A new bill has been proposed recently in the District of Columbia which would entitle employees to 12 weeks of paid leave when they have a child. Diana Furchgott-Roth, a Senior Fellow at the Manhattan Institute, responded with a thoughtful commentary urging people to remember who would pay the costs of this policy: DC businesses and taxpayers.
While maternity leave is a desirable benefit, it comes with trade-offs. Someone has to pay for it. If that’s the government, then the leave comes at the expense of local taxpayers and businesses. If it’s businesses, they’ll have incentives to hire men over women to avoid the extra cost.
As Furchgott-Roth states:
Requirements for paid leave come with higher federal and state taxes, if funded by the government, and higher costs for businesses, if funded by employers. Higher taxes discourage women from entering the workforce, because a larger share of their paycheck goes to the government. Higher business costs discourage women from being hired. If a firm can choose a man who does not come with the cost of four months’ paid leave, men are more likely to be hired.“]
Every government policy, no matter its benefits or good intentions, has costs. The growing demand for more maternity leave is not sufficient cause for for government intervention. First, we should consider whether intervention is more effective and less costly than alternative solutions.
You can read the full article over at Economics 21.
Want to learn more about women and worker compensation? Check out our video below, which asks “Do women really earn less than men?”