the companies can pitch in is in helping the woman get her career back on track. There is no reason why this cannot be done that are not cultural. Alas, the mere fact that they are cultural does not make them any less real. If, at the snap of a finger, men and women started sharing childrearing duties equally, I have a feeling coming back from maternity/paternity leave would become less of an issue instantly. Right now it is problematic for men and women alike because it is primarily thought of as a woman’s problem, and so we don’t really have to deal with it.
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