Kristin Shapiro and Andrew Biggs have offered a new idea for providing paid parental leave. They sum it up like this:
The federal government could provide paid parental leave to all workers in the United States by offering them Social Security parental benefits. The proposed program would be structured to be self-financing. In return for receiving parental benefits, new parents would agree to defer their collection of Social Security benefits upon retirement for the period of time necessary to offset the cost of their parental benefits. Participation in the program would be strictly voluntary; new parents who do not need parental benefits or who do not wish to defer their retirement benefits would not be required to participate.
In short, parents of newborns that chose to take paid leave will be required to make up those benefits at the end of their career by retiring later and foregoing old-age pension benefits.
Michael Hiltzik has already offered a scattershot criticism of this idea, but he manages to miss the crucial problem with it, which is that it goes against the purpose of family benefits. The main purpose of family benefits is to promote equality between similarly-situated families with different numbers of children.
The only way for a family with three kids to live like a family with zero kids is if we ensure that the three-kid family does not have to forego many months of pay every time they give birth (paid leave), does not have to drop out of the labor force to provide care and education during the workday (public child care, public school), and does not have to shoulder the entire financial burden of raising their kids (child allowance, child tax credit). A society that fails to provide these kinds of family benefits is one that is massively slanted towards those who have few or no kids, which seems unfair from an egalitarian perspective.
Unlike normal paid leave plans, the Shapiro-Biggs plan does not try to equalize the conditions of families with different numbers of kids. Instead, it intentionally maintains that inequality by requiring people who have more kids to retire later than people who have fewer kids. Put simply: the proposal takes the inequality that paid leave is meant to solve — people who have children are forced to forego pay — and moves it to the end of the career by forcing people who have children to forego old-age pension. The inequality is thus shifted to another ledger without being ameliorated at all.
Parent Tax Penalty
What’s particularly odd about the Shapiro-Biggs plan is that previous conservative ideas to expand social benefits for families seemed to understand that their purpose was to counteract interfamily inequality.
As bizarre as it was, the Reformocon notion of the Parent Tax Penalty, which states that people who have children pay FICA payroll taxes twice (once for themselves and once through their kids), at least gestured towards the idea that families with more children shoulder greater financial burdens than families with fewer children and that these burdens should be equalized for fairness reasons. As Robert Stein noted, families that raise children spend well over $200,000 per child doing so, and then those children enter the labor force and pay for the old-age pensions of all elderly people whether they had children or not.
The Shapiro-Biggs plan somewhat amusingly takes the exact opposite stance on the relationship between child-having and old-age pensions. Whereas Stein and the Reformocons argue that people who have children should receive financial relief because they make possible the old-age pensions of everyone (including the childless), Shapiro and Biggs say they should receive no financial relief and should actually retire later than people who saved $200,000 or more by choosing not to raise the next generation of workers that pay their old-age pensions.
Although I think it’s clear that the Shapiro-Biggs plan is ridiculous, there may be a cynical case for supporting its passage in the short-term. The cynical case is that, after such a policy was enacted, it would be trivially easy to subsequently kill the part where parents who take the benefits are forced to retire later. In fact, you would have about 25 years of time before the first recipients of the paid leave benefit would be retiring. If the Democrats took control anywhere in that 25 years, they could ensure that nobody who received the paid leave benefit has to delay their retirement for doing so. Indeed, adopting the popular plank of “ending the parent retirement penalty” may even make it easier for them to take power in the future.