Request for Information

Date: January 8, 2024

To: Senator Cassidy, Senator Gillibrand, Representative Bice, and Representative Houlahan From: Abby McCloskey, McCloskey Policy LLC

Subject: A bipartisan path forward for paid parental leave

I want to express my deep gratitude for your engagement and dedication to widening paid leave access. I believe that there is a bipartisan path forward that increases paid leave access in meaningful ways and that improves the culture for American families while minimizing fiscal and business burdens. Specifically, I believe that there should be a universal, paid parental leave program at the federal level for at least six weeks, available to both parents and funded out of existing spending.

By way of background, I am the mother of three young children. I have dedicated my professional life to improving America’s family policy and advancing paid leave in particular. Currently, I direct the cross-partisan, cross-sector Convergence Collaborative on Supports for Working Families as recently featured in the New York Times. Paid leave is a primary area of our bipartisan exploration. Previously, I was the economic policy director at the American Enterprise Institute, a member of the AEI-Brookings Working Group on Paid Leave in 2017-2019, presidential policy director for Governor Rick Perry ‘16 and Howard Schultz ‘20, and a Senate staffer.

I will take each of the questions in turn and am happy to answer any further questions. These answers are my personal opinion and not representative of my clients.

1. What should the federal role be, if any, in providing, promoting, and/or incentivizing paid leave? And how should this interact with the role of state government programs, and/or employer programs?

I believe that there is a federal role to provide paid leave, starting with paid leave for parents with newborns or adopted children. A federal policy should provide a baseline level of economic support and job protection upon which state, localities, the private sector, or philanthropy can build upon. The reason for a federal baseline is simple: an infant’s ability to securely bond with his or her parents should not be dependent on their parents’ employer, wage level, access to philanthropic giving, or the state in which their parents live.

I understand that many people would prefer the government not be the main provider of any type of paid leave, citing recent growth in paid leave provision by employers and states. But despite recent growth, paid family leave provision from employers or states remains the exception not the rule. Fewer than one in four civilian workers had access to defined paid family leave in 2021, according to the Bureau of Labor Statistics. Only 12 percent of workers in the lowest wage

quartile have access to paid family leave of any duration from their employers. In contrast, other types of leave are more widely available: In 2021, nearly 90 percent of full-time workers (86 percent) had paid sick leave from their employers, and almost half of full-time employees had access to employer-provided temporary disability insurance or medical leave.

To be sure, workers often use sick days, vacation days, and other types of personal leave to provide paid time off for family or medical-related events. However, nearly four in 10 workers report that they received no pay upon taking such leave, according to Pew Research. This helps explain why, according to the oft-cited Abt Associates survey, one in four previously working mothers return to work within two weeks of giving birth. 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.

A patchwork of paid leave access permeates existing government programs as well. A dozen states have formal paid family leave policies; however, 38 states do not. At the federal level, the creation of 12 weeks of paid parental leave as part of the FY 2020 National Defense Authorization Act is dependent on the parent being a federal employee, which is hardly within the affected infant’s purview. Access to unpaid leave is also uneven, with 40 percent of workers excluded from FMLA’s job protection due to exemptions. This means that in addition to not being paid, a low-income new mother may not have job protection following her child’s birth.

Unfortunately, well-intentioned federal efforts to promote business offerings of paid leave, such as tax credits for companies, have been understudied or not particularly effective. 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.

To be sure, 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. 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.

2. What types of leave should a potential federal program cover, at what length, and why? How should different types of leave be prioritized? Should different types of leave be treated differently or does doing so create adverse effects?

I believe there should be a universal, paid parental leave program at the federal level for at least six weeks available to each parent, and ideally longer. A six week duration should be the floor for any policy because of: (1) the fragility of the early weeks for infant and birthing parent, (2)

most child care providers will not accept an infant under six weeks of age, (3) six weeks is when new mothers go in for their post-birth check-up, and (4) six weeks for married households brings the leave duration up to 12 weeks in alignment with FMLA.

I believe there could be bipartisan consensus for a longer duration of paid leave, such as eight to twelve weeks per parent, and that this would be even more beneficial for families without “breaking the bank” so to speak, since the leave would only apply to parents and birth is a limited (increasingly so) event. For example, the 2017 AEI-Brookings bipartisan working group of economists (of which I was a member) recommended 8 weeks for paid parental leave. The 2023 Convergence Collaborative on Supports for Working Families that I lead, whose members include a cross-section of some of the most progressive and the most conservative leaders and advocates in the country, will recommend 12 weeks for paid parental leave. The Convergence report will be released in February 2024.

Another approach, as is the case with most European countries, could be to separate out different lengths for the mother to recognize the need for physical healing in addition to bonding; say 12 weeks for mothers and 3 weeks for fathers. Across the OECD in 2023, the average maternity leave was 18.5 weeks and the average paternity leave was 2.3 weeks, if the countries offer paternity leave at all, which nine countries do not. In America, there are some concerns that this approach would result in more discrimination against women. (Similar discrimination concerns surround the separation of paid parental leave from a broader leave package in that the availability of paid leave only for parents would lead to discrimination against people of child bearing age relative to a policy that anyone could take advantage of). I tend to believe that these concerns are overblown. Rightly or wrongly, the assumption that mothers will take more leave tends to be correct. Internationally, even when there are incentives for fathers to take parental leave, fathers continue to take less leave than mothers. Perhaps the larger concern in my mind of this approach is that different leave lengths for the mother versus the father reduce the benefits to married couples relative to more equal periods of leave, as will be discussed later on. Additionally, there are benefits to both parents being present in the early weeks of a child’s life, including father involvement in the child’s life and improved health outcomes for mothers. However, I am not against this approach in principle.

The reasons to separate out parental leave from other types of leave, including family and medical leave, are numerous. Question 3 will address the political reasons and potential for bipartisan consensus, but here I’ll address the academic reasons: the vast majority of the academic literature highlighting the socioeconomic benefits of paid leave is specific to parents and infants, full stop. There is, quite simply, nothing close to compatibility in the amount of research or findings of benefits for other types of family or medical leave. This is ultimately why the 2017 AEI-Brookings Working Group I was part of addressed paid parental leave as a

stand-alone policy. Internationally too, 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. 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, as will be further addressed in Question 6. Short periods of paid leave have been found to boost work and wages for mothers by as much as 10 percent, significantly increasing their economic opportunity and even reducing reliance on other government benefits such as food stamps, while helping to improve the health outcomes of children and parents. 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. 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. 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. 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. A recent study found that accessing paid leave decreased employment and earnings for new California mothers six to 10 years after childbirth. This could be perceived negatively from an economic perspective, but it also could reflect parents having increased choices for work and spending time with children. I tend to believe that the latter is a positive development and why federal policies should not consider economic impacts alone. Less professional upward mobility and other negative professional impacts tend to occur with lengths of leave that are 6 months or longer; well outside the scope of what is being discussed by either political party in America in 2024. 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.

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.

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. As such, policymakers should prioritize paid leave for new parents and pursue it as a stand-alone policy.

3. Please describe your recommended framework/s, focusing on what you believe could be a bipartisan and passable solution/s to expanding paid leave nationally?

As a nation, we decided long ago that all American children irrespective of their circumstances deserved to be educated. We decided that the aged and frail deserve economic and healthcare support. We decided that there should be programs in place for our impoverished citizens. It is time for America to protect its most vulnerable population of all: infants. Paid parental leave upon the birth of a child should be integral to our social contract, embodied in a sustainable and comprehensive system of benefits, instead of a stand-alone benefit or perk.

The issue of protecting parents with newborns is politically pressing in 2024 with: (1) the rise of infant and maternal mortality rates in the U.S. for the first time in modern history, (2) the rollback in abortion access because of the Supreme Court decision overturning Roe v. Wade, resulting in more babies being born into potentially unstable and financially insecure households that quite literally cannot afford to bond; and (3) the fertility rate in the U.S. dropping below replacement, a source of concern across the political spectrum, (4) the reality that most parents of young children work and yet, as previously mentioned, do not have access to paid and protected time off after birth or adoption.

Moreover, few if any other issues generate such significant bipartisan support across the political spectrum. For example, a recent IFS/EPPC YouGov poll that shows that taking care of new moms and dads has wide support, including among 62% of Republicans. And as previously mentioned, my work in the cross-partisan, cross-sector Convergence Collaborative found support for paid leave for new parents from members ranging from Heritage to the Center for American Progress. It is also where the wide ideological range of economists who were part of the AEI-Brookings Working Group in 2017-2019 - including legendary economists Doug Holtz Eakin, Betsey Stevenson, Heather Boushey, and others found agreement.

In practice, Congress could design a paid parental leave policy in multiple ways:

a. Child Tax Credit & FMLA modernization. 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 provides increased 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, which has been a sticking point among some conservatives, (although I’ll point out that stay-at-home parents are

already able to spend time with their newborns; it’s working parents who face this unique barrier).

In my opinion, 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. Policymakers could also restructure the CTC so that more money accrues to families in the early years, which might be more administratively straight-forward. Currently, families receiving the full credit can claim $2,000 a year for each child ages 0-17, or $32,000 in total. CTC could be reformed so that families receive $5,000 a year for each child ages 0-4 ($25,000 total) and $500 a year thereafter until age 17 ($6,000 total), which would be the same cost and yet frontload benefits for families when they need the support the most. Please see Question 4 for more possibilities for reform.

However, CTC reform as a paid-leave solution is not without downsides. 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 has led to substantially more families taking time away from work after the birth of a new child (and thus reaping the aforementioned benefits of paid leave). Therefore, if CTC is used as part of the paid leave solution for new parents, it should be accompanied by a reform of FMLA so that more parents could actually take protected time off of work.

Currently, FMLA excludes nearly 40 percent of workers due to restrictions on employer size and job tenure. Resources to provide pay for periods of leave—whether from advance CTC payments or a pregnancy CTC or a lump sum cash benefit—are helpful, but obviously would be most helpful if accompanied by job protection and a broader social norm wherein American parents take leave following the birth of a child. For years, Democrats have introduced FMLA modernization legislation in a push for its protections to cover nearly all workers, such as the recent Job Protection Act by Reps. Tina Smith and Lauren Underwood. But this overlooks why such exemptions were included to begin with—which was to protect businesses from having to hold a job for months for someone who just started working there and to limit the burden on small businesses that come with all employees entitled to up to three months of leave for a wide variety of reasons—and so is likely to face pushback.

A bipartisan coalition could pair a cash benefit to new parents with an extension of FMLA for a shorter duration and more limited uses, such as six weeks following the birth or adoption of a child, which could be applicable to businesses of any size and for workers who’ve been with that employer for at least three months. While it is understandable that small businesses might be concerned about complying with a broad 12-week job protection mandate that could be used for a wide variety of purposes—intermittently and annually—it would be much harder for them to argue that nearly half of new parents aren’t entitled to any job protection at all, as is the case with the status quo. Birth is by its very nature a limited occurrence, leave tends to be taken all at once, instead of broken out, and there is little fraud associated with it. Are businesses going to advocate to maintain their right to fire a new mother if she doesn’t return to

work the week following birth? Moreover, the government funding this child-related benefit would reduce pressure on small businesses having to do so themselves.

Another consideration for front-loading CTC is that this approach would also do little to address the relative imbalance of federal safety-net dollars against children, with an already outsized 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. This is why some have turned to entitlements for the funding and administration, which is where I’ll now focus.

b. Social Security reform. 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.

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,” means-testing Social Security benefits would help restore fiscal balance, and a sliver of the savings could be used to offer parental leave benefits.

c. Stand-alone paid parental leave program. My preferred approach would be to create a stand-alone paid parental leave program at the federal level that is not tied to reducing a parent’s benefits elsewhere. I first proposed a version of this plan in National Affairs in 2014. At the time, it was an anathema to conservatives but times have changed. In 2017, 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 latter an unlikely pay-for). It was the first administration to include paid leave in the White House Budget. The AEI-Brookings Working Group on Paid Family Leave in 2017 proposed an eight-week federal paid parental leave benefit, funded by a combination of payroll taxes and repurposed government spending. Former Republican VP candidate and Speaker of the House Paul Ryan included a chapter on paid leave in his new book on revising the social contract.

Practically, the federal government could provide states with the funds to administer their own programs, enough to cover 6 weeks of paid leave for all new parents, with states able to top off their programs with additional resources. This could be administered as an

entirely new program or through an existing one. For example, unemployment insurance (UI) is naturally suited as a potential administration mechanism and has been considered dating back to Clinton’s proposal for “baby UI.’ Consider that UI is designed to deliver

temporary benefits to those out of work for short periods who have an expectation of re-employment, just as paid family leave delivers temporary benefits to new parents who expect to eventually return to work. The hybrid federal–state model of UI allows for considerable state flexibility in determining benefit levels, instead of a one-size-fits-all federal approach. This makes it an especially appealing match for paid leave, given that benefit and taxation levels vary widely across the patchwork of existing state paid-leave programs.

The Disaster Unemployment Insurance program, which “provides federally funded unemployment benefits to individuals unable to work as a result of a federally declared major disaster and otherwise ineligible for regular UC benefits,” is also a useful analog, as a federal benefit that runs largely independent of and parallel to state systems. By comparison, benefits that flow through the Social Security Administration such as disability insurance and old-age payments are delivered over the long-term without an expectation of returning to work and thus the administration for paid parental leave is less comparable, at least in this regard.

An alternative approach to 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. This would be similar to the CTC proposal above. However, the case for tying the payment to leave-taking as opposed to a lump sum is to help there be a cultural change that it is the “norm” to take time away from work when you have a new child.

4. Please describe alternative ways any proposed framework can be financed, including possible pay-fors. What financial mechanisms should be considered to expand paid leave?

I am wary of a new government program or additional government spending. Similarly, I do not want to levy higher payroll taxes, which reduce take-home pay at a time when so many Americans already struggle to make ends meet. But a modest paid parental leave program could be paid for by cuts to existing spending instead of new taxes or mandates – keeping the size of government exactly the same.

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, included in the 2018 AEI-Brookings Working Group on Paid Family Leave (the second of the two reports) found that

an eight-week paid parental leave program with 70 percent wage replacement would cost between $3.5 billion and $11 billion annually, depending on participation rates and other underlying assumptions. For perspective, this is around 0.5 - 1 percent of the cost of federal entitlements each year. 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.

A paid-parental-leave program - averaging $10 billion - could easily be paid for out of repurposed general spending, eliminating the need for tax increases, while delivering support to vulnerable new parents without strings attached (such as reducing retirement benefits later in life) that might unnecessarily discourage its use. There are multiple options for this:

a. Funded out of existing spending. Consider that the Tax Foundation estimated that the doubling of the estate-and-gift tax exemption included in the Tax Cuts and Jobs Act of 2017 will cost $72 billion from 2018–2027. The mortgage–interest deduction, 90 percent of the beneficiaries of which are households earning more than $100,000 a year, is expected to cost $597 billion from 2019–2028. Either total would be enough to cover a parental-leave program

b. Included as part of a bipartisan, fiscal reform package. My preferred approach would be to include paid parental leave as part of broader fiscal reform, which is urgently needed. At the end of 2023, the federal debt is essentially the size (98%) of the entire U.S. economy, meaning that if the economy was liquidated, only then could outstanding debt obligations be paid.The fiscal crisis was exacerbated by pandemic-era payments, but the underlying growth has almost exclusively been driven by old-age entitlements and interest payments as the American society ages. The ever-larger share of federal tax revenues devoted to old-age benefits and interest payments is crowding out room for productive investments — such as education and infrastructure — and reducing the nation's latitude to deal with future crises ranging from wars to financial meltdowns. Despite taking up a larger share of the federal budget, entitlement programs themselves — Social Security, including Social Security Disability Insurance (SSDI), and Medicare — will soon be insolvent, compromising benefits for those who depend on them in their poverty, illness, and old age. Social Security’s insolvency date is less than a decade away, at which point benefits will be reduced across-the-board by 26% or the dedicated taxes will be raised by 40%.

The country needs a new vision for government spending that not only restores fiscal balance, but that modernizes benefits for the next generation. For example, even if the current entitlement system were made more financially sound, it would still not offer much to workers in prime-earning years who face unexpected and costly medical conditions or prolonged periods without an income; it largely is a system for the elderly. While a worker can pay in and receive indefinite weeks of Social Security benefits after retirement, there is no system that a worker can pay into and receive benefits after the birth of a child.

There is a strong case that providing a minimum level of support for new parents should qualify as a basic element of the safety net, providing Social Security benefits to millionaires might not. Additionally, budget reform should include reorienting benefits towards the young. Currently the federal government spends $6 on adults over the age of 65 for every $1 it spends on children under the age 18. Minimal investment in children and their parents, combined with the large and looming debt burden, is a raw deal for younger generations. Budget reform should increase intergenerational equity in the budget and invest more in caring for young children.

c. Included as part of 2025 tax reform. In 2025, Congress will be renegotiating the 2017 tax legislation. Rather than re-upping CTC at its current levels, or letting the extension expire completely (which Republicans are unlikely to do, in particular if President Trump is in office), there is a way to reform the CTC to make room for a paid parental leave policy, while delivering more CTC benefits to families with young children than was the case even during the pandemic. This can be done by increasing the CTC up to $5,000 each year for children ages 0-2, reverting to $2,000 each year for each child ages 3-5 (current levels), and $1,000 each year thereafter up to current limits (pre-2017 levels).

According to the Committee for a Responsible Federal Budget’s publicly available CTC calculator, this approach saves nearly $75 billion relative to the extension of existing policy, costing $439 billion versus $514 billion between FY2024-3033. This could pay for paid parental leave, especially if you income test at the higher end. I do support a more progressive phase-in as well. If policymakers pay out this benefit monthly when kids are young - as was the case in the temporary CTC pandemic expansion - that is more than $400 a month, more than families were getting even during the pandemic, while spending less money than the status quo.

5. How can proposed paid leave frameworks avoid creating unintended distortions, such as marriage penalties, reductions of private sector paid leave coverage, etc.?

First, declining marriage rates are cause for national concern for the impact on children in particular. Policymakers should be doing all they can to reduce or eliminate the marriage penalties throughout our tax and transfer programs. However, paid parental leave is a unique federal policy in that it explicitly rewards two-parent households, since both parents would have access to leave. In the case of a federal, universal six week parental leave plan, a married household would be able to claim 12 weeks of paid time off with sufficient workforce participation, relative to a household with only one earner who could claim a maximum of 6 weeks.

Conservatives may be inclined to only offer a paid parental leave plan for the mother or to dramatically shorten the length of eligible leave for the other parent. However, this reduces the marriage benefit from the paid leave policy. Additionally, the non-birthing parent’s access to paid leave is the primary benefit for stay-at-home parents, which policymakers should keep in mind. The marriage boost from the policy is largest if both parents can claim an equal duration of paid leave. While this is unlikely to materially impact marriage rates, it does send a signal of the value of two-parent households.

Second, employers dropping their paid leave programs for a federal program is a real concern. The crowd-out effects are likely to increase with the duration and size of the public benefit offered, if the public option surpasses private ones. This speaks to the importance of having a limited federal policy, where the amount of the benefits is set low enough, and the duration short enough, that it functions as a floor, not a ceiling.

While there is little evidence from the existing state-based programs that there are negative employer effects, this is an area that needs further research. This could be because, unlike sick leave, companies that offer paid parental leave are in the minority so there is relatively little to crowd out. Moreover, the length of the longest running paid family leave in state-run programs has been short (four to six weeks). While New York and other states have passed laws to have 12 weeks of paid family leave, these programs have not been running for as long and thus the employer effects are less certain. That said, early evidence shows minimal disruption from 12 weeks of paid family leave and even some benefits to small and mid-sized employers.

6. Should government support for paid leave be focused only on the most vulnerable individuals in our society, or on all Americans regardless of means or need?

I believe that a paid leave policy should be universal for three reasons: (1) to avoid benefit cliffs, (2) administrative ease, and (3) to create a norm around leave-taking following birth or adoption of a child. Additionally, I am supportive of a progressive wage replacement rate, and I believe that even within a universal program, it is vulnerable individuals who have the most to gain from a public paid leave program.

As I wrote in my 2020 AEI paper with Angela Rachidi and Peyton Roth “Designing Paid Leave Policy to Benefit Low Income Workers,” it is widely established that lower-wage workers start from a lower baseline of paid parental leave access compared to their higher-income counterparts. They also have lower personal financial savings and less access to even unpaid leave access. This is why a public plan tends to disproportionately benefit these individuals. As cited in that report, more than 20 percent of bonding female claimants in California’s paid family leave program had incomes in the lowest two brackets (below $24,000 per year), and the majority of female claimants (60%) had incomes below $48,000.

Economists Rossin-Slater, Ruhm, and Waldfogel explored how California’s paid leave law affected leave taking for various sub-groups using data from the US Census Bureau’s Current Population Survey. They found that certain demographic groups with greater likelihood to experience economic disadvantage, such as unmarried mothers, mothers with a high school education or less, and non-White mothers, experienced the largest gains in leave taking after California’s paid leave law was implemented. Moreover, the socio-emotional benefits of paid leave have been particularly pronounced among low-income populations. For example, the largest increases in breastfeeding rates and duration were seen among low-income parents in California after the implementation of the public paid leave program. Additionally, researchers have found that low-income mothers saw greater increases in their self-reported mental health and their ability to cope with the day-to-day tasks of parenting after accessing paid leave than higher-income mothers.

To be sure, the most vulnerable populations might have difficulty accessing the paid leave program and tend to be impacted the most by regressive payroll taxes. This has been a topic of discussion on the political right in particular. However, this is not a reason for not having a paid leave program. Rather, these are reasons to help lower-income populations access such a program and to explore alternative funding possibilities other than payroll taxes, as were identified in Question 4.. A public advertisement campaign, communications to local leadership and faith-based organizations and crisis pregnancy centers, and other methods of marketing could also be considered. For example, the paperwork for enrollment in paid leave programs could be made available to families at hospitals upon the birth of a child, in the same way that Social Security, birth certificate, and child support paperwork is.

7. What supports do small and mid-sized businesses need from the federal government to provide paid leave to workers?

In many ways, a public plan is the least expensive way to provide paid leave from a business perspective, especially for small and mid-sized companies. A public paid parental leave program reduces financial pressure on small businesses of having to provide such policies themselves and could help to level the playing field with larger companies.

However, public paid leave still imposes costs on employers. The cost is not funding the benefit, but of replacing the worker while they are on leave. To be sure, it is understandable that small businesses might be concerned about complying with a broad 12-week job protection mandate that could be used for a wide variety of purposes—intermittently and annually—creating numerous and varied absences. However it would be much harder for employers to argue that nearly half of new parents aren’t entitled to any job protection at all, as is the case with the status quo. Are businesses able to advocate in good faith to maintain their right to fire a new mother if she doesn’t return to work the week following birth? This seems unlikely.

I believe that lead-time from pregnancy to birth, the limited occurrence of birth, the lack of fraud, and that leave tends to be taken all at once instead of broken out, is of minimal disruption to employers. All firms except the smallest of the small should be invested in their workforce enough to allow their employees to bond with their new children after birth.

8. What does research say about the impact of providing paid leave on worker health, job satisfaction, economic mobility, child development, breastfeeding rates and related health outcomes, fertility rate, infant mortality, elderly health, public assistance levels, family income, and recruitment and retention efforts?

Paid parental leave allows working mothers to stay more attached to the labor force and boosts their future wages; reduces families’ reliance on government benefits, such as food stamps, and; allows fathers to spend more time with young children and share in the child-rearing. These and other benefits to parents are cited in Question 2.

However, perhaps the most crucial beneficiaries of paid leave policy are babies. I’ll discuss the benefits to infants in this section, which are equally if not even more overwhelming in the

literature than the benefits for parents. In her book, What Children Need, Columbia University economist Jane Waldfogel finds that a parent being actively present during the first year of a child’s life is linked to a host of positive emotional, physical, and mental health outcomes for children.

Yet the status quo makes it very difficult for parents to spend this critical time with their children, especially low-income parents who have a thin financial margin and lack access to benefits such as paid leave from their employers. While some families desire and can afford for one parent to stay home with children, both parents work in the majority of households with young children. Additionally, one-quarter of households with children are headed up by single parents. Fewer than one in four workers have access to paid parental leave from their employers, and 40% of workers lack job protection following the birth of a child. As a result, one in four mothers returns to work within two weeks after having a child, and many fathers take no time off of work at all. The impact is significant, from reduced rates of breastfeeding to one of the highest rates of neonatal fatalities in the developed world.

Paid parental leave creates more options for parents who want and need to work so that they can be present during these critical months. Recent research has found that infants whose mothers had paid parental leave exhibited more mature brain function at 3 months of age. Economist Christopher Ruhm estimates that 10 weeks of paid parental leave would reduce neonatal deaths by as much as 2.9%, saving hundreds of infants' lives each year; a pro-life cause that for too long has gone unnoticed. This is also why paid leave is specifically for working parents as presumably stay-at-home parents who are already able to be with their children in the early weeks of life. Of course, even stay-at-home parents benefit from paid leave offerings as it allows the working spouse to be home in the early weeks of the child’s life as well.

Focusing on what children need also generates a rare and hopeful point of widespread, bipartisan agreement. For example, the majority of Americans support a parent being home to raise a child, and the majority of Americans support a paid-parental-leave policy, which by its very nature benefits only working parents. While these may look like conflicting data points, these polls represent a wholly consistent, bipartisan, and research-supported view that there are significant benefits to children from being with their parents, especially in the early weeks and months, whereas other policies such as workplace flexibility can help families balance work and care later. This is significant common ground that should not be overlooked and arguably should be the starting point of a policy discussion on paid parental leave.

9. What lessons should the federal government learn from successful or failed attempts at expanding paid leave in U.S. states or other countries?

I’ll cite two. First, is the need to separate out paid parental leave from other types of leave, for which there is little to no equivalence. Behind closed doors, some paid-leave advocates have admitted that they fight against proposals for parental paid leave when the measures don't include paid leave for a much broader set of uses, including medical and family caregiving (with loose definitions attached to the term "family"). This misguided quest for universality recently led Congressional Democrats to reduce their paid-leave proposal in Build Back Better to four weeks for new parents — well before a mother is scheduled for a wellness check or an infant

would be accepted into daycare - in order to provide equal durations of paid time off to a new mother as carrying for a distant relative.

We must not conflate the benefits of more targeted programs with universal ones, shortchanging the people who need the most help. A review of the paid-leave literature by the American Enterprise Institute/Brookings Working Group on Paid Family Leave found that the vast majority of evidence about the benefits of public paid-leave programs is specific to parental leave. This research shows the tremendous societal benefits of having a robust parental-leave program, but it says little about the outcomes of offering paid leave for other purposes. Internationally, too, the most generous paid-leave programs are exclusively for parental leave — and maternity leave, at that. These distinctions reflect the recognition that the months following a child's birth are a unique time, worthy of generous and differentiated public investment.

Many advocates cite the size and scope of the aging population in the U.S. as the reason for a broader paid family leave policy. To be sure, how we care for our elderly will undoubtedly be an area of increased policy focus. However, there are reasons to believe that other approaches - such as workplace flexibility, boosting worker wages, and increasing part-time work options that retain benefits - are preferred solutions to provide the intermittent care required for the elderly population and ill family members. As stated earlier, when it comes to family and medical leave, relatively few developed 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. Lastly and a bit uncomfortably, the aging population are the primary beneficiaries of America’s current vast entitlement programs; it is the youngest in whom we chronically underinvest.

In the U.S, I believe that medical leave for a worker’s severe personal illness could be better addressed through reforms to disability insurance, as was one of the recommendations of the AEI-Brookings Working Group. Reforms to SSDI — such as encouraging better work accommodation with employers and tighter screening — could be paired with the introduction of a short-term medical leave program, providing new coverage for people with short-term medical conditions (such as cancer) and encouraging people who can still work to access a more temporary program than SSDI. The program might work similarly to long-standing state TDI programs including carefully crafted definitions of qualifying conditions, medical verification, and duration. More research is needed before this option is pursued, but the end result could provide more comprehensive coverage for those with serious medical conditions than the 12 weeks of medical leave typically discussed.1

As for short periods of sick leave, I believe that this should be directly provided by employers. It is already a ubiquitous benefit provided to more than 9 out of 10 of all workers, and it is much easier for a worker to financially cover a few days off of work relative to weeks or months. I am not opposed to a sick day mandate, but this discussion is entirely separate for what is needed for workers to support themselves for more sustained periods of time away from work.

Second, is the overwhelming evidence of even a modest paid leave program from the longest running state-based program, California. Most of our domestic literature on paid leave is based on California’s now 15 year long program, which for most of its duration extended for a modest

1 https://www.aei.org/economics/for-now-treat-paid-parental-leave-as-a-stand-alone-policy/ 14

duration of 6 weeks (and is now 8 weeks). While it is a paid family program available for a wide range of uses, much of the program’s uptake has been by new mothers, and more recently, fathers as well. The increases in breastfeeding, women’s wages, better postpartum and infant health outcomes, all come from this relatively modest program. The more recent programs have been more expansionist in their duration and eligibility, reaching 12 weeks or longer; however they have not been around long enough to know their effects.

We should base a federal leave program on the longest-running state program for which we have the most evidence. The example of California’s paid family leave program reveals the benefits to American families even from starting with a relatively short duration of 6 weeks. Additionally, it is also important to remember that the paid leave benefits accrued to parents and infants in

California were related to the program’s wage replacement and payments over time. We simply have not seen equivalent benefits from cash support alone. American families are facing more than a financial shortage. They are facing a time shortage. Paid parental leave addresses both. This is why there have been such significant socioeconomic benefits to these programs.

10. What other information would you like us to consider as we attempt to chart a bipartisan path forward?

As you know firsthand, the U.S. is in a precarious political moment. Only 2% of Americans report having a “great deal” of confidence in Congress. Just one in five Americans say they trust the government in Washington to “do the right thing” most of the time. The federal government is carrying the largest peacetime debt burden in American history. Without reform, the U.S. will be unable to fulfill its promises for cash support to the old and infirmed within the decade. There is little agreement among Americans on the way forward. Political scientists have concluded that the electorate is more politically polarized than any point since America’s Civil War. According to Pew Research, eight-in-ten adults (81%) say they are somewhat or very concerned about divisions between Republicans and Democrats.

In the midst of this environment, bipartisan compromise in areas such as paid leave is even more powerful. It pushes back on the inaction, distrust, performance without results, and the toxic winner-take-all mentality. It reminds Americans what the government, at her best, can do when our political parties negotiate and cooperate together. A bipartisan paid leave plan for parents with new children is a stake in the ground for something good, normal, and true. It would deliver significant benefits to American families. It would show the world that America is still here, still learning, still innovating, still leading, still caring. If there is any time such bipartisan, bicameral action in the name of decency and the recognition of our common humanity, it is in 2024.

Thank you for your time, service, and engagement,

Abby M. McCloskey

Founder, McCloskey Policy LLC

Email: abby@mccloskeypolicy.com

Cell: 202-854-8280