Americans often hear about Europe’s superior benefits systems. Where I live in Germany, women receive 14 weeks of fully paid maternity leave and an additional 12 months of partially paid support. The upsides of such a policy are clear: Women have ample time to recover from birth and bond with their babies. Yet there are also real drawbacks, which include and go far beyond the expense for taxpayers and businesses.
Women in the European Union are more likely to work part-time and in lower-paid positions and are less likely to be managers than American women. Women hold 43 percent of managerial positions in the United States, but less than 30 percent in Germany. Research confirms that other European employment mandates and family-friendly programs — such as the right to work part-time and the mandatory provision of child care — make women more expensive to employ and result in lower take-home pay and fewer job opportunities.
I’ve seen up close what this means for women living here. While many certainly enjoy their time off from work, I’ve also heard complaints about how these policies affect careers. A married friend without children worries that her boss hesitates to give her more responsibility because he thinks she’ll inevitably disappear for a lengthy leave. Another friend — the head of her department — is frustrated with having to hold a position for an employee taking a second year-long leave. She works extra hours to train a temp while the woman on leave posts pictures from the park on Facebook and shares plans for another child.
America has been wise to avoid creating a one-size-fits-all paid leave system for our diverse workforce of about 150 million people. While we want all workers to be able to take off when it’s needed, people have different preferences for how to handle absences and different priorities for compensation. Many employees value paid leave benefits (which is why most American business voluntarily offer some paid leave benefits). But some workers would rather have larger paychecks and fewer benefits. That should be their right. Moreover, some businesses can’t afford to offer paid leave benefits to all workers, and forcing them to do so would require job cuts or closures. Companies need and deserve flexibility too.
This flexibility made it possible for the Independent Women’s Forum, the small nonprofit organization that I help manage, to hire a woman just three months before her due date. We offered some paid time off so she could adjust to motherhood, but asked that she be available by phone and email to help us function while she was on leave. Such negotiations and the development of flexible, win-win relationships wouldn’t take place if a one-size-fits-all law were enforced.
This doesn’t mean that nothing can be done to help more workers prepare for leave or to help those who struggle financially when they need to take time off. Policymakers can start by making it easier for people to save on their own for periods of leave and encourage Americans to assist those with lower incomes who lack paid leave benefits through tax incentives or private charity. The Independent Women’s Forum recently released a report calling for the creation of “personal care accounts” (PCAs), which would allow workers to save pretax income to be used when they take time off for situations eligible under the Family and Medical Leave Act. Saving in advance could help workers who lack paid leave benefits replace income when they need to take time off from work.
Of course, workers living paycheck-to-paycheck can’t save on their own. Policymakers can help them by using tax breaks to encourage businesses to open and contribute to PCAs for these workers and to offset the costs of other leave benefits. For example, Virginia considered legislation that would have given small businesses that provided paid leave benefits for workers taking leave after the birth of a child a tax credit to help offset these costs. This could make it easier for more businesses to offer such benefits. Private charities could also help by setting up and funding PCAs for workers with lower incomes.
Undoubtedly, PCAs won’t ensure that everyone has the time off that they need. Yet in discussions about paid leave policy, it’s important to recognize that there is no magical solution that will help everyone without also harming others by eroding job opportunities and reducing take-home pay. Sweeping mandates and government paid leave entitlement programs are sometimes presented as magic solutions, but only because they ignore those women who would miss out on higher pay or better jobs, or would be priced out of the job market entirely. Policymakers can best help people by giving both workers and companies flexibility.
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