Wednesday, May 27, 2015

The Perils of Paid Family Leave

You remember the law of unintended consequences.

A zealous ideologue concocts a solution to a problem that mostly exists in his mind. Being an ideologue he does not recognize that the problem merely manifests a reality that he denies. He also fails to see that, however pure his intentions, the outcome need not fulfill his wishes.

When the supposed problem exists within the labor market the zealous ideologue will want to use the power of government to impose a solution. He does not understand that government attempts to control the labor market have often come a cropper.

Today’s instance involves laws that provide new mothers with generous dollops of paid parental leave. In principle, these rules allow women to keep their jobs and their places on career tracks while giving them some quality time to bond with their newborns.

Sounds good, doesn’t it?

In practice, it ends up being bad for women.

The New York Times has the story:

In Chile, a law requires employers to provide working mothers with child care. One result? Women are paid less.

In Spain, a policy to give parents of young children the right to work part-time has led to a decline in full-time, stable jobs available to all women — even those who are not mothers.

Elsewhere in Europe, generous maternity leaves have meant that women are much less likely than men to become managers or achieve other high-powered positions at work.

Why is this happening?

For one thing, employers know that young women are more likely to have children and therefore are more likely to take extended leaves of absence. They also know that they will be paying these women their salaries during these absences.

The result: companies are less likely to hire young women. When they do hire young women they pay them less and grant them fewer responsibilities.

Why hire someone who is going to cost you more and will spend less time on the job when you can hire someone who will not be taking an extended family leave?

It doesn’t take advanced math.

Look at the situation in Spain:

Spain passed a law in 1999 giving workers with children younger than 7 the right to ask for reduced hours without fear of being laid off. Those who took advantage of it were nearly all women.

Over the next decade, companies were 6 percent less likely to hire women of childbearing age compared with men, 37 percent less likely to promote them and 45 percent more likely to dismiss them, according to a study led by Daniel Fern├índez-Kranz, an economist at IE Business School in Madrid. The probability of women of childbearing age not being employed climbed 20 percent. Another result: Women were more likely to be in less stable, short-term contract jobs, which are not required to provide such benefits.

“One of the unintended consequences of the law has been to push women into the lower segment of the labor market with bad-quality, unprotected jobs where their rights cannot be enforced,” he said.

The same is true in many other countries:

These findings are consistent with previous research by Francine Blau and Lawrence Kahn, economists at Cornell. In a study of 22 countries, they found that generous family-friendly policies like long maternity leaves and part-time work protections in Europe made it possible for more women to work — but that they were more likely to be in dead-end jobs and less likely to be managers.

Naturally, the zealots are trying to find a way to solve the problem they created.

Among their solutions: encourage men to take family leave when their wives give birth. Because, after all, if extended family leave is bad for a woman’s career, why not share the badness.

If both parents take parental leave, both will be consigned to lower paying jobs. Both will be knocked off the management track. 

Unless paid family leave is obligatory for men, those men who choose to take it will put themselves at a disadvantage. The zealots want men to take time off too because they believe that there is no real reason why women should mother their children.

People who fail to understand why a mother’s presence is more important for a newborn should not be making public policy on these matters.


Ares Olympus said...

It seems like there may be too much worrying here about equality or fairness, specifically about "career advancement" as if everyone aspires to management or needs a higher salary for a good life.

I can see an ideal of "family values" ought to support policies that "allow" new parents to have a certain number of weeks (or months) away from their job, without risk of being laid off, but its hard to believe anyone should think this "luxury" also requires such "expensive" employees also get equivalent pay raises and promotions.

But the reality is many parents, fathers or mothers, may be reluctant to take their full leave if there are pay consequences, but if they accept this risk, then they can make an informed decision of cost and benefit of a choice. What more could we want?

Having paid time off is certainly a luxury, and it makes sense most employers will not be easily able to absorb this cost. I mean even an unpaid leave, hiring a temp worker to replace an employee on leave is expensive and inefficient.

Maybe Jonathan Haidt can help explain this liberal hyperfocus on fairness?
Haidt's talk is about his own research on the five moral value systems that he argues underlie the liberal-conservative political dimension: 1) Care for Others/Do no harm; 2) Fairness/Justice/Equality; 3) In-Group Loyalty; 4) Respect for Authority; and 5) Purity. His research shows-across large numbers of people and many different countries-that there are very reliable differences in the degree to which liberals and conservatives differ in the extent to which they endorse these values. Conservatives tend to value the five domains relatively equally. Liberals, in contrast, value the first two domains much more than the latter three.

Well, it does seem complicated. Somehow liberal values aspire to force others to conform which doesn't sound very liberal.

Sam L. said...

"Well, it does seem complicated. Somehow liberal values aspire to force others to conform which doesn't sound very liberal."

And isn't. When a balloon is squeezed, most of the gas in it goes to the unsqueezed part. Squeeze that, too, and the balloon pops. Unintended consequences come from a lack of full consideration, and no matter how much you consider, you cannot think like all the other people in the world. One or more of them will see what you failed to see, or did not allow yourself to see, or think of.

Ignatius Acton Chesterton OCD said...

People talk about "The Government" as a provider or just arbiter. It's the willful suspension of disbelief. The government does not and cannot love. People are expecting this magical institution to feed what their soul seeks. They are surprised when left empty-handed. Too bad, so sad.

Ares Olympus said...

My libertarian-leaning, self-employed running coach says we should say "Right" and "Left" rather than "Conservative" and "Liberal", and it makes some sense.

The "Left" idealizes big-government (mamma?) democracy, and the "Right" idealizes big-business (papa?) free-markets, while neither may actually exist as we pretend.

Libertarians can see both sides as authoritarian-leaning, but it does seem hard to believe any sort of institutions can impose law and order the huge complexity and diversity of society we experience. Its a miracle systems work, and sadly the only thing we can be sure is systems are easier to break than to rebuild.

I tend to think both big government and big corporations may die together dinosaur style once our cheap energy and cheap debt systems hit their predictable bottlenecks. And then small local government, and small local business will assert their will in a free-for-all.

But until then we have to keep pretending that big corporations will remain the future of wealth and power, and that big government's law and order will have the resources to do everything it might in a time of shrinking net energy per capita.

I just keep wondering which country will face the future first. But until then, if paid or unpaid leave helps parents do their thing, I admit I'm not going to speak against it. I just wouldn't depend on it existing in the future.

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