This article appears under the title "Aiding Families, Boosting the Economy," in the Fall 2016 issue of The American Prospect magazine. Subscribe here.
For many people, economic policy brings to mind issues like taxes, trade, and interest rates—the subjects that dominate the financial news. Child care and family leave go into another basket typically conceived of as “women’s issues” and implicitly treated as irrelevant to economic growth and prosperity.
But this framing gets things badly wrong. About half of all workers are women, and women are the breadwinners or co-breadwinners in roughly two-thirds of families with children. Policies that affect the ability of women to work outside the home affect the ability of the economy to grow. Conversely, the failure to invest in such policies holds the economy back. And, of course, the same policies that would benefit women in the labor force would benefit men as well.
In just the past year, according to new census data, middle--class and poor families have seen significant growth in income. But when viewed over the entire period since the 1970s, the incomes of the majority of families have been nearly stagnant. The major exception has been dual-earner couples, most of whose additional income has come from women joining the labor force and working more hours. In fact, income inequality would have grown 53 percent faster if married women had not increased their labor force participation since 1963.
We might have had more growth and less inequality, however, if public policy helped workers manage commitments inside and outside the home. The U.S. Department of Labor estimates that if women in the United States had the same rate of labor force participation as women in Germany or Canada—countries that provide paid leave and child-care assistance—more than five million additional women would join the labor force, boosting economic output an extra $500 billion each year. A 2015 Washington Post poll found that three-quarters of mothers and half of fathers have either left the workforce or switched to a less demanding job at some point to care for their children. Parents who leave the workforce for child care pay the price throughout their career. For example, a median female wage earner out of the workforce for five years beginning at age 26—the average age at first birth in the United States—will lose $467,000 in wages, wage growth potential, and retirement assets over the course of her lifetime.
High Fives: Nationally not yet time to celebrate child-care assistance and universal pre-K, but for once those are top priorities in a presidential campaign.
These issues are ripe for addressing at the national level. Hillary Clinton has made them a central concern of her entire career and her presidential campaign. Donald Trump has said he would also provide help for child care and mandate paid maternity leave. The differences between their positions are enormous, but if the presidential campaign is any indication, now is the time to focus public discussion on new policies that could serve both economic growth and family well-being.
THE FEDERAL GOVERNMENT ONCE came close to enacting a national program of child-care assistance. That was in 1971, when Congress passed legislation that President Richard Nixon vetoed at the behest of social conservatives on the grounds that it discriminated against stay-at-home mothers. Since that time, conservative opposition has prevented the United States from adopting the kinds of measures that help working families in other rich democracies.
The only explicit work-family federal legislation is the Family and Medical Leave Act (FMLA), signed into law in 1993 by Bill Clinton as one of his first priorities as president. The FMLA provides job protection to workers if they need time off to care for a new baby or a seriously ill family member, to address their own serious health condition, or to deal with a family member’s military deployment. Although the law has helped millions of workers keep their jobs, it provides no guarantee that the leave will be paid, and strict eligibility requirements exclude about 40 percent of workers.
As a result, even workers who do qualify for job-protected leave under the FMLA often have to return to work more quickly than is advisable because they cannot afford to take off more time without pay. One in four mothers who take FMLA leave, for example, report that they returned to work within two weeks of giving birth—even though medical professionals typically advise between six and eight weeks of recovery time. State programs in California, New Jersey, Rhode Island, and, beginning in 2018, New York do provide for paid family and temporary disability leave, but the other 46 states have no such protections.
One other federal program provides child-care assistance to low-income families, but it is extremely limited. The Child Care and Development Block Grant reaches just one in six eligible children, and the average annual assistance is less than $5,000, which pales in comparison to the actual cost of child care. Higher-income families can take advantage of a tax credit, but the maximum amount of assistance is just over $2,000—again falling short of the $10,000 price tag most families find at child-care centers.
While conservative opposition has blocked a strong national program, changes in society and the economy have made work-family solutions even more critical to family security than they were earlier. Stay-at-home mothers are much less common today than they were when Nixon vetoed child- care assistance 45 years ago. In 2012, just 28 percent of children had a stay-at-home mother, compared to nearly half of children in 1970. Sixty-five percent of children under age six have either a single working parent or two working parents. Meanwhile, 12 million children under the age of five—or roughly 60 percent—are cared for by someone other than their parent.
The only explicit work-family leave legislation is the 1993 Family and Medical Leave Act (FMLA). Here, former President Bill Clinton speaks on the 20th anniversary of the FMLA, February 5, 2013, in Washington, D.C.
Low-income parents face special difficulties. Poor and near-poor families account for about half of America’s children. By poor, we mean those with incomes beneath the federal poverty level ($24,250 for a family of four in 2016); the near-poor have incomes between the poverty line and twice that level. Forty-two percent of Americans make less than $15 per hour, and low wages aren’t their only problem. Many of them work in industries such as fast food, retail, janitorial, home health care, and other services that have erratic and unpredictable schedules. Parents with these jobs face both irregular work and volatile income, and they are the least likely to have any paid time off for any reason. Among all private-sector employees, 61 percent have paid sick days and 11 percent have paid family leave, but among those in the lowest earnings quartile, only 31 percent have paid sick days and just 5 percent have paid family leave.
Parents need reliable child care to stay employed, but those in low-wage employment have few resources to pay for it. Child-care costs now exceed median rent prices and college tuition at public universities in most states. A family with two children in a child-care center can expect to pay almost $18,000 per year, which amounts to nearly 30 percent of the median household income. Among families who pay for child care, poor families allocate 36 percent of monthly income to child care.
Child care imposes heavy burdens on middle-class parents as well, usually falling on them long before they reach peak earning potential at a time in their lives when many are starting a career, paying off student loans, facing high rents, and perhaps trying to save money to buy a home. Despite having more education than their counterparts did in 1984, today’s 30-year-olds have about the same real earnings. Child-care costs keep rising—they were up 37 percent between 2000 and 2012—but incomes haven’t grown correspondingly. These are the realities that a new president and Congress should be addressing.
FEW WERE SURPRISED TO SEE work-family policies included in the 2016 Democratic Party Platform, as these have been Democratic priorities for decades. Hillary Clinton, in particular, has long championed early-childhood programs and family-friendly policies. What was less expected was Donald Trump’s focus on child care as a policy priority. But the proposals the two candidates have offered are not really comparable.
Hillary Clinton has long championed early-childhood programs and family-friendly policies. Here, Clinton speaks at a town hall meeting in Manchester, New Hampshire, on January 22, 2016.
Let’s take Trump’s first. Under a proposal that he made last summer, families could take a tax deduction for their child-care expenses, up to the average cost in their state. In September, after being criticized that this deduction would do little or nothing for the low- and moderate-income parents most in need, Trump added a $1,200 “rebate” for poor families and a tax-free savings account that the government would match up to $1,000. Both approaches are too little to meet the burdens that low-income families face.
Trump also proposes to provide six weeks of paid maternity leave. While offering few details, he has said that the state unemployment insurance system would administer the new benefit, which would not require new funding because it would be paid for by cracking down on unemployment insurance “fraud.” The program would offer no paid time off to fathers, adoptive parents, or workers who need leave for other reasons such as the need to care for seriously ill or aging family members. Limiting the program to maternity leave could adversely affect women workers. Since on average women already experience a “motherhood penalty” of 7 percent per child in their earnings, a program solely for maternity leave would likely exacerbate the gender wage gap.
Trump’s proposal to introduce paid maternity leave without any new funds is also cause for concern. The current unemployment insurance system is badly underfunded, and many states are barely getting by. During the Great Recession, 36 states depleted their reserves and had to borrow more than $50 billion to finance benefits. Only 18 states currently have the minimum recommended reserves yet would now be expected to absorb the costs of paid maternity leave.
Clinton’s proposals for child-care assistance are better targeted at the low- and moderate-income families in need and would be financed out of general revenues. Through a combination of tax credits and subsidies, she proposes to limit the cost of child care to 10 percent of a family’s income, a commitment that could be carried out in various ways. For example, the Center for American Progress, where we work, has proposed a refundable tax credit to purchase child care for families earning up to four times the federal poverty level ($97,000 for a family of four). The tax credit would be tied to state quality ratings of child-care programs so as to promote child development and school readiness.
Clinton would also expand early-learning programs starting at birth and make preschool universally available to all four-year-olds, just 29 percent of whom currently receive public preschool. She has proposed investing in programs that provide parenting support as well as a program called RAISE—Respect and Increased Salaries for Early Childhood Educators—which would address child-care workers’ chronically low wages and limited opportunities for professional development. Another component of Clinton’s approach helps parents who are studying for a college degree. She is calling for an increase in federal support for on-campus child-care programs from the current level of $15 million to $250 million, and an additional $1,500 child-care subsidy to go to parents in college.
Long a proponent of paid family and medical leave, Clinton also advocates legislation to provide up to 12 weeks of partially paid leave for the same qualifying conditions as under the FMLA. Clinton would finance the program by increasing taxes on those with incomes of over $250,000. As under the existing state programs, workers taking leave under Clinton’s plan would receive at least two-thirds of their normal wages, up to an as-yet-to-be-determined ceiling.
Another option for paid family leave is the FAMILY Act, a social insurance proposal supported by other Democrats that, like the Clinton proposal, would pay workers on leave two-thirds of their normal wages for up to 12 weeks after the arrival of a new child, or when needed to care for a seriously ill family member or to address the worker’s own serious health concern. Sharing the cost of the program, employers and employees would each pay a tax of 0.2 percent of wages, which for a worker earning the median wage would amount to $1.65 per week.
While neither presidential candidate has yet addressed fair scheduling issues, progressives in Congress have proposed a bill, The Schedules That Work Act, which would give workers the right to request more flexible or predictable work schedules and protect them from retaliation for making those requests. The legislation would also require schedules to be posted at least two weeks in advance and provide additional pay to workers who are subject to “just-in-time” scheduling. Under just-in-time schedules, firms send workers home early from shifts when business is slack and require them to call in and report to work on short notice when the company needs them. These practices contribute to income volatility and make it difficult to create budgets, arrange child care, hold a second job, or attend school while working.
Despite support from both Clinton and Trump, work-family policies will face significant political hurdles in Congress, especially if Republicans continue to control at least one chamber. Aside from concerns about his own work-family balance, House Speaker Paul Ryan has yet to offer support for policies such as paid leave, child care, and fair scheduling.
Child-care expansion and the creation of a comprehensive national paid family and medical leave program are two of Clinton’s most ambitious policy proposals to help working families. As a seasoned politician and pragmatist, she has also offered incremental steps that may provide a basis for striking a compromise with Republicans. Despite the obstacles, she would have one thing on her side if she is elected: The majority of voters, even those who identify as Republicans or independents, show strong levels of support for government intervention to provide paid leave and child-care assistance. In this case, what is good for the economy and good for families would also be good politics, too.