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August 3 2018

The Family Act would leave all workers with less take-home pay

via The Hill
by Carrie L. Lukas

The introduction of a bill is rarely considered big news. But now Republican senators are introducing a bill to expand access to paid leave for workers. That’s a important development since this is an issue area that has long been considered exclusively the Democrats' domain.

Americans of all political persuasions have long wanted the government to do more to help people who need time off from work, particularly following the birth of adoption of a child. People know that paid parental leave leads to better health outcomes for babies and mothers, and encourages people to stay in the workforce. When they hear stories of women who have to return to work just a few days after delivering a baby, they all want them to have better options.

Yet Republicans have typically been in the position of explaining why proposals to expand government's role in offering paid leave won't work as intended. Progressive proposals like the Family Act would create an entirely new entitlement program with a new payroll tax on all workers.

That would not only leave everyone with less take-home pay in every paycheck, it would also encourage companies to drop the leave benefits they currently offer, potentially leaving many workers with reduced benefits and less flexibility than they enjoy today.

Mandates that employers must offer paid leave benefits would have similar drawbacks. By increasing the employment costs, such a mandate would discourage hiring, particularly of women and those with fewer skills.

Recognizing the flaws in these approaches, however, didn't mean that Republicans didn't also recognize the hardship faced by those who lack on the job paid leave benefits. Taxpayers also have an interest in solving this problem: Nearly 17 percent of workers who lack access to paid parental leave go on government assistance to finance their paid leave — and this number jumps to nearly 50 percent for lower-income workers.

The goal has been to find a way to help those who need access to paid leave without crowding out employer-provided programs or imposing a new tax on all workers. And that's exactly what Republicans are now offering. Sen. Marco Rubio (R-Fla.) is offering legislation that would reform Social Security to give workers the option to receive paid leave benefits after the birth or adoption of a child, in exchange for delaying their eligibility for retirement benefits to offset those costs.

Currently, workers and their employers pay 12.4 percent of their earnings to Social Security on their very first day of employment. Even for a low-income worker, that means that they are contributing thousands of dollars each year into this system.

While they are accruing benefits that are meant to support them in retirement, the truth is that a young worker welcoming a new baby or family member often has a far greater need for income support at that time, than he or she will be at the relatively young retirement age of sixty-seven. Certainly workers deserve to have that option and make that decision for themselves.

Under the Rubio proposal, workers could opt to receive benefits to help them finance up to 12 weeks of time off in exchange for delaying their eligibility for retirement by about three months.

Importantly, this proposal would be entirely voluntary: No worker would have to use this option if he or she didn't believe it was a good deal. The existence of the trade-off — that receiving a benefit today would require delaying a benefit in the future — would not only encourage responsible leave-taking, but also encourage companies to continue offering paid leave benefits when they can afford to do so.

This approach wouldn't require a new payroll tax and wouldn't change retirement benefits for anyone other than those who choose to take the new option. Rather, it would modernize an existing government program to make it more flexible, efficient, and better help those who truly need it.

While this reform wouldn't change Social Security's overall liabilities, some benefits would be paid out earlier than under current law. These costs would be modest compared to Social Security's overall outlays. Moreover, since access to paid leave encourages new parents to keep their jobs, it could lead to more payroll taxes — something missed in current cost estimates. By encouraging work, this reform could enhance retirement security for women and reduce dependence on welfare programs.

Republicans and Democrats should welcome and carefully consider this proposal, which should appeal to both parties, by strengthening the safety net, helping those in need, while protecting taxpayers.

IIndependent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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