Wednesday, May 31, 2017

Trump’s Paid Parental Leave Entitlement: Bad for the Economy, Bad for Women

May 30, 2017 by Dan Mitchell @ International Liberty

In a recent interview on the new Trump budget, I hit on some of my usual topics such as growth, real-world fiscal numbers, tax reform, fake budget cuts, entitlement reform, and my Golden Rule.

But I want to call attention to the part of the discussion that started a bit before the one-minute mark. This is the point where I expressed concern about Donald Trump’s proposed parental leave entitlement.

I’ve written about Trump’s childcare scheme, but that’s a different intervention than what we’re talking about today.

Government-mandated paid parental leave is just as misguided childcare subsidies. It may even be worse. Let’s look at some details.

The Wall Street Journal is unimpressed by Trump’s plan to expand the welfare state.
Mr. Trump’s budget would require states to provide six weeks of paid family leave for new mothers and fathers, as well as adoptive parents. States would have “broad latitude to design and finance” the benefit, which would be delivered through unemployment insurance. States would be forced to work out how much to pay parents, whether to ban a beneficiary from working during the leave, and dozens of other details. The budget says the program will cost the feds $25 billion. The cost is offset in theory by reducing waste and abuse in unemployment insurance. The left is naturally panning the plan as stingy. …Once an entitlement is codified it expands. Proponents note that underwriting the benefit requires only a tiny increase in taxes, or some other levy on businesses. But wait until Democrats double or triple the duration of the leave, which they will do as soon as they are in power. The idea that Republicans can propose a cost-effective entitlement is delusional… The left chants that every industrialized country in the world offers some form of paid family leave—even Oman!—but one reason European countries have inflexible labor markets and higher unemployment is because they make hiring more expensive.
The final sentence is the key.

Why on earth should the United States mimic the policies of nations that have less growth, more unemployment, and lower per-capita economic output?

And James Pethokoukis of the American Enterprise Institute agrees that if Republicans start the program, Democrats will expand it. But his citation of some academic research is the best part of his article.
…how could the left not be secretly thrilled? Even if Trump’s bare-bones plan doesn’t become law, it sets a sort of precedent for Republicans supporting paid leave. And should the plan pass Congress and get signed by Trump, it establishes a program that future Democratic presidents and lawmakers can expand. …A 2017 study, by UC Santa Barbara economist Jenna Stearns, of maternity leave policy in Great Britain found that…there’s a tradeoff: Expanding job protected leave benefits led to “fewer women holding management positions and other jobs with the potential for promotion.” Likewise, a 2013 study by Cornell University’s Francine Blau and Lawrence Kahn found family-friendly policies…also “leave women less likely to be considered for high-level positions. One’s evaluation of such policies must take both of these effects into account.” …In a classic 1983 paper on mandated benefits like paid leave, former Obama economist Lawrence Summers explained businesses would offset higher benefits with lower pay or hiring workers with lower potential benefit costs. You know, tradeoffs.
Amen.

And this is why even a columnist for the New York Times has pointed out that self-styled feminist policies actually are bad for women.

The best policies for women are the same as the best policies for men (not to mention all the other genders that now exist). Simply stated, allow free markets and small government.

P.S. Government-mandated paid parental leave is a bad idea even when the idea is pushed by people at right-wing think tanks.

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