A Bad Argument for Paid Family Leave
In a blow to arguments that a federal paid leave law would harm small businesses, a new study co-authored by Stanford’s Maya Rossin-Slater finds that support for paid leave among small employers is not only strong, but also increased as the pandemic added new strain to the work-life juggle.
“The big roadblock to passing paid family leave legislation is a concern that small businesses are not supportive and that it would be challenging for them,” Rossin-Slater says. “We find that’s not the case.”
The research, released this week by the National Bureau of Economic Research as a working paper, finds that 71 percent of New York and New Jersey employers surveyed during COVID-19 said they backed paid family leave — up from nearly 62 percent in 2019, before the coronavirus outbreak. What’s more, the study finds the jump in support was driven by employers that were previously opposed to the policy, and not just neutral about it.
This is from Krysten Crawford, “Paid family leave support grew during COVID-19, Stanford study finds,” Stanford Institute for Economic Policy Research (SIEPR), November 17, 2021.
Both the press release excerpted above and the actual study stop short of saying that their findings are a good argument for mandated paid family leave. That’s good because it’s not a good argument; it’s a bad one.
To the extent employers and employees want paid family leave, they are free to negotiate that. Nothing is stopping them. So a mandate isn’t necessary. But to the extent there are employers and employees who don’t want paid family leave, a mandate is undesirable.
It’s not just undesirable to employers; it’s also undesirable to employees.
Employers and employees agree on overall compensation packages in return for employee productivity. These packages include monetary pay, vacation leave, sick leave, usually health insurance, and sometimes paid family leave. If an employee wants paid family leave strongly enough to give up even a few dollars more than the cost of that leave to the employer, then both sides will benefit if such leave is provided. If we observe a pay package that doesn’t include paid family leave, that strongly suggests that the cost of providing it exceeds the value to the employee, making it a non-optimal pay package. So if the government mandates paid family leave in situations where employers don’t provide it, those mandates, once various other components adjust, make both employers and employees worse off.
I hope the authors understand that.