By David Henderson
Pardon the grammar. The correct grammar is: TINSTAAFL: There is no such thing as a free lunch.
Don Boudreaux has an excellent post this morning in which he takes on a post at the American Enterprise Institute about mandated paid parental leave. Here’s the relevant statement from the AEI piece, written by Christopher Ruhm of the University of Virginia:
There is widespread public support for paid parental leave, including majorities in both major political parties, and both major party Presidential candidates in 2016 advocated for some type of leave policy.
A check of the link to the claim about widespread public support leads to this AEI article. The article states:
Support for the concept is bipartisan, with 83% of Democrats and 71% of Republicans in favor of this policy.
I tried to find the original poll question, but this is the best I could do. It doesn’t state the particular question asked.
Don points out the big problem with Ruhm’s claim, writing:
If there truly were widespread support for paid parental leave given its costs, employers would have every incentive to supply such leave to more workers. The fact that such leave is not supplied to more workers is the best available evidence that support for such leave in fact is not as widespread as Mr. Ruhm assumes it to be. The poll of the market where each respondent acts with something material at stake – in contrast to opinion polls (upon which Mr. Ruhm relies) where each respondent talks with nothing material at stake – reveals that most of the workers who Mr. Ruhm wishes to force to take a larger share of their compensation in the form of paid leave in fact prefer compensation packages featuring no paid leave but with higher take-home pay to packages featuring paid leave but with lower take-home pay.
I agree with Don that the market is the most reliable pollster. Employers, because they try to maximize their profits, respond to the demands of employees. If paid parental leave costs the employer, say, $2,000, and the employee values it at, say, $2,100, they can make a mutually beneficial deal. But if the employee values it at, say, $1,900, the deal won’t happen. And it’s good that it won’t happen because such a deal would make the employer and employee both worse off. I wrote about this here.
But there’s more to say. There’s strong evidence from polling data that when people are asked if they want something nice, they will say yes. But when they are asked if they want something nice but they will have to pay something for it, the numbers tank.
Here’s what Professor Ruhm’s colleague Steven Rhoads wrote in 1985 in The Economist’s View of the World, which ranks as one of my 3 favorites economics books by a non-economist:
Some years ago a similar poll found overwhelming support for increased spending on social programs. Seventy percent of respondents wanted more spent on the elderly. Sixty percent favored increases both for the needy and for education. And 54 percent wanted more spent on hospitals and medical care. But when the same people were asked if more should be spent even if more taxes were required, those favorable disposed dropped to 34, 26, 41, and 25 percent, respectively. Making clear who will pay the taxes can also have a dramatic effect. One poll that found 50 percent support for the use of tax monies to supplement the cost of operating bus services found only 27 percent support a few months later when the words “personal income tax monies” were used instead of “tax monies.” We, the public, seem quite willing, if given half a chance, to believe that there is such a thing as a free lunch.
All italics in both quotes are in the original.
Now you might argue that this is about taxes whereas the original post was about mandates. But that makes my point, and Don’s, stronger, not weaker. The likelihood that a mandate on a worker’s employer will be paid for by the worker is actually higher than the likelihood that an expenditure program will be paid for by the particular person polled.
If the people polled were employees, and if they really understood who pays for the mandated benefits, many of them would answer: “Butt out, buddy. Keep your life-arranging hands off my wages.”