Paid leave entitlements that backfire

Paid leave and child care policy mandates make women differentially more expensive to employ. And then? Vanessa Brown Calder speaks to Caleb Brown in a Cato podcast, after discussing the issue in an earlier blog post:

Though the United States doesn’t have a federally-mandated paid leave policy, it did enact a federally mandated unpaid leave policy, Family & Medical Leave Act (FMLA), in 1993. And despite FMLA being an accepted part of the modern legislative fabric, the consequences of the policy are not all stellar. Analysis suggests women hired after the policy are five percent more likely to be employed but eight percent less likely to be promoted.

Though the U.S. hasn’t adopted a paid leave mandate, a few states have. Research on policy outcomes in California show female labor force participation rising after implementation of paid leave (maybe good?) and childbearing-aged female unemployment and unemployment duration rising, too (unambiguously bad). This is probably because the mandate made women universally more expensive in employer’s eyes, whether professional women intend to use benefits or not.

In the end, free benefits are not free. Notes Calder in the podcast: “Over the course of women’s lives, they are actually paying the price for some of these policies, and that’s something that is not part of the current debate.”


  • Since society is benefiting from these policies (raising fertility among educated women), society should compensate employers for their losses.

    • Can you cite any data that shows that fertility has increased among educated women since the FMLA was enacted?

  • Company A, Employee B
    a pays b
    a receives tax deduction equal to amt of pay + 1 hr work
    A pays leave for B
    a receives tax deduction but no work. Since we know the value of the hour of work (perfect world the pay) so the company based on government mandate should receive both a deduction for the hour of pay plus the hour of leave…

  • Would mandatory paternity leave equal to the maternity leave mandates not solve this inequity?

    • Would doubling down on the error make it better? Or perhaps, let individuals negotiate the details their benefit package with their employers.

      Example: I get 2 weeks / year of paid sick leave. For the last 20 years, I’ve used ~1 day / year. Unused sick leave is cut in 1/2 at the end of the year. That remaining half is banked for future years. If I don’t use it before I quit / retire, they cut that unused balance in 1/2, then pay me a capped rate (far below my current pay scale) for what is unused. I’m in a 1 size fits some union contract. If, instead, we had a cafeteria bene plan, I’d select far more vacation or increase my 401k. Same goes for the company life insurance – I’m single with no kids. I don’t need life insurance. Adding insult, I have to pay income tax on what they spend on me, for a useless benefit.

    • Would mandatory paternity leave equal to the maternity leave mandates not solve this inequity?

      I’m fairly sure this is already done; anything else would be illegal gender discrimination. But women tend to take the leave more often and for a longer duration.

  • Newsflash: everything costs something.

    The question for me is not whether maternity leave costs or whether it raises the costs of employing females. It does (although I am sure that the actual cost is debatable).. Instead, the question is whether we want to burden businesses with the costs.