Should the United States Government Mandate Paid Maternity Leave?

The children are our future. Raising children is the most important job. Growing up, these were a couple of adages I've heard regarding the importance of childrearing. Children eventually grow and become the next generation of leaders, innovators, and workers. This much aligns with how history and labor markets work. To have a good labor force in the future, we need to be mindful of raising children today. That is especially true when the child is a newborn, which is arguably when the child needs the parent's attention and care the most. To be able to juggle between career and parenthood, many suggest that the government mandates either maternity leave, paternity leave, or the gender-neutral family leave. In spite of women's liberation, maternity leave is still the most popular legalized variant of providing one or both of the parents with time off during the initial weeks of a child's birth because in spite of "the times changing," the mother still tends to be the one to care for children. Proponents like to show the following map to show just how far behind Americans are to the rest of the world with regards to maternity leave.

Aside from places like Papua New Guinea, Liberia, and Suriname, the United States is really the one country (certainly the only developed country) on the planet without any sort of mandatory maternity leave. Heck, even countries that violate human rights, like Cuba, Iran, Russia and China have paid maternal leave. "If those countries can get it right, why can't the United States?"

My initial response has to be more normative in nature, which is that entrepreneurs should be allowed to run their businesses how they want because that is a part of economic freedom. It's a reason why I also take issue with occupational licensing, anti-discrimination laws in the workplace, and minimum wage. In a free society, there has to be a very compelling reason to force a business to do otherwise. I would like to explore is whether a) the net externalities could begin to justify such a government mandate, and b) there are any unintended consequences that proponents might be overlooking.

Part of the issue here is that "the workplace" is still stuck in the 1950's. What I mean by that is that the mentality is such where it is assumed, at least in this context, that the husband is the breadwinner and the wife stays at home to tend to the family. Certain facets regarding family structure and labor markets have changed, and I don't even need to go into details about same-sex couples, for instance, to illustrate the complications here. There is that part of me that wants to say "If you want to have children, you better have the means to take care of your child. Otherwise, you have no business having children and forcing others to pay for your decision." On the other hand, as I will illustrate now, we have a labor market that discourages childrearing more than it has in the past. One facet is that in many instances, you need two working parents to make ends meet. The labor markets have shifted enough where it's difficult enough for most couples to afford having one spouse stay at home. Even if that were made possible, the couple would have to cut back on expenditures considerably. The second facet is that of single-parent households. If it's difficult enough for a typical two-parent household to make ends meet with children, imagine how much more difficult it is with the typical single-parent household. The third facet is that more and more women are entering the workforce, which should be obvious, but it also increases the need for maternity leave because there are women who are trying to maintain both career and motherhood. The fourth facet to contend with is increased turnover rate. "Back in the day," it was a much better guarantee that an employer can hire an employee and they will stay with the company for many years. These days, an employer is lucky if an employee stays for a few years. It can be worrisome for an employer if the employee takes maternity leave and then quits their job after the leave expires because the mother decides to be a full-time stay-at-home mother. Labor force attachment is a legitimate issue, especially if the mother plans on having multiple children. Even if the woman decides to return to the workforce, another individual, someone who is most likely less qualified and experienced within that particular role, has to fill the position. This could also have a spillover effect for all women. How so? Employers might be reluctant to hire women in general because the could see the possibility of a female employe having children to being cost-prohibitive. There is a rigidity in the labor market that leads many to have to choose between family and career. Not everyone has the luxury or the means to have both.

What about the Family Medical Leave Act (FMLA) of 1993? It provides up to 12 weeks of maternity leave. The maternity leave that this Act provides has many caveats. One is that it only applies to employers with fifty or more employees, which means that it doesn't cover 34 million employees in this country. One has to be employed at the firm for at least 12 months, and needs to have put in 1,250 work-hours within the past year, which is about 24 hours a week. The biggest caveat is that the maternity leave is unpaid. For those who decided not to or were unable to save money to have their finances withstand three months of unpaid work, this is indeed an obstacle.

Expanding the length of the woman's maternity leave [from 18 to 35 weeks] does not add additional benefit to the child's welfare nor does it create benefits for the couple's marriage (Dahl et al., 2013). The Dahl study certainly makes a case for not extending maternity leave, especially when it costs the taxpayers a pretty penny (The study does not compare maternity to no maternity leave....more on that in a moment). There is also the added benefit of improved child development (Baker and Milligan, 2008) or lower rates of depression in the mother (Dagher et al., 2013) to consider. Although maternity leave does not cause an adverse interruption of a woman's career progression, it also doesn't help that an extended maternity leave causes human capital depreciation for women, which still causes some issues for a woman's career projections.

Even with all of this considered, my answer to the question of "should there be mandated maternity leave" is "I don't know." I don't say that because I can't form an opinion. Looking back in my blog, I can essentially form an opinion about any topic with the proper research. The issue here is there is incomplete information. If I am to make an informed opinion, I still need two pieces of information. First, I would like to see how paid maternity leave affects an employer's decision to hire a woman. Does paid maternity leave create an additional disincentive for employers to hire woman, does it improve a woman's situation, or does it not matter? Second, while we have studies analyzing the effects of different lengths of maternity leave, there is not a reputable study or cost-benefit analysis comparing zero weeks of paid maternity leave versus "x > 0" weeks of maternity leave. It would be nice to see if no mandatory maternity leave is better than mandated maternity leave. There is economic intuition for both sides as to whether it works. It would be nice to revisit the issue when there is more information, but until then, I find that the question remains unanswerable.

6-17-2015 Addendum: The Foundation for Economic Education put out an article on how mandated maternity leave harms women.