Family at the Center: Parental Leave and the Social Contract

In a country mired in debt, with prodigious and unbridled spending from both political parties, the least that citizens should expect in exchange from such spendthrift is a basic level of support for the most vulnerable populations. Yet there’s a gaping hole in our safety net.

America has no national policy to ensure that infants can spend the first weeks of life with their family without their parents fearing financial instability or job loss. The lack of paid parental leave has consequences that extend from the health of the baby and the parents (mothers, in particular) to workforce attachment, welfare dependency, and social norms about caretaking.¹ The issue is particularly pressing with the rollback in abortion access because of the Supreme Court decision overturning Roe v. Wade,² resulting in more babies being born into potentially unstable and financially insecure households that cannot afford to bond. This rollback will be pronounced in pro-life conservative states, underscoring the need for a thoughtful conservative response that supports family flourishing.

Liberals have attempted to use the obvious gap in paid leave benefits upon the birth or adoption of a baby to ram through a freight train of unrelated and expansive paid leave policies at considerable expense to taxpayers and businesses. Conservatives can and should do better, addressing paid parental leave as part of broader fiscal reform and modernizing our social contract to increase financial security for American families, reconcile a generational imbalance in our federal portfolio, and create a more effective and sustainable safety net for the next generation.

A federal policy that makes it easier for parents to invest greater time caring for their newborn children is a pro-life, pro-work, and pro-growth policy that fits squarely within conservative values. At the most basic level, a helpless baby would benefit greatly from having one or both parents around. Yet for reasons discussed below, this is often not possible given financial pressures and lack of job protection—especially for low-income households.

Data show that access to paid parental leave reduces neonatal fatalities and improves health outcomes for mothers and infants. It increases workforce attachment and decreases welfare dependence for mothers by allowing them to stay connected to the labor force. And it sends a strong cultural signal that caretaking is valuable and worth protecting, especially in the crucial time of healing, attachment, and development following birth.

Understandably, there have been conservative concerns that paid leave for new parents would be a slippery slope to other types of government-sponsored leave, crowd out private action, overly burden business, and drive up our already unsustainable levels of federal debt or raise taxes on working Americans. But few workers have access to paid family leave through their employers; birth is a predictable and limited event, unlike other types of medical or caregiving leave; and the slippery-slope logic leaves our most vulnerable population—infants—unprotected, despite the obvious benefits and relative ease of a modest paid parental leave program. Policymakers can structure such a policy in ways to minimize the fiscal and business burden.

The chapter flows as follows: The first section reviews existing paid leave policies and identifies where gaps and unmet needs exist. The second section summarizes the literature on the outcomes of paid leave programs. The third section reviews current congressional proposals for reform. The fourth section articulates a way forward on federal policy for conservatives, anchored by principles of supporting family, opportunity, and growth.

Landscape of Paid Leave Access

Paid leave generally refers to policies that provide pay to workers who need time away from their job after the arrival of a new child (parental leave), to care for an ill or elderly family member (family leave), or for their own personal medical needs that would extend beyond sick leave (medical leave). While it is often said that the US is the only developed nation without a federal paid leave policy, US policymakers are not starting from scratch in the paid leave space. The private sector has been the leading provider of paid leave in America, and employer provision of paid leave has expanded considerably in the past decade.

According to the Bureau of Labor Statistics, access to paid family leave (including parental leave) grew from 19 percent to 35 percent between 2011 and 2021 for the highest 25 percent of wage earners. For the lowest 25 percent of wage earners, paid family leave access more than doubled during the same period, from 5 percent to 12 percent, though access still remains notably low.³ Other types of paid leave are more widely available. In 2021, nearly 90 percent of full-time workers (86 percent) had paid sick leave from their employers,⁴ and almost half of full-time employees had access to employer-provided temporary disability insurance or medical leave (Figure 1).⁵

Figure 1. Access to Selected Paid Leave for Civilian Workers, by Wage Category, March 2021

Government provision of paid leave also has expanded in recent years. In 1993, the Family and Medical Leave Act (FMLA) became law, requiring 12 weeks of unpaid, job-protected leave for parental, family, and medical reasons. Since then, nine states, the District of Columbia, and many cities have introduced paid family and medical leave programs.⁶ Federal workers were given 12 weeks of paid parental leave through provisions in the National Defense Authorization Act for Fiscal Year 2020. Companies extending paid leave benefits to mid- and lower-wage employees began to receive tax credits partially offsetting the cost of these benefits through a provision in the 2017 tax reform legislation. And emergency paid family and medical leave provisions were passed in response to the COVID-19 pandemic in 2020.

Even so, gaps remain in paid leave access. Such gaps are particularly pronounced around paid leave for the birth or adoption of a child and for low-income workers. Paid family leave (including parental leave) remains the least available benefit from employers.⁷

Fewer than one in four civilian workers had access to defined paid family leave in 2021, according to the Bureau of Labor Statistics. While workers often use sick days, vacation days, and other types of personal leave to provide paid time off for family or medical-related events, nearly four in 10 workers report that they received no pay upon taking such leave, according to Pew Research.⁸ This helps explain why, according to one Abt Associates survey, one in four previously working mothers return to work within two weeks of giving birth.⁹

As mentioned above, access to paid leave policies is particularly minimal among low-wage workers, with only 12 percent of workers in the lowest wage quartile having access to paid family leave of any duration from their employers.¹⁰ Without paid leave, many low-income parents go on welfare or take on debt following the birth of a child. A survey by Pew Research reported that, of households with under $30,000 in income that didn’t receive full pay during parental leave, 57 percent took on debt and nearly half (48 percent) went on public assistance, suggesting the status quo carries a fiscal burden.¹¹ Access to unpaid leave is also uneven, with 40 percent of workers excluded from FMLA job protection due to exemptions.¹² This means that in addition to not being paid, a low-income new mother may not have job protection following her child’s birth.

What We Know About the Economic Impact of Public Paid Leave Programs

A significant body of academic literature highlights the socioeconomic benefits that accrue from increased access to public paid leave benefits. Importantly, the vast majority of this research focuses on the outcomes of paid leave for new mothers and infants, despite supporters of public paid leave programs often conflating such benefits with those of other types of leave, such as medical leave and leave to care for an ill or elderly family member. Internationally, paid maternity leave is the most common and generous paid leave benefit provided, adding to the depth of research on the socioeconomic impact of public paid parental leave programs on new mothers in particular.

Research suggests that access to a public paid parental leave program is associated with a wide range of health benefits, including reduced neonatal deaths, longer durations of breastfeeding, improved maternal healing, and increased attachment and involvement from mothers and fathers extending beyond the period of paid leave.¹³ Unsurprisingly, these benefits tend to be most pronounced for low-income women who would have been the least likely to have access to paid leave benefits before. The short-term employment impact of paid parental leave programs is also positive, including higher wages as a derivative of improved labor force attachment, reduced welfare dependency, and improved job continuity for mothers. One study found up to a 20 percent reduction in women leaving their jobs in the year following a child’s birth when provided access to paid leave.¹⁴ Another study found that California mothers who took paid parental leave relied less on public assistance, including a 40 percent drop in food stamp usage.¹⁵ This suggests that while such a policy wouldn’t pay for itself, cost savings are associated with paid parental leave.

There’s some uncertainty about the long-run employment effects of paid parental leave programs. A recent study found that accessing paid leave decreased employment and earnings for new California mothers six to 10 years after childbirth, which could be perceived negatively from an economic perspective, but it also could reflect parents having increased choices for work and spending time with children. Other studies have found that women in Europe have higher labor force participation rates because of access to family-friendly policies, such as paid parental leave.¹⁶ Another study found that over the long term, the availability of paid family leave nearly closed the gap in workforce participation between mothers with young children and women without minor children.¹⁷ This suggests that certain features of paid family leave policies, such as whether job protection is included and the duration of leave, can have different effects on employment for new mothers.¹⁸

In contrast, the evidence base on the socioeconomic impacts of non-parental family and medical leave is less robust, despite supporters of paid leave often using the benefits of paid leave for new parents to advocate for much broader leave packages. This is largely because the wide range of eligible illnesses and caretaking relationships makes it difficult to track individualized health or labor market outcomes. It’s also because the take-up rate for family caregiving in public paid family leave programs has historically been significantly lower than the take-up rate for new parents. Internationally, paid caregiving and medical leave policies are less generous, consistent, and comparable than paid parental leave is. Relatively few Organisation for Economic Co-operation and Development countries provide paid family care leave, especially for adult family members, and it tends to be linked to terminal illness for a spouse or child, isolating its usage for the most extreme medical events and limiting its recurrence and business interruption.¹⁹

Given policymakers’ growing interest in issues such as eldercare and the recent introduction of state-based paid family and medical leave programs, more research will likely emerge that will improve our understanding of the impacts. But this research is still largely in its infancy, especially relative to the evidence base for paid parental leave, suggesting that we know little about how a national paid medical and family leave policy would work in practice and that, therefore, it would be premature to implement a federal policy.²⁰ As such, policymakers should prioritize paid leave for new parents and pursue it as a stand-alone policy.

Examining the Existing Proposals for Paid Leave Reform

There’s considerable public energy across party lines to increase access to paid leave, with one poll finding that 94 percent of Democrats and 74 percent of Republicans support a national paid leave policy.²¹

Recognizing the demand for reform, along with the unmet need for paid leave and benefits that can accrue from paid leave, federal policymakers have put forward multiple proposals. Their approaches generally fit into three categories.

A Universal and Comprehensive Federal Paid Parental, Family, and Medical Leave Program. The most prominent Democrat-led proposal has been the Family and Medical Insurance Leave (FAMILY) Act, which would provide 12 weeks of paid family and medical leave, funded by higher employee payroll taxes. A version of this proposal was included in the Biden administration’s Build Back Better plan in 2021. However, Joe Biden’s proposal was scaled down to four weeks instead of 12 to reduce costs, and it suggested higher taxes on companies and wealthy individuals to pay for it.

Treating all types of paid leave the same could engender a broad coalition of support. It would allow leave to be accessible for all workers, not just those with children, and it would fit within the existing unpaid leave framework of the FMLA. But such an approach risks significant business interruption, as paid leave can be used for intermittent periods and workers could theoretically access leave every year. Additionally, a universal benefit is likely to crowd out policies that companies already provide, and it goes beyond most of the state-based paid leave offerings and most private policies, which tend to average six weeks in duration.

The FAMILY Act is also expensive, adding a new taxpayer burden upward of $100 billion annually by some estimates. And it is funded by payroll taxes, which are regressive and place a disproportionate burden on low-wage workers relative to other funding streams.²²

A Paid Parental Leave Policy Paid for by Increased Flexibility of Existing Government Benefits and Tax Credits. Other legislators have tended to focus on parental leave only, funded by parents trading out other government benefits and tax credits. For example, bipartisan legislation introduced in 2019 by Sens. Bill Cassidy (R-LA) and Kyrsten Sinema (D-AZ) and Reps. Elise Stefanik (R-NY) and Colin Allred (D-TX) would have allowed parents to advance $5,000 of future child tax credit (CTC) payments at the birth of a new child. This has a small price tag and increasing flexibility for people to access existing government benefits when they need them the most. This kind of program could also be compulsory, so people would not be required to pay taxes to a new system from which they may never benefit. It also would accrue to working and stay-at-home parents alike.

However, as an inescapable aspect of a broad credit, there is no guarantee the money would be spent on children at all. Further, little to no research suggests that additional family supports outside of a formal paid leave benefit have led to substantially more families taking time away from work after the birth of a new child. The “advance CTC” approach could fail to accrue more benefits to families for the purpose of paid parental leave.

This approach would also do little to address the relative imbalance of federal safety-net dollars against children, with an already outsize share of resources increasingly directed to adults over age 65. This lopsided generational spending, in addition to the debt burden inherited by future generations to pay for it, is unsustainable and economically inefficient. It’s well-documented that spending early in the life cycle has the greatest return on investment, as research by James Heckman and Dimitriy Masterov has shown.²³

Another example of repurposing existing funds for paid parental leave comes from the Child Rearing and Development Leave Empowerment Act, sponsored by Sens. Joni Ernst (R-IA) and Mike Lee (R-UT), which would allow a parent to pull forward Social Security benefits during their child’s first year of life. Similar to increasing flexibility around CTC payments, this opt-in system would be largely budget neutral over the long term. However, the Social Security program already faces substantial financial challenges of its own, and opponents argue that there’s something unfair about making women choose between taking benefits after the birth of a child and receiving support during old age when the need might exist for both. A litmus test for entitlement reform should be that it strengthens or at least does not make worse the solvency of existing programs and that it does not reduce need-based benefits.

Encouraging the Private Sector to Provide Paid Leave Policies Through Tax Incentives. Other legislators have focused on expanding the private sector’s offering of paid leave. For example, bipartisan legislation by Sens. Deb Fischer (R-NE) and Angus King (I-ME) included in the 2017 tax legislation provided tax credits for companies offering paid family leave. Employers could receive up to a 25 percent replacement for providing up to 12 weeks of paid family leave. To minimize the risk of rewarding companies that already provide paid leave, the policy was targeted to companies that extended paid leave to employees who did not previously have access to this benefit and were making under $72,000 per year, the least likely to have paid leave benefits. However, it is unclear to what extent this has increased access to leave-taking, as companies would still be footing a substantial portion of the bill.

Alternatively, companies simply could be mandated to provide some level of paid leave. Public polling on paid leave indicates that this is what most Americans support—companies, not the government, footing the bill for paid leave.²⁴ This would come at zero cost to taxpayers, which, like raising the minimum wage, may make it appealing for policymakers.

But there are other large potential costs, such as significant business costs to cover absent employees, which would be most burdensome for small businesses that lack a broad workforce to smooth out costs, and higher consumer costs if prices rise to cover increased business costs. These mandates could also lead to discrimination against workers expected to use the policy, particularly women in their childbearing years, which could reduce labor force attachment for women. For these reasons, employer mandates receive little support among scholars and policymakers.

A Way Forward

The wide range of paid leave reform proposals put forward in recent years suggests an energy around paid leave reform in the near future. At a minimum, this should be a reason for conservatives to engage to help shape what reform looks like instead of being on the sidelines of the conversation.

But a key element has been missing from the previous attempts to close the gaps in paid parental leave outlined earlier. That’s situating paid parental leave upon the birth of a child as integral to our social contract, embodied in a sustainable and comprehensive system of benefits, instead of a stand-alone benefit or perk. Viewed in this way, paid parental leave is not just one more thing to be taken on by Washington, but a key component to modernizing our social contract for the 21st century and making it more effective and sustainable for the next generation.

Conservative policymakers have a fresh opportunity to move sensible paid leave reform forward in the US. The foundation should be a federal baseline of support for new parents—available to all workers—covering at a minimum six to eight weeks of lost wages following childbirth or adoption, before which a woman likely has not recovered from birth nor would an infant be accepted at a childcare center. This is where the largest gap in private-sector benefits exists and where the evidence is strongest on economic and health benefits. But it should be treated as part of a larger overhaul of existing benefits, including old-age and health care entitlements, instead of simply rearranging the deck chairs on what we already spend on children, already a rapidly shrinking part of the federal budget.

In practice, Congress could design a paid parental leave policy in multiple ways. As discussed earlier,²⁵ providing families the option to front-load CTC payments is good policy and should be done irrespective of whether such flexibility is officially considered paid leave. Ideally, instead of cutting CTC benefits for those families later in the child’s life—when there are still innumerable child-related expenses—the funding should come from a broader overhaul in our spending portfolio and not from the limited and declining relative sum earmarked for children.

If paid leave benefits were provided through Social Security, ideally this would be done as a broader overhaul of entitlement benefits instead of simply added onto the existing bankrupt system or making a parent trade out retirement benefits to stay home with their infant. As I proposed in a National Affairs essay titled “Beyond Growth,”²⁶ means-testing Social Security benefits would help restore fiscal balance, and a sliver of the savings could be used to offer parental leave benefits. In Chapter 6 in this volume, Andrew G. Biggs proposes substantial reforms to the Social Security program to address its solvency problems, a portion of which could be used to fund six to eight weeks of parental leave.

Without change, future generations will have less economic opportunity than their parents did because of the debt and bankruptcy of existing programs. Parents are currently asking their children to pay for their benefits—and opposing any small changes to them—with the full knowledge that such programs will not exist for their children. Meanwhile, parents watch their children struggle to balance work and family life in an increasingly competitive economy. As Biggs proposes, an overhaul of Social Security, such as means-testing benefits, would restore their fiscal solvency and modernize benefits for today’s labor force.

Another option is to create a stand-alone paid parental leave program at the federal level that is not tied to reducing a parent’s benefits elsewhere. Such a plan could also take the form of Sen. Mitt Romney’s (R-UT) proposal to allow pregnant workers to receive an additional year of CTC payment, without drawing from future CTC benefits. The Trump administration proposed a six-week paid parental leave program, funded by payroll taxes and reduction of fraud and waste in the unemployment insurance system. The AEI-Brookings Working Group on Paid Family Leave proposed an eight-week federal paid parental leave benefit, funded by a combination of payroll taxes and repurposed government spending.²⁷ Or a paid leave policy could simply be a new lump-sum benefit—an “infant bonding birthright”—that parents could register to receive at the hospital following the birth of their child while they submit paperwork for their child’s Social Security card and birth certificate.

In all these approaches, the cost is minimal relative to other federal programs. My back-of-the-envelope calculation for a lump-sum benefit, equivalent to six weeks of full-time minimum wage work (which would be $1,740 per parent), with 3.6 million babies born in the US, is that it would cost roughly $6 billion if the take-up rate were 100 percent, a standard never met in benefit programs. If both parents were eligible, the cost would be somewhere less than double that (almost certainly not reaching $10 billion), given the one-third of households headed by single parents.

More formal cost estimates for a paid parental leave program conducted by the AEI-Brookings Working Group on Paid Family Leave found that a six- to eight-week paid parental leave program with 70 percent wage replacement would cost between $3.5 billion and $11 billion annually, depending on participation. For perspective, this is less than 0.5 percent of the cost of federal entitlements each year.²⁸

Importantly for fiscal hawks, a natural safeguard prevents paid parental leave from becoming a spiraling new entitlement: Birth is by nature a limited occurrence, happening less than twice in a person’s life on average. Further, birth is a well-documented event and thus is not subject to widespread fraud or subjective medical diagnoses.

Regardless of the policy pathway taken, remaining questions need to be answered. The most pressing challenge is the 40 percent of Americans who currently lack job protection following the birth or adoption of a child, who are arguably some of the most disadvantaged workers. Resources to provide pay for periods of leave—whether from advance CTC payments, Social Security benefits, or a newly created benefit—are helpful. But the effects of these benefits would be most helpful if accompanied by job protection and a broader reshaping of social norms wherein American parents do not feel discouraged against taking leave following the birth of a child.

Without job protections and a changing norm around leave-taking, even with increased resources, workers may still hesitate to take advantage of leave. It is worth exploring an extension of the FMLA to cover these excluded workers for a shorter duration and more limited use, perhaps six weeks following birth, which is a materially different burden than small businesses providing the full three months of leave for a broad range of uses. A deeper cultural question about the value of family and life must emanate locally, from the bottom up, in accompaniment with any successful federal policy. Companies, churches, and communities must work to establish the norm that parents and children should spend the first weeks of life together to complement federal policy change.²⁹

Conclusion

Conservatives have the opportunity to lead on paid parental leave as part of a broader package to shore up the country’s finances and maintain a strong social contract for the 21st century. For social conservatives, paid parental leave has well-documented pro-life and pro-family benefits, including reduced neonatal fatalities and the protection of and investment in families, which are the foundation of social capital and society. This is especially crucial in a post-Roe landscape. For those concerned about America’s growth trajectory, significant pro-work, pro-growth benefits accrue from providing parents with more choices for blending work and family, which is a much-needed priority given our international lagging labor force participation and aging workforce, as workforce attachment is the foundation of upward mobility. And for those concerned about our rapidly deteriorating budgetary outlook, even a generous paid parental leave policy is far from a budget leviathan. It can be paid for, at least largely, out of existing spending, and it could be a needed salve to accompany necessary yet uncomfortable fiscal reforms at a relatively small cost.

It should be the birthright of all American children to spend their first weeks of life with their mother and father without their parents experiencing unnecessary financial or employment-related stress. This is where America’s social contract begins.