AEI’s Andrew Biggs offers a fascinating proposal to fund family leave that avoids reducing women’s wages. He writes:
“The U.S. is the only industrialized nation without a law guaranteeing workers paid parental leave. The idea has broad public support, but how to pay for it? One idea is to mandate that employers fund it, but economists find employers offset the cost by reducing wages for female employees.”
“Our proposal is simple: Offer new parents the opportunity to collect early security benefits for…12 weeks after the arrival of their child. To offset the cost, parents would…delay collecting Social Security retirement benefits…six weeks. An average woman…enters the workforce at 21…has her first child at 26 [and earns] about $31,100. Using the same formula used to calculate Social Security disability benefits, she would be eligible for a….parental-leave benefit of $1,175 a month, equal to 45% of her earnings. That amount is comparable to the paid leave provided by many other countries. … To make the Social Security program financially whole, a parent who claimed 12 weeks of benefits would need to delay claiming retirement benefits by only around six weeks…because parental-leave benefits claimed early in life would be low relative to retirement benefits claimed later, as earnings typically rise considerably from one’s 20s to one’s early 60s.” https://www.wsj.com/articles/a-simple-plan-for-parental-leave-1516836442