Kirsten Gillibrand designed a simple, smart family leave plan. Moderates may destroy it.
Will Gillibrand and her Senate allies defend the FAMILY Act?
For several years, Sen. Kirsten Gillibrand (D-N.Y.) has been a principal backer of a paid parental leave plan called the FAMILY Act. "Here's what I believe: If the C-suite gets paid leave, then the factory floor should have it too — and the FAMILY Act would make that happen," she said in a statement in 2019. America is not only alone among rich countries in not providing paid parental leave at the national level; it is nearly alone among all countries.
Gillibrand's program was supposed to be part of the reconciliation bill now before the Senate. Yet in the House, Rep. Richie Neal (D-Mass.), chair of the Ways and Means Committee, has mangled the plan beyond recognition — changing it into an ultra-complicated ObamaCare-style disaster. Will Gillibrand and her allies defend their old priority?
Let me start with the policy details. The FAMILY Act is fairly straightforward. It would provide 12 weeks of paid leave per year for new parents, people caring for family members, or people with serious illness. It would be run by the Social Security Administration, pay 66 percent of workers' previous wages up to a monthly cap of $4,000, and be funded by a small payroll tax. There would be a work requirement, unfortunately (requiring some moderate work history in five of the last 10 years), but it would also have a minimum benefit of $580 per month. That's meager by international standards, but it's a decent foundation and mostly a sound design.
Neal's plan is a nightmare of complexity by comparison, and stingier, too. Instead of setting up a centralized federal program, Neal would run everything through the private sector and the states. His proposal has a complicated wage-replacement schedule for qualifying paid leave plans which employers would be incentivized to obtain through private insurance companies by the government paying 90 percent of the average paid leave premium. Then, states' current paid leave programs would be grandfathered in. Finally, there would be a rump federal plan for those who don't qualify for either an employer or state plan.
There are hideous problems here. As Matt Bruenig writes at the People's Policy Project, Neal's more stringent work requirement (requiring work history in the previous three to six month period) would probably render about a third of new parents ineligible. Unlike the FAMILY Act, there's no minimum benefit, which means very low earners who manage to qualify would get almost nothing. (The point of the minimum is to ensure that even parents with very limited labor income at least have a subsistence income while on leave.)
Worst of all would be the incredible administrative complexity. A new parent would have to figure out whether their employer has a plan, then, if not, whether their state has a plan. If neither option were available, then they'd have to apply for a federal plan and hope it comes through on time.
The government, meanwhile, would have to keep track of every employer-paid leave plan across millions of companies, plus their enrollment of tens of millions of workers. Remember how the government struggled mightily to do anything more complicated than mail checks last year, and how even that simple project isn't going great? It beggars belief to think the American state would keep track of all new parents in the tremendous churn in the labor market with a program with so many moving parts. Millions and millions of people would fall through the cracks.
There's also the question why private companies would be involved with paid parental leave at all. The only way for them to make money would be unjustly denying benefits or cheesing the demographic probabilities. The duplicative bureaucracy of multiple private insurance companies, plus their need for a profit margin, would increase costs by something like 20 percent — from $500 billion over a decade to $600 billion.
So why complicate the FAMILY Act approach? In a word, money. Some insurance companies already offer private paid leave plans, and they've been donating hand over fist to most Ways and Means Democrats for years, Neal included. They want a piece of the action. The American Council of Life Insurers (which has lobbied hard on this issue) told The American Prospect's Lee Harris the company thanked Neal for "the opportunity to partner and for continued dialogue." "We're in the sausage-making stage of this legislation, so there may have been considerations at play incoming from other stakeholders in the private sector," added Vicki Shabo, a fellow at the New America think tank.
As Bruenig notes, Neal himself posted a statement on his website from Dan Fishbein, president of the Sun Life US insurance company, praising Neal's plan: "We applaud Chairman Neal and the Committee for their work to develop a strong federal PFML [paid family and medical leave] program that recognizes and builds on the existing leave benefits provided by many businesses and insurers."
The small-mindedness and brazen transactionalism on display here is staggering. This is a once-in-a-decade chance to provide a modest benefit for all Americans. Thousands of activists and politicians have sunk years of effort into reaching this point. The FAMILY Act would remove one of America's many international humiliations and help cement Democrats' hold on power at a time when staving off Republican authoritarianism couldn't be more important.
Yet none of that matters in the face of a minor lobbying blitz from interested parties. They wanted $100 billion to do a much worse job, and, by God, Richie Neal is going to give it to them.
The question now is whether Gillibrand and other Senate Democrats will accept these Ways and Means shenanigans. At time of writing, Gillibrand hadn't responded to a request from The Week for comment, but a spokesman told The American Prospect's Harris she'd keep pushing for the FAMILY Act. So she should — yet the hour is late, and public criticism and activism against Neal's alternative is lacking.
It would be a shame to squander this opportunity for a half-decent paid leave plan so a handful of rich donors can sponge more money off the public purse.