While legislation has yet to be ironed out, the plan as outlined by the IWF would “offer new parents the opportunity to collect early Social Security benefits after the arrival of their child in exchange for their agreeing to defer the collection of their Social Security retirement benefits.”
The IWF estimates the plan would replace 45 percent of the average parent's income for a period of up to 12 weeks. In exchange, that parent would have to defer retirement by roughly six weeks to offset the cost.
The IWF proposal is different from the approach favored by Sen. Kirsten Gillibrand (D-N.Y.), who has proposed an across-the-board 0.4 percent payroll tax that would fund 12 weeks of paid family leave at an income replacement rate of 66 percent.
While both plans are an improvement over current law, which mandates no paid maternity leave, either one would still leave the United States a stingy outlier among the world's wealthy nations when it comes to paid family leave.
The other wealthy nations in the Organization for Economic Cooperation and Development, for instance, mandate leave durations between 12 and 166 weeks, and payment rates between 26 and 100 percent of a mother's pre-leave income.
To make complete country-level comparisons and see how the Senate proposals would fit in, we can express maternity leave policies in terms of full-income equivalents, in weeks. If a country mandates 10 weeks of leave at 50 percent income replacement, for instance, that would work out to a full-income equivalent of five weeks.
The international standard established by the International Labor Organization recommends 14 weeks of maternity leave with an income replacement rate of at least 66 percent, which works out to a full-income equivalent of 9.2 weeks. Nearly all countries in the OECD offer considerably more than that: Eastern European countries offer the equivalent of a year or more at full pay, while the Nordic democracies offer six months or more.
Most other nations offer at least 12 weeks of full-income equivalent leave. Gillibrand's proposal works out to eight weeks of full-income equivalent leave, still below the 9.2 week threshold but better than the policies in place in Switzerland, New Zealand and Australia. The IWF proposal works out to 5.4 weeks, which would still place the United States at the very bottom of the list.
IWF President Carrie Lukas points out that under the IWF plan, maternity leave pay would be calculated using the existing Social Security disability benefit formula, which means that lower-income mothers would receive a greater rate of income replacement than high income ones. People “who need more support and who are less likely to be able to save on their own would have more of their income replaced,” she said via email.
Both approaches represent an improvement over current law, which doesn't provide anything. And liberals and conservatives alike appear to agree in principle on the need for paid leave and the benefits it would bring: greater labor force participation among women, improved child and maternal well-being, and greater paternal involvement in child-rearing.
The sticking point is over how to pay for it. Conservatives like the IWF proposal because it's self-funding and doesn't involve any new taxes or expansions of the federal government.
But critics point out that the Republican proposal essentially penalizes larger families: the more children you have, the more time you have to take off, the longer you end up deferring retirement.
The IWF's Lukas, who has five children herself, rejects the notion that this would be unfair. “People with big families face all kinds of extra costs for having extra kids,” she said via email. “Keep in mind that this would be optional: Anyone who thinks that the trade-off is too much — if they don't want to postpone retirement benefits by extra months — then they don't have to.”
Liberals are also wary of the wisdom of turning the Social Security Trust Fund into a piggy bank.
“Any plan that robs the Social Security trust fund will hurt low-income workers, seniors, and women the most,” said Gillibrand in a statement released Wednesday. “No worker should have to borrow against their own Social Security benefits, which are already too low, to get paid family leave when they need it to take care of a new baby, a sick family member, or themselves.”