Dive Brief:
- The paid parental leave plan couched in President Donald Trump's proposed budget is a first for Republican administrations, but is unlikely to pass as is, according to a joint report from the American Enterprise Institute (AEI) and the Brookings Institution. The plan calls for six weeks of paid leave for parents after childbirth or an adoption, and is projected to cost $20 billion over 10 years.
- According to Brookings, Trump's paid parental leave proposal finally unites Republicans and Democrats around a single issue, even though there's conflict about the specifics: How the plan would be funded; how much time off should be granted; whether the plan should cover only low-wage earners (the Republicans' preference) or cover all workers (which Democrats favor); and how strict eligibility rules should be.
- AEI and Brookings have authored their own version of a paid parental leave policy that the report says would satisfy bipartisan prerequisites. This version would grant 70% wage replacement capped at $600 per week for eight weeks, and would be open to mothers and fathers. A combination of payroll taxes, spending reductions and tax spending cuts would fund the plan.
Dive Insight:
Paid parental leave policy are invaluable to working parents who need time off but can't afford to forego a paycheck. Such benefits are coveted by employers who realize paid leave's value for attracting and retaining talent. Janet Yellen, Chair of the Federal Reserve, even suggested that paid leave (along with other family-friendly policies) promotes economic growth.
As such, several companies, states and municipalities already have their own paid parental leave legislation, pressuring Congress to weight in. There's also considerable public support — 83% of Democrats and 71% of Republicans favor paid parental leave, according to Brookings. Plus, over a third (38%) of employers offering the benefit, according to a WorldatWork report.
And even though a Congressional seal of approval on paid family leave would apparently be a huge victory in the eyes of these and other groups, the devil is in the details for influential interest groups (namely business advocates). Anything that holds businesses accountable for additional taxes is likely to be fought.
The hypothetical bipartisan plan put forth by Brookings and AEI would in theory allay some of those concerns. Of course, payroll taxes on employees are likely to draw grumbles from yet other corners. Somebody's got to pay for paid leave. Employers who have the financial bandwidth to do so have been increasingly open about their paid leave policies, but small employers and part-time heavy businesses are a different story.
