Subsidize Motherhood, not Apple Pie

During the Democratic Primary, the question of paid family leave got a moment in the sun. Bernie Sanders cited Denmark as his model and Hillary, the smart kid who does her debate prep, insisted that “we are not Denmark” before proceeding to recall her trials as a working mom endorsing Denmark. We spend billions subsidizing sugar, in Apple Pie and elsewhere. Should we subsidize motherhood instead?

There is a good case for paying moms.  Raising babies ain’t ping pong. Since babies are pure positive externality — we all get the benefits without paying the cost. Sugar is the reverse, so perhaps we need to tax Apple Pie in order to subsidize mothers.

During the Clinton years, the Labor Department fought for and eventually passed the Family and Medical Leave Act (FMLA) in 1993. Bob Reich gets a lot of credit for making it a serious priority. The FMLA guarantees at least 12 weeks unpaid maternity leave to new mothers in companies with 50 or more employees. Half of all states have supplemented the FMLA by lowering the firm-size threshold to as few as 10 employees (14 states) or allowing longer absences (7 states). This is protected leave — time that an employer must accommodate unpaid leave.

Some states have enacted paid leave programs. California, New Jersey and Washington operate programs that require employers to pay employees who utilize maternity leave at partial replacement rates. Three other states and the District of Columbia guarantee mothers paid maternity leave through disability Insurance provisions.

Compared with other modern countries, the US is hostile to mothers, as Sanders pointed out before Clinton scolded him for his Danish ways. The rest of the world welcomes new babies by giving their mothers some paid time away from work. Only the US doesn’t.

Conservative economists have two worries about family leave programs — and one looks valid. Notice that the graph segments into countries that allow about a year off and those at allow two or more years. Most of the countries allowing more than 150 weeks leave suffer from low female labor participation rates. Women, like anyone else, will choose not to work if you pay them enough.

Some conservatives also worry that paid leave somehow undermines family formation. It’s an odd argument, since most conservative economists think that incentives matter and it is not clear how a public incentive to form a family would end up wrecking families. Academic research into welfare support for mothers works concludes pretty forcefully that it improves family formation by increasing both marriage and fertility, which are both declining in the US. Parental leave is also associated with increased divorce, although one can question whether public policy should attempt to hold a marriage together so weak that it dissolves in the face of maternal leave.

Bottom line: Americans can and should do more to support mothers. Where should our policy fit on the above chart? In my view,
right around Denmark.