by Matt Bruenig, Founder of People’s Policy Project
The United States is the only country in the developed world that lacks a national parental leave program, and one powerful Democrat in Congress — doing the bidding of the insurance industry — is trying to keep it that way.
During the presidential election, Joe Biden promised that he would finally fix America’s paid leave crisis by providing parents cash benefits through the Social Security Administration to cover a portion of their wages for 12 weeks after the birth or adoption of a child. Twelve weeks of paid leave is a modest amount compared to our peer countries, but it would be a decent start for a country that currently offers parents no help at all.
But, in the last few months, the Biden plan has hit an obstacle in the House of Representatives. Congressman Richard Neal, the chair of the powerful Ways & Means Committee, has replaced the Biden paid leave plan with a much worse proposal endorsed by the private insurance industry.
Under the Neal proposal, parental leave would no longer be provided publicly through the Social Security program. Instead, the federal government would give cash to businesses so that they could pay private insurance companies to provide paid leave benefits for their workers.
The Neal plan has won the praise of the Life Insurance Lobby and support from one of the nation’s largest insurance companies, Sun Life. But it would be a disaster for new parents who would be forced to navigate a much more complicated system run by insurance companies that make money by denying benefit claims and adding wasteful administrative costs. It would also be a disaster for the federal budget because businesses with workforces that take a below-average amount of paid leave would be able to extract money out of the system for their own profit.
In addition to needlessly turning Biden’s paid leave ambitions into a private insurance giveaway, the Neal benefit proposal has three major design problems that would severely reduce the effectiveness of the program.
The first problem is that new parents who do not work in the 3 to 6 months prior to giving birth would be ineligible to receive any benefits from the program. This means that parents who are still in education, parents with work-limiting disabilities, and parents facing an unluckily-timed spell of unemployment would be excluded from the program. Altogether this design would keep around 1 in 3 new mothers from claiming benefits.
The second problem is that the program has no minimum benefit level. Instead, workers only receive a benefit equal to, at most, 85 percent of the wages they were earning prior to having a child. Low-wage workers who cannot afford to give up 15 percent of their pay would not be able to access the program even though they are technically eligible for it.
The third problem is that the program provides 12 weeks of leave per parent with no option to transfer any of those weeks between parents. This means that two-parent families are eligible for twice as much leave as one-parent families, which also means higher child care bills for one-parent families.
Passing a poorly designed paid leave proposal is a dangerous political game for Democrats. Voters would rightly blame them for the difficult and inefficient program that they’ve now been forced to deal with, wiping away what should have been a political winner. When we make voters feel government can’t deliver, it hurts the entirety of the progressive agenda.
It would be very easy to create a paid leave system without these problems. Congress could pass a bill that establishes a public paid leave program through the Social Security Administration that pays all new parents at least the minimum wage during their parental leave period and that gives families a total of 24 weeks that they could split between parents in whatever way they prefer. But Congress needs to act quickly. If it doesn’t, Biden’s Build Back Better Agenda will fall prey to the Insurance Company Agenda.
Matt Bruenig is the founder of the People’s Policy Project.