An interesting thing happened in Washington last week. No, not high profile testimony or legislative action on health care. Rather, a working group of economists from the Brookings Institution and the American Enterprise Institute issued a report on paid family leave. You might wonder what is so interesting about another report coming from some Washington economists, but stay with me a minute:

 

  • The American Enterprise Institute is a conservative think tank that, generally, advocates for lower taxes and less government involvement in the economy. The Brookings Institution has a more progressive/left-of-center orientation and a more favorable view of social safety net programs.
  • The report identified key issues around paid parental leave and developed a framework to create a new, national paid parental leave program.
  • The report identified areas where the members disagreed and sought to find a middle ground and compromise over their differences in order to come together and craft a solution.

In effect, this report could serve as a blueprint for a national program to provide paid parental leave. Here is some more about the report.

 

A Focus on the Data

As noted, the members of this working group are economists. As a result, the report focused on economic issues in assessing the impact of the current (absence of a) national policy on paid family leave and in the benefits of establishing a new program. And, because there are several states with paid family leave programs that have been in place for several years (primarily California and New Jersey) there is data that can support a more thoughtful analysis of the impact of paid family leave programs.

 

Also, the report focused specifically on paid parental leave – maternity/paternity leave to care for and bond with a new child. This focus was based on conclusion that there was better data and research on the costs and benefits of parental leave. The report noted that the focus on parental leave should not be interpreted to mean that medical leave (for workers’ own medical needs) and family leave (to care for medical needs of a family member) are not important. These are economists and it is all about the data.

 

Access to Paid Parental Leave Benefits the Entire Economy – and Impacts Lives.

Paid family leave improves parents’ “attachment” to the workforce. For example, the report cited one study showing that women with access to paid family leave are 40 percent more likely to return to work after giving birth than those without access are. Another study showed that the impact of paid family leave persisted for years after birth of a child, showing that access to paid leave led to significantly higher workforce participant for the ten-year period following birth of a child. The report notes that increasing workforce participant could lead to significant growth in Gross Domestic Product and, correspondingly, declining workforce participation is tied to “sluggish” economic growth. In effect, this affects the entire economy.

 

The benefits of paid parental leave go beyond the economic benefits and can have a lifelong impact on children. The report cited studies showing that paid parental leave is associated with a reduction in low birth rate babies, and lower rates of infant mortality. The report also noted that paid maternity leave was associated with lower high school dropout rates and higher wages for these children at the age of 30.

 

This is Feasible

The report articulated some very straightforward principles and a framework for creating a national paid parental leave program. Here are the key elements of the compromise proposal offered in the report:

  • Publicly paid parental leave should be available to mothers and fathers so that working parents do not need to return to work within days after the birth or adoption of a child.
  • Any plan should be budget neutral, splitting the costs of financing between a payroll tax (including a payroll tax on workers) and savings in other government programs.
  • Paid parental leave benefits would be modest and targeted. The report specifically proposed replacing 70 percent of pay (with a $600 per week cap) for a limited number of weeks (e.g., eight weeks).
  • The program should also include job protection for workers.

What is Next?

Don’t expect any legislative action for the foreseeable future. These things take time – it took a decade until the movement to enact pension protections generated the law we know as ERISA. But, in this current environment, a proposal that includes compromise and spans the political spectrum is noteworthy. Perhaps, it is the start of something.