Why parental leave laws aren’t working

If we want to have a workforce in the future we need to have children. The necessity to create tomorrow’s employees means today’s employers must tolerate a degree of disruption. Babies need to be cared for, which means parents need paid leave and the security of knowing there’s a job to return to.

Companies cannot be expected to manage this themselves and need rules and regulations to govern parental leave so it works fairly. Left unfettered, the market would reward companies who scrimped on paid leave and replaced pregnant employees and new parents with unencumbered workers.

Governments are needed to regulate a level playing field, where more laws, more flexibility for employees and more parental leave are to the benefit of society.

This is progressive gospel but is it necessarily true?

At first glance 2016 was a bad summer for advocates of government-mandated parental leave.

In Britain there were two standout developments: a law firm found that only a tiny minority of fathers offered the chance to split time off with mothers actually did so; and new research revealed that discrimination against pregnant women and new mothers had risen sharply in the last decade, despite a battery of legal protections.

Why does it matter what’s going on in the U.K.?

Britain is as good a place as any to check on whether parental leave laws really work. While it’s not as generous as some of the Scandinavian countries, the U.K. offers far more to new parents than the United States — the only rich-world country not to legislate in favor of paid parental leave.

Shared Parental Leave, or SPL, was one of the big diversity battles of Britain in recent years. And when in April 2015 the British government legislated, its supporters predicted it would deliver a major boost to gender equality in the workplace.

SPL allows both parents to share up to 50 weeks of leave and 37 weeks of statutory pay ($187 per week) after their baby arrives, or 90 percent of the weekly pay of the wage earner who has taken leave, whichever is the lower amount. It aimed to encourage mothers to go back to work sooner than they had in the past and make British laws reflect a more gender balanced workforce.

When a firm of lawyers, EMW, put in a freedom of information request to see how many families had actually opted for SPL, the real numbers were a shock to some. While an estimated 285,000 families had qualified for the benefit only 3,000 had applied for it.

“Policymakers also need to think carefully about what impact measures like this will really have,” warned Jon Taylor, a principal at EMW. “Both on those it is meant to benefit, and their employers who will have to manage a more complex system.”

He argues that there may be other, more effective ways to help businesses provide family-friendly policies, such as tax breaks for childcare provision.

When the British government commissioned a report on pregnancy and maternal discrimination in 2015 most observers were expecting to find at least some progress had been made. Few expected to find that discrimination had markedly increased.

When it was released in August 2016 it concluded: “Shockingly, pregnant women and mothers report more discrimination and poor treatment at work now than they did a decade ago.”

The report found that 54,000 women had lost their jobs as a result of pregnancy discrimination in 2015, up from 30,000 women in 2005.

This huge rise, which comes as more women than ever are active in the labor market, comes despite legal protections. Under British law discrimination is classed as treating a woman unfavorably — for instance passing her over for promotion or reducing pay — because she’s pregnant or has recently given birth. This protection lasts from the discovery of pregnancy to the end of maternity leave.

Findings like these encourage critics who believe there’s a limit to what government and laws can achieve in refashioning the workplace. Some politicians and business people argue that it’s time to rethink the need for more laws enshrining paid leave or protecting the rights of parents.

One of the reasons that particular attention is being paid at the moment is that there are mounting calls in the U.S. for federal legislation on paid parental leave. It has featured on both sides of the partisan divide during the presidential primaries. Both Hillary Clinton and Bernie Sanders from the Democrats have called for federal laws on paid parental leave.

On the Republican side, former contender for the nomination, Marco Rubio, said there were too many Americans “who have to choose between being there for their children in times of great need or meeting the basic financial needs of their family.”

The Rubio plan centers on a 25 percent tax break to companies offering between four and 12 weeks paid leave. The credit would be capped at $4,000 per employee. Even this proposal is too much federal government intervention for some observers. They point to two developments: the small number of states who have mandated paid leave and the increasing number of companies electing to shoulder the cost. Washington doesn’t need to get involved, they argue.

With low unemployment meaning U.S. companies face a “talent squeeze,” paid parental leave will join other benefits like medical insurance as a means of attracting potential employees. The business case for paid leave broke through into mainstream consciousness in 2014 when Google revealed that increasing paid maternity leave had boosted retention of new mothers by half.

It wasn’t just a boon for the health and prospects of mothers and babies. The oped in the Wall Street Journal pointed to a survey in California, carried out after the state mandated paid maternity leave showing 91 percent of employers reported the policy either boosted profits or had no negative effect.

The author of the Google oped, Susan Wojcicki, said the U.S. should be embarrassed to be the only developed country in the world without any form of government-mandated paid parental leave: “Paid maternity leave is good for mothers, families and business,” she wrote. “America should have the good sense to join nearly every other country in providing it.”

Not everyone agrees. Nita Ghei — like Wojcicki a working mother — wrote an influential column for the Cato Institute arguing against paid family leave. “Legislation,” she wrote, “cannot change the laws of economics.”

Extended periods of paid leave, she argued, would take women permanently out of the work force and entrench bias in favor of full-time employees: “To truly help families, the federal government should look for ways to reduce the regulatory burden on employers so that they can experiment with alternative work arrangements.”

So is it a case that some parental laws work and others don’t? Or even that government-mandated programs interfere with the workings of the market. A closer examination of the two developments in Britain suggest an answer.

Part of the reason why the new shared parental leave option has seen sluggish take up was because families couldn’t afford it. Paid maternity and paternity leave provisions have seen bigger buy-in because companies agreed to top up statutory pay. Only a handful have done this so far with SPL. Research from across Europe shows parental paid leave works better when the cost burden is shared between business and government.

The author of a light-hearted blog on shared parenting, Captain Poo-Pants, captured the general response to EMW’s findings when he wrote: “The policy needs improvement to make it a real option for families. Employers can clearly do much more to promote SPL and to make it a more financially viable option.”

Similarly, the author of the parliamentary report which found a sharp increase in job discrimination against pregnant women and new mothers, suggested improving on and expanding existing laws, not junking them.

Maria Miller from the Women and Equalities Committee, made three solid recommendations. Firstly, to follow the German model in offering additional legal protections against redundancy. To consider Denmark’s approach where a collective insurance scheme helps employers from small and medium businesses provide enhanced pay and cover for maternity leave. And finally, to reduce the cost to employees of taking an employer to tribunal from the current level of $1,600.

You don’t need to be a moral philosopher to understand that laws are at once imperfect and necessary. Admitting to this imperfection and auditing the impact of laws against the stated intention of legislators should be applauded. In the case of paid parental leave the balance of evidence is in favor of improving and adding to existing laws, not scrapping them.