Paid family and medical leave is a policy that’s so popular and eminently sensible that even the Grand Old Party appears to be coming on board. But “appears” may be the most important word. That’s because the “Protecting Worker Paychecks and Family Choice Act,” a draft proposal from two senior Republicans on the House Ways & Means Committee, isn’t really paid family leave at all, despite its promise to expand access to this crucial benefit.
“Our package is based on the premise that strong economic growth is the foundation for ensuring flexible options for families through better jobs, lower unemployment, and higher wages—not one-size-fits mandates that put Washington in control and result in lower paychecks for workers,” said Kevin Brady, the ranking Republican on the committee.
The problem with that is that paid family and medical leave is, largely, a one-size-fits-all proposition in that everyone should be able to take paid family and medical leave no matter what their work situation, income level, or gender.
This bill looks a lot more like nibbling around the edges with changes that favor employers and white-collar workers. It’s an assortment of policies that check a lot of Republican boxes, like tax cuts, and personal responsibility, and there are some nice things in it. But it is not a plan that will make universal paid family and medical leave a reality for American workers.
The GOP Plan for Paid Family and Medical Leave, Explained
The bill would make the Paid Family and Medical Leave tax credit, originally a part of former President Trump’s Tax Cuts and Jobs Act, permanent. The credit allows companies that provide paid family and medical leave to receive a reimbursement from the IRS between 12.5 and 25 percent of the wages they pay to workers on leave. It would also allow companies to add some administrative expenses to the credit base, increasing what they would receive without increasing the pay the worker receives while on leave. The credit would gradually decrease over the first five years an employer offers paid leave so that by year six a company wouldn’t receive any subsidy at all.
Unfortunately, this tax credit doesn’t give companies that don’t currently offer paid leave don’t have much more of an incentive to do so. It’s still up to them to pay for the bulk of the cost, and the fact that they receive no tax credits at year six and beyond further lessens the potential motivation of the tax credit for companies that don’t already offer paid family and medical leave.
The bill also proposes a new structure, family savings accounts, which would serve as a tax-advantaged (i.e. untaxed) place for individuals to contribute and the government to match those contributions, up to $1,000 annually for workers making less than $50,000. Generous employers, state governments, and even non-profit organizations would also be able to deposit funds in these accounts, which could be used to pay for everything from school expenses to child care, elder care, and, yes, wage replacement during periods of parental or medical leave.
Unfortunately, many low-income families can’t afford to stash $1,000 a year, which means the neediest won’t receive the $1,000 match. And the other sources of funding are all optional—there’s only so much employers, states, and non-profits can and would deposit into these accounts. And that they are so flexible means that many parents will use those funds to pay for things like home care for elderly parents or college tuition for older kids, sacrificing their chance for paid family and medical leave down the line. Pushing people to make these tough choices is the kind of awful situation a mandatory paid family and medical leave law would allow Americans to avoid.
The bill would also make it easier for small businesses to pool together to pay for paid family leave, something that’s already allowed for disability insurance and other specified benefits. That would make it easier and cheaper for employers to provide paid leave, but it’s not enough of an incentive to get a critical mass of employers to offer the benefit.
If this bill passed, eligible low-income parents could receive an existing child care subsidy directly as partial wage replacement to stay home with a baby in lieu of child care assistance. Only parents with work history in the previous four consecutive quarters would be eligible for the benefit, which essentially pays parents a small amount of money to stay home in the first 12 weeks of having a child on the condition, among others, that they not receive paid leave from any other source. That’s a good thing in that it gives parents more of a choice to stay home but still does not ensure that everyone can take time off after the birth or adoption of a child.
The proposal also includes the Working Families Flexibility Act, an existing resolution that allows private employees to take compensatory time off in lieu of cash for overtime wages (like many public employees do), up to 160 hours per year. Essentially, employers and employees could mutually agree that overtime hours be compensated with paid time off at a rate not less than one and a half hours for each hour of overtime worked.
All of these provisions add up to a law that has some benefits for employers and white-collar worker whose companies already offer paid family and medical leave but is inadequate to reach what has to be the lodestar in this effort: guaranteed paid family and medical leave for every American worker regardless of their income level.
The GOP Plan for Child Care
Brady’s bill, which he introduced along with Rep. Jackie Walorski, would also change existing laws around child care. It would allow employers to claim a tax credit for subsidizing off-site and back-up child care for employees and increase the reimbursement of this credit for small employers from 25 to 50 percent.
It would also decrease the amount parents would receive in child care assistance, a move that Republicans claim would prevent them from falling off of “the child care cliff” by encouraging them to “gradually increase their earnings toward independence,” which is magical thinking at best. (Given that child care can cost as much as tuition at a four-year public college, financial independence is not the problem. The lack of affordable child care is.)
States would also have to spend 100 of the entitlement portion of a specific federal child care block grant on child care assistance in an effort to increase parent choice of providers, including faith-based providers. Setting aside the constitutional concerns about giving government money for religious education, the plan restricts what states can do with the money they’ve received, an interesting move for the party constantly decrying the power of the federal government. And speaking of federal funds, it would also redistribute the $633 million increase in child care entitlement funds in the American Rescue Plan Act to each state based on the number of children under the age of 13 in poverty compared to other states.
It would also beef up existing dependent care flexible spending accounts, allowing parents to contribute triple the current limit, allowing funds to roll over from year to year, and expanding the list of eligible expenses and the maximum dependent age from 13 to 15. Again, however, this does nothing for people who don’t make enough to save money in an account like this, so only higher earners will actually benefit from what amounts to a nice tax cut for those who use these accounts.
There’s also a call to establish a commission to create a report with recommendations on streamlining financing of early care and education and require the HHS secretary to report to Congress on state child care regulations with an eye on decreasing costs. These provisions are likely code for cutting regulations which, when you consider the stakes, seems rather ill-advised.
Finally, the bill would provide states with options to spend unallocated dollars from the $24 billion child care stabilization fund created by the American Rescue Plan. That includes money for family child care providers, improving child care facilities, and grants for employers to start and expand child care programs for employees.