Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Investing

Government‐​Supported Family Leave Still Entails Tradeoffs

by August 4, 2023
August 4, 2023

Vanessa Brown Calder

Federal legislation on government‐​supported paid family leave has stalled for the time being. But in the meantime, paid leave policies have been adopted by 13 states, most recently Maine, and are being considered by others.

Privately provided paid family leave is a boon to many employees, both male and female. Employers providing paid family leave to employees often constitutes a valuable benefit. However, unforeseen tradeoffs frequently accompany government‐​provided family leave benefits.

Because governments around the world have adopted family leave policies, evidence of many of these tradeoffs is already available. And because U.S. state and local governments have implemented government‐​supported family leave, domestic evidence is emerging.

Many tradeoffs associated with government‐​supported family leave are detailed here. But in recent years, further evidence has come to light. For instance, a Harvard study from earlier this year finds that the introduction of state and federal unpaid family‐​leave policies contributed to the stagnation in the rate of gender wage convergence for women in the United States, with “the introduction of family‐​leave policies reduced the rate of gender wage convergence by 76%–96%.” The authors calculate that, if it weren’t for these leave policies, wage parity could have been achieved as early as 2017.

They conclude:

“A key lesson from our work is that legally‐​mandated labor market flexibility can have the un‐​intended effect of stymieing gender wage convergence, notwithstanding the increasing evidence that flexibility which arises endogenously in the labor market through technological innovation, or from firms changing their own policies, can lead to reduced gender wage gaps.”

Although the Harvard study considers the consequences of government‐​mandated unpaid family leave, a study of government‐​supported paid family leave policy finds similar effects. A study of a three‐​month paid family leave expansion in Sweden indicates that the gender wage gap grew in industries with greater exposure to the policy, while promotion, hiring, and starting wages of childbearing‐​age women declined following the reform.

Unfortunately, adverse employment effects are not limited to Sweden. A significant study evaluating California’s paid family leave policy likewise finds adverse consequences for mothers’ employment and wages. Under California’s policy, new mothers’ employment fell by seven percent, and annual wage earnings fell by eight percent over 10 years.

Although one of the prominent arguments for government‐​supported paid family leave is that paid leave will increase women’s labor force attachment, the California study finds that the policy did not increase mothers’ attachment to their employers.

It is well‐​known that higher‐​educated, higher‐​income women are more likely to have access to paid family leave. Consequently, many advocates argue that government‐​supported leave is necessary to ensure coverage for low‐​income workers. Less well‐​known is that low‐​income women are less likely to utilize government‐​supported leave and that these policies frequently regressively redistribute from low‐​to middle‐ and upper‐​income women.

This is partly because payroll taxes generally support paid leave programs. So, low‐​income women pay into the program along with other workers but are less likely than other workers to claim benefits. In 2020, the California Budget and Policy Center found that “workers earning between $80,000 and $99,999 annually had a utilization rate that was nearly four times higher than for workers in the lowest wage bracket.” Just 0.6 percent of eligible workers in the lowest wage bracket utilized the benefit.

Similarly, San Francisco has their own city‐​wide leave policy, and a 2019 Berkeley paper finds that 79 percent of new moms with household incomes above $97,000 received paid leave benefits from the government, compared with just 36 percent of moms with household incomes under $32,000. This regressive, redistributive effect is not limited to California; a review of New Jersey’s paid leave policy found that low‐​income parents were disproportionately less likely to receive paid leave benefits, and as noted elsewhere, research on international paid leave policies is also critical.

Unfortunately, most advocates and many policymakers are not interested in grappling with the costs of government‐​supported family leave and are exclusively interested in espousing the benefits. But they should be careful to avoid overselling the benefits of government‐​supported leave policies, particularly as it pertains to improving employment outcomes and helping lower‐​income women. Building evidence suggests that these policies do quite the opposite.

0
FacebookTwitterGoogle +Pinterest
previous post
Liberal groups supporting IRS push to build government-run tax filing system
next post
Copper Stocks Have Lots Of Volatility

You may also like

If Funding and Enforcement for Students with Disabilities...

April 24, 2025

Bill Maher’s Embrace of Civil Discourse Is No...

April 15, 2025

The U.S. Experience in Colombia Is a Terrible...

September 11, 2023

Fact-Checking Biden’s Speech about US Conflicts

July 26, 2024

Obama, Biden Have Mislead More Health Insurance Purchasers...

July 31, 2023

Another Adverse Effect of the US-China Trade War

September 11, 2024

Where the Brookings’ Social Security Plan Falls Short

March 19, 2025

OECD’s Pillar One: A Step Towards Chaos Rather...

October 30, 2023

CFPB Targets Overdraft Fees in Biden’s War on...

January 23, 2024

Biden’s Newest Folly on Student Loan Forgiveness

April 24, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Elon Musk may speak to Trump aides in push to calm feud

      June 6, 2025
    • Everyone Talks About Leaving a Better Planet for Our Children: Why Don’t We Leave Better Children for Our Planet?

      June 6, 2025
    • MARK HALPERIN: Democrats try to construct a Frankenstein candidate while JD Vance gains momentum for 2028

      June 6, 2025
    • ‘Gone too far’: GOP lawmakers rally around Trump after Musk raises Epstein allegations

      June 6, 2025
    • Democrats begin to embrace Musk amid Trump spat after party railed against him as a ‘dictator’

      June 6, 2025
    • Trump administration defends US and Israeli sovereignty with new sanctions against four ICC judges

      June 5, 2025

    Categories

    • Business (8,149)
    • Investing (2,011)
    • Politics (15,544)
    • Stocks (3,130)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved