Hillary Clinton’s Paid Leave Plan Fails to Address This Huge Issue

January 13, 2016, 8:00 PM UTC
Transportation Sec'y Foxx Endorses Hillary Clinton At Iowa Campaign Event
WATERLOO, IA - JANUARY 11: Democratic presidential candidate Hillary Clinton speaks during a campaign stop at the Electric Park Ballroom on January 11, 2016 in Waterloo, Iowa. Clinton continues her quest to become the Democratic presidential nominee. (Photo by Joe Raedle/Getty Images)
Photograph by Joe Raedle via Getty Images

Hillary Clinton’s proposed plan for paid family leave — a policy idea whose time has surely come for the benefit of American businesses and families — makes me wonder, why does she not simply support the Democrat-led FAMILY Act (Family and Medical Insurance Leave Act) that’s already progressing in Congress? In September, over 200 of my colleagues from business and management schools joined me in urging Congress to pass this legislation.

The proposed legislation — first introduced in December 2013 by Representative Rosa DeLauro (D-CT) and then re-introduced in March 2015 by Senator Kirsten Gillibrand (D-NY) and Representative DeLauro — is nearly identical to Clinton’s with respect to the amount of time offered (up to 12 weeks of guaranteed partial income, still woefully short by comparison to most other countries), but differs in the way the program would be funded. The proposed legislation is supported by a small payroll tax on employers and employees (less than $2 per week on average), which employs a familiar, tested insurance pool framework that spreads the cost of leave in a way that is affordable, responsible, and sustainable, similar to most programs throughout the developed world. What’s more, the plan relies on the existing infrastructure of the U.S. Social Security program and would essentially create a national paid-leave-policy floor for all businesses, no matter their profit margin.

So why would Clinton not support the pending legislation, driven by her fellow Democrats and based on a proven record of success abroad and at home? She touts the fact that her plan would not impose financial burdens on businesses, especially small businesses, and would not impose a payroll tax or an “employee mandate to pay for leave.” So, with this type of funding, Clinton can keep her pledge not to raise taxes on those earning less than $250,000. Indeed, she’s criticizing her primary opponent, Sanders, for his support of the Family and Medical Insurance Act because it raises taxes. This seems to be a politically expedient solution; to appear at once as a champion of reform unwilling to raise taxes on the poor, the working class, and the middle class, and as a candidate who understands the needs of business owners. It may turn out to be a savvy political maneuver that boosts her populist cred and keeps her in good standing with the business community, but it’s fuzzy on detail and needlessly scorns a solid, evidence-based proposal that’s already on the table.

Other countries and states that have adopted programs similar to the Family and Medical Insurance Leave Act, have demonstrated that it is a sound and smart approach. In states such as California, Connecticut, and New Jersey, where paid leave policies have already been implemented, there’s ample evidence that they make good business sense while providing workers with the support they need to manage work and family. Paid leave reduces turnover and increases employee loyalty, which results in cost savings for businesses. It also enables employees to devote more time and attention to their home lives, which gives them a greater sense of control and increases efficiency, engagement, and productivity. In short, paid leave, funded as a social good via payroll taxes, is a global norm, demonstrated to benefit parents, children, and businesses.

Most countries that offer paid leave — and the U.S. is shamefully alone among all advanced nations in not offering any — deliver it as they do other social welfare programs that affect the commonweal, like our Medicaid and Social Security. Nonetheless, the U.S. has come a long way if we look back at history. Thirty years ago — when I started talking about work and life issues in my Wharton MBA classes and began a series of conferences on the subject, with psychologists, economists, sociologists, business leaders, and policy advocates — paid family leave was not, to say the least, front page news. Nor were leading presidential candidates talking about it.

To the contrary, I had colleagues wondering aloud why I’d chosen to complement my research on leadership development with an active interest in what they then referred to as a “women’s issue” that few seemed to really care about. So, the fact that in 2016 there is a serious discussion, at least among Democrats, running for our highest political office is enormous progress. As a number of us have been saying for decades, it’s a human issue with economic, political, social, and cultural consequences. We’ve come a long way, to the point that the debate now seems less about a ‘yes’ or ‘no’ question over whether paid family leave is necessary, and more about how; how many weeks of paid leave, how to pay for it, and how to administer this social policy most effectively.

Most Democratic and Republican voters, including Tea Party supporters, do not want health and wellbeing benefits such as Medicaid and Social Security changed or diminished. Medicaid and Social Security are not construed or structured as something the very wealthy are gifting to the less well off. There is nothing noblesse oblige about these programs, nor should there be in modern society. Likewise, paid time for family care ought to be a citizen’s right. Yet Clinton’s approach — funded by new taxes on the wealthy — carries this unfortunate and unnecessary symbolic weight.

Further, it is worryingly unclear as to what Clinton means in her proposal about how she would “make the wealthiest pay their fair share” for this program. And what would preclude whatever such tax she implemented from being undone by future administrations? Our tax code is plagued by loopholes, rife with unfairness, and in great need of reform. But intermingling these two pressing problems – the demand for tax reform and the need for paid family leave – is messy and risky. In other words, if Clinton’s tax reform proves too difficult to implement, then we don’t get paid leave.

Stewart D. Friedman is the practice professor of management at the Wharton School of the University of Pennsylvania. The former head of Ford Motor’s Leadership Development Center, he is the author of Leading the Life You Want: Skills for Integrating Work and Life, Baby Bust: New Choices for Men and Women in Work and Family, and Total Leadership: Be a Better Leader, Have a Richer Life.

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