Would Expanded Family Leave Hurt Workers?

This article originally appeared in Regulation Magazine. Click here to read the full article.

By Sam Batkins and Ike Brannon

A good many politicians have elevated the need to reduce income inequality as the paramount purpose of economic policy in the immediate future. There are many ways to pursue such a goal, of course, but the easiest and most popular— at least of late— is to simply reduce the income of the wealthy. Such a maneuver usually doesn’t improve anyone’s well-being beyond government employees and contractors, but it is a way for the government to demonstrate its dedication to The Cause.

Another method that supposedly would reduce inequality— and one that is becoming au courant— is to provide paid family medical leave to new parents, adult offspring of infirm parents, or couples dealing with other medical or family crises.

It is a “socially responsible” benefit and because it is already done in Europe, the thinking goes, it ought to be done here. The problem is that creating a new, expensive entitlement, at least in this instance, is not necessarily a useful or productive way for government to demonstrate its obeisance to the family. Mandating paid family leave will result in sharply higher employment costs, and the market will ultimately respond by either reducing employment, wages, or some combination there of, whether government finances the benefit or it comes via a government mandate. If not done correctly, it could also create perverse incentives that might harm those most likely to use such benefits.

This article originally appeared in Regulation Magazine. Click here to read the full article.

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