Thursday, November 19, 2015

Economics of Paid Family Leave

The issue of paid family medical leave is bubbling up as it becomes a talking point with some of the presidential candidates. Social media is abuzz with
various groups pushing for legislation which will require a business to provide paid family medical leave, most notably, following the birth of a child.

Sounds noble, doesn't it?

But like all other mandates, it comes with a cost.

If businesses, large and small, are required to provide even 3 months of paid leave consider the cost of such a measure.

While the woman (and her spouse) are home taking care of their newborn and collecting a paycheck, what is going on at work?

At least two, and possibly four, people are being paid during the family leave. The work load has to be absorbed by someone. Either other workers (not on leave) are performing their own jobs but also picking up the slack. Some of them may be paid overtime.

Some jobs are so unique the company has to hire a temp to take the place.

There is a cost to that, and that cost is passed along in the form of higher prices.

Advocates say the U.S. is the only industrialized country that does not provide paid family leave.

I suppose those countries would the ones with a socialized form of government that are currently on the verge of bankruptcy.

Others talk about companies in the U.S. that currently provide paid family leave. Companies like Nestle', Amazon, Google and so forth. Those are big companies that made a conscious decision to voluntarily offer paid family leave. No one forced them to offer this benefit.

Fortune 500 companies employ roughly 20% of the total workforce.

That leaves 80% of the working population employed by smaller companies.

One of the problems with government mandates is they fail to take into account the consequences of new rules.

Obamacare has consequences.

Raising the minimum wage to $15 has consequences.

The same will be true if DC requires paid family leave.

All this begs the question. How have we made it this far as a country without paid family leave? What did generations before us do?

My guess is they planned and saved for the event. That is called personal responsibility.

What a novel idea.


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