Sen. Marco Rubio, R-Fla., and presidential adviser Ivanka Trump are reportedly collaborating on a paid leave plan. Though no official policy has been rolled out, Rubio supports a so-called “conservative” version of paid family leave: giving new parents the option to delay their Social Security payments and draw benefits while at home with a newborn.
But this plan is not conservative at all. Instead, it expands an overburdened entitlement program that desperately needs to be reformed.
Sure, this paid leave plan has its advantages. Republicans could tell their constituents that they are “fighting for working families,” which has a lovely ring to it. The plan would theoretically not involve an increase in taxes, and it would not coerce businesses into paying for benefits they do not wish to offer. For working parents in their 20s or 30s, delaying Social Security benefits for six to twelve weeks in their 60s does not seem like too big a deal.
And new parents will think exactly that. But this is a flaw, not an advantage, of the proposed policy. Two or three months of additional work past the legal retirement age seems like nothing to 20- and 30-somethings. But this sort of short-term thinking is the very reason why Social Security was created in the first place.
Behavioral economists call this phenomenon, in which people put more value on having something now than having something better in the future, “temporal discounting.” Government policies should not incentivize this sort of behavior any more than Social Security already has. Harvard economist Martin Feldstein found in 1996 that each dollar of expected Social Security benefit reduces retirement savings by 60 cents. Social Security itself has disincentivized private savings, and its expansion into paid leave would only exacerbate this unfortunate trend.
But politicians seem more concerned with using Social Security to pay for their pet projects rather than actually encouraging individuals to save. For example, Rep. Tom Garrett, R-Va., recently proposed a plan that would allow individuals to delay retirement in exchange for some student loan forgiveness. But Social Security was not created to pay for family leave or student debt forgiveness — it was created to eliminate poverty among the elderly, a goal it may not accomplish if the fund is constantly raided.
Plans such as Garrett’s and Rubio’s ignore Social Security funding troubles. The 2017 Annual Report presented by the Social Security Administration predicted that funds will run out by 2034, because it is paying out more funds than it receives. A 30-year-old mom who takes six weeks off today could see the Social Security Trust Fund empty out when she is 46, decades before she could ever collect benefits. Republicans in Congress should use their majority to reform Social Security, not expand it.
But Rubio’s paid leave plan is not only bad policy because of Social Security’s precarious future. It’s bad policy because it fails to help its intended beneficiaries: working parents.
Government-granted paid leave will only encourage companies to discriminate against young women, newlywed couples, and anyone else who seems likely to have a child in the next few years. Companies that do not offer paid leave do not do this because they are evil, but because they believe that their benefits package is the best one for their particular company. When the government incentivizes women to take longer paid leaves, companies do not spontaneously become more compassionate. The government can mandate paid family leave, but it cannot sit in conference rooms and HR departments to prevent companies from hiring fewer women.
Government-funded paid family leave would end the trend of companies voluntarily offering paid family leave to their employees, as companies would be foolish to offer to pay for a benefit that the government is offering to fund. Big employers like Walmart and Starbucks have recently announced paid parental leave benefits for hourly workers, joining companies like Wells Fargo, IBM, and JPMorgan Chase in a move toward equity between salaried and hourly employees. A new government welfare program would disincentivize other companies from taking this sort of beneficial action in the future.
Rubio’s intentions in formulating paid leave policy are good, but good intentions do not make good policy. Funding family leave through Social Security is misguided and short-sighted. True pro-family policy would allow businesses to voluntarily offer paid family leave to employees, not encourage new parents to delay retirement and add new pressures to an overburdened welfare program.
Amelia Irvine (@ameliairvine3) is a contributor to the Washington Examiner's Beltway Confidential blog. She is a Young Voices Advocate studying government and economics at Georgetown University.
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