Why dropping Biden and Democrats on paid leave from the $1.75 trillion plan is a smart move

When President Joe Biden’s “Build Back Better” plan emerged from negotiations with Democratic lawmakers Thursday, one widely promised item was dropped — paid time off to care for a new child or to care for a sick relative. This comes as a surprise, as Biden and most Democrats in Congress have campaigned vigorously on the issue, and at least in theory, polls show strong support. In fact, reconnaissance Through my own organization, the Cato Institute, I have found that 74 percent of Americans, including 88 percent of Democrats, 76 percent of independents and even 60 percent of Republicans, support this idea.

As proven in California, it was the well-to-do women who benefited from paid leave.

Given the political pressure progressives in particular are sure to bring to restore the measure before the plan is put to a vote, it’s not entirely certain that the measure is over. That’s why it’s important to understand why paid vacation – as attractive as it sounds – can do more harm than good.

With Congress more concerned with timelines than with content, there was little chance of the issue being discussed seriously. However, there are real drawbacks to enacting another massive and costly nationwide program, especially given creeping inflation and ballooning national debt, not to mention the potentially disastrous unintended consequences of this program in particular.

Under current law, Workers can take up to 12 weeks Leaving their job after the birth of a child or to deal with a family emergency without the risk of being fired. However, they are not automatically paid while they are on vacation. Biden had suggested it be Covering the federal government now Part of the cost of this salary is on a graduated scale, according to which low-income workers get the most compensation by receiving up to 80 percent of their wages.

But is this federal spending really the best use of limited resources? It was the paid vacation plan originally envisioned in the Rebuild Better Act Estimated cost As much as 225 billion dollars. Federal programs are already heavily skewed toward families with children. And the Build Better Act, with childcare subsidies and an extension of the child tax credit, will continue this trend. Such policies can redistribute wealth from childless adults to those with children, from men to women, from male-headed households to other types of households and – most importantly – from low-income to middle-income workers or high.

As demonstrated in California, Better off for a woman They are the ones who benefited from paid leave. The benefit is most concentrated among high-income women, with the average participant earning $10,000 more than working women overall. The UC Davis researchers speculated that this was because better paid women were more likely to be aware of the jobs in which they were eligible for compensation and in those jobs, as well as their tendency to accept less than full pay for time off. But whatever the reason, the reality of this redistribution poses a dilemma for those who support parental leave in the abstract but are also interested in reducing income inequality and creating a more inclusive economy.

Similarly, for those who wish to encourage women’s participation in the workforce, delegating family leave increases the likelihood that employers will be less likely to hire women. While the landmark case for paternity leave for Transportation Minister Pete Buttigieg shows that both men and women can take advantage of paternity leave, Women remain much more likely To take advantage of these options. At the same time, Employers fear itEven with federal subsidies, making employees take extended periods away from their jobs isn’t free.

As a result, some employers may be more reluctant to hire young women who they believe are more likely to take time away from the job. This discrimination may be illegal, but there are many ways employers can get around the rules. In fact, After California implemented a six-week parental leave program In 2004, the unemployment rate and duration increased among women of childbearing age—and at higher levels than among older women, California men and women from states without such a program.

Parental leave may also reduce a woman’s pay. As did former Obama Treasury Secretary Larry Summers pointed out, “If wages could be adjusted freely, then these differences in expected costs would be offset by wage differentials.” In short, employers are concerned with how much the total cost of hiring a worker is, not how those costs are divided between different wages and benefits. Increases in one area are likely to lead to reductions in others in order to keep overall compensation the same.

Studies from Europe She points out that the unintended consequences of imposing parental leave could include lower salaries, higher unemployment, and fewer leadership positions for women overall. Even other research points to this That, because women are more likely to take parental leave, leave programs“It is likely to reinforce the traditional division of care work in the home,” while making housekeeping “institutional as the norm for many women.” As one study put it, women who take time off mean they are available to perform household chores “during a critical period of household negotiations,” which in turn “sends a clear message about who should provide family labour.” Thus, parental leave may, inversely, reduce gender equality.

And providing a federal program prevents the private sector from advancing on its own. The Cato Institute offers generous parental leave benefits, as do most major companies. According to a survey According to the Society for Human Resource Management, more than half of employers (55 percent) now offer paid maternity leave, while 45 percent offer paid paternity leave, and 35 percent offer paid extended family care leave for reasons such as a spouse or child illness, The numbers are steadily increasing.

More and more employers are still trying to accommodate their employees in different ways, for example by allowing greater use of flex time. Others allow the use of a disability pension after giving birth. In the absence of a federal mandate, these companies are able to craft a benefits system that best suits their needs and the needs of their employees. Twelve weeks of vacation won’t work for every company — or every worker — so tailoring options to suit each particular circumstance is best for both parties. Ultimately, this empowers women by giving them more choices and the ability to make decisions for themselves about the kinds of benefit tradeoffs they value.

until the Democrats’ political push It may be an overestimation of what is expected from passing parental leave. And the same surveys that show such strong support for parental leave show that Support drops sharply When costs, cash etc. are included. With all this in mind, Congress was wise to make a decision this time around. Parental leave – and the potential consequences of implementing it – must have a full broadcast so that the drawbacks as well as the advantages are clear before the federal government authorizes such a major change.

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