Paid-Leave Proposals Debated at Congressional Hearing

 

Allen Smith, J.D. By Allen Smith, J.D. July 13, 2018
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​Proponents of paid parental leave squared off against advocates for paid family and medical leave at a July 11 hearing before the Senate Committee on Finance.

The Society for Human Resource Management (SHRM) has not yet taken a position on either proposal, noted Lisa Horn, SHRM's vice president, congressional affairs. Neither bill would have an impact on the patchwork of state and local sick-leave laws that the SHRM-supported Workflex in the 21st Century Act (H.R. 4219) seeks to address.

The workflex bill would let employers voluntarily offer employees a plan that includes a federal standard of paid time off and options for flexible work arrangements. This plan, covered by the Employee Retirement Income Security Act, would pre-empt state and local paid-leave and workflex laws. But it would not affect the state paid family and medical leave laws already in place or soon to be in place in California, Massachusetts, New Jersey, New York, Rhode Island, Washington state and Washington, D.C., she said.

"H.R. 4219 would provide both paid leave and flexible work options to all employees of participating employers," Horn stated. "Data suggests employees value flexibility just as much as paid leave, and this bill provides both to better assist all employees with their work/life needs."

Paid Parental Leave

Sen. Joni Ernst, R-Iowa, along with Sens. Marco Rubio, R-Fla., and Mike Lee, R-Utah, have been working on the issue of paid parental leave.

"The issue of paid leave is incredibly important. Millions of mothers, fathers, grandparents and families across the country struggle with the realities of childbirth and infant care while also working hard to put food on the table and raise strong and healthy families," she testified.

Rubio, Lee and Ernst have been working on a proposal that would allow new parents to elect to receive a paid-leave benefit through Social Security, she said. In return, participants would delay getting their Social Security benefit upon retirement.

Paid leave would have to be funded somehow, but several proposals have downsides, noted Andrew Biggs, resident scholar with the American Enterprise Institute. "Many Americans are reluctant to fund paid leave with a new payroll tax of 0.4 percent of their wages, as proposed in the FAMILY [Family and Medical Insurance Leave] Act," he testified.

In addition, he observed that if employers are required to provide paid leave, they likely will offset the costs by reducing wages or even avoiding hiring women of childbearing age, even though Title VII of the Civil Rights Act of 1964 would prohibit such gender discrimination.

It also is difficult for young workers to save to provide leave for themselves, given their lower earnings on average, student loan debt and the frequently short time between entering the workforce and having children, he observed.

Biggs argued for a parental-leave benefit provided through the Social Security program. He acknowledged that the program already has a significant funding shortfall, so policymakers would rightly be concerned that a paid-parental-leave plan would make matters worse.

But he said that the Social Security leave proposal might be designed so that, over an individual's lifetime, the offset to future retirement benefits would fully pay back with interest the value of parental-leave benefits received after the birth of a child. So, he asserted, the proposal would be revenue-neutral over the long term.

Not so, according to Vicki Shabo, vice president for workplace policies and strategies with the National Partnership for Women & Families in Washington, D.C. An Urban Institute analysis has found that the Social Security leave proposal would run a cash deficit every year of its operation because the cost of someone's taking leave would not be recouped until their retirement benefit offsets had been fully realized—generally decades later, she noted.

FAMILY Act

Shabo called instead for the enactment of the FAMILY Act. "Put simply, paid leave for new parents is necessary, but it is not a sufficient or complete response to the needs of working people and families," she testified.

Leave taken for the birth or placement of a child account for about one-fifth of the 20 million leaves of absence taken under the Family and Medical Leave Act (FMLA) each year. 



Approximately 75 percent of people take leave to care for a seriously ill, injured, elderly or disabled spouse, parent or child; to receive treatment for or recuperate from a serious personal injury, illness or disability; or to address the deployment or injury of a military service member in their family, she noted.

[SHRM members-only toolkit: Managing Family and Medical Leave]

"It would be a cruel double hit to adopt a paid-leave plan that fails to cover family caregivers while simultaneously forcing trade-offs between parental leave and Social Security retirement benefits," she said in written testimony.

Sen. Sherrod Brown, D-Ohio, agreed with Shabo that family and medical leave, not just parental leave, should be paid. "Any national paid-leave plan should build on the FMLA and reflect the well-established needs laid out in that law—parental leave, family care leave, personal medical leave and military caregiving leave," he said.

Payroll deductions from employees and employers and contributions from self-employed workers would fund the benefits, which would be administered through a new office within the Social Security Administration. No amounts from the Social Security trust funds or appropriated to the administration to administer Social Security would be used for the family and medical leave benefits.

Sen. Kirsten Gillibrand, D-N.Y., said that the FAMILY Act is affordable, costing taxpayers only a cup of coffee per week and providing 66 percent of the wages of those on leave.

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