We’ve heard a lot lately about whether the government should require companies to offer paid family leave to employees with a new baby. So let’s have a conversation about fairness and family.
First of all, paid family leave is a great incentive for employees. Having time at home with baby has tons of benefits for the family, setting up Junior for success in life. But as with anything, there are costs and benefits.
Paid family leave benefits are, of course, targeted to primarily younger employees of child bearing age. They also help employers recruit and retain employees. In an increasingly tightening talent market, businesses use benefits like family leave to attract qualified employees over their competitors. Better employee retention reduces costs to train new employees and the loss of productivity inherent in employee turn-over.
It isn’t just high tech companies like Adobe and Microsoft that recognize the value of offering a generous benefit package. Starbucks now provides six weeks of paid leave for moms after the birth of a child. Fathers and adoptive parents are eligible for up to 12 weeks of unpaid leave. The benefit package even includes tuition reimbursement for classes earned toward a bachelor’s degree. Good luck to Coffee Brand X; they won’t be poaching Starbucks employees any time soon, unless they can offer better.
And now for the costs.
First, companies who commit to offering paid family leave pay the salaries of employees on leave. It’s also likely they will have to hire additional help or pay overtime to other employees to fill the gap for the new parent. These costs are passed along to customers.
Starbucks, coincidentally, hiked coffee prices a month after announcing enhanced benefits. Fortunately for them, many coffee drinkers are willing to pay more for a latte. Not all companies can raise prices and keep customers, and a government mandate to provide paid family leave squeezes small businesses already struggling to keep the doors open.
Second, leave policies do not help employees who choose not to have children. The percentage of unmarried and childless Americans is on the rise. Some of these Americans would prefer other benefits that reflect their priorities. A government mandate ties employers’ hands in what they can offer potential employees.
Third, in some states that already have government mandated leave policies, the employees themselves pay for the program, so the cost comes straight out of our pockets.
Fourth, there’s the question of whether or not this is the proper role of government. Most Americans are beyond concerned about the growth of government interference in our lives. If the government mandates this level of specific policy, what else can they do?
Finally, many experts are concerned that a mandated family leave policy could result in more discriminatory hiring practices, with employers avoiding hiring women of child-bearing age. Also, as with other government mandates like minimum wage laws, it could speed up the trend of automation.
Do the costs of mandated family policies offset the benefits of companies exploring unique, personalized plans?
Some argue that Congress should make all businesses provide paid family leave (the law currently requires 12 weeks unpaid leave) and pass the cost onto taxpayers, customers, or employees.
Mandates seem very unfair to employees and taxpayers who do not take leave. They would be unfair to businesses that will lose customers should they raise prices to cover leave expenses and their employees who might lose hours, other benefits, or employment.
A one-size-fits-all government mandate on family is thus bad public policy. Rather businesses should be free to create benefit packages that are in the best interest of all their employees.
What are your thoughts?
Do you get a better deal if a government requires your employer to provide family leave (which could put your job at risk) or a robust economy where employers compete for your talent by offering you a compensation plan that best fits your needs?