When Ivanka Trump pushed for more government regulation on businesses for family leave at the Republican convention, some wondered whether Donald Trump took it seriously. The answer, according to the Washington Post’s Robert Costa, is apparently yes. Trump will propose six paid weeks of maternity leave, along with child-care tax credits aimed at families earning $500,000 a year or less:
A campaign memo shared early Tuesday with The Washington Post shows that Trump’s plan “will rewrite the tax code to allow working parents to deduct from their income taxes child-care expenses for up to four children and elderly dependents.”
That deduction would be capped at the “average cost of care” in the state of residence, and it would not be available to individuals earning more than $250,000 or a couple earning more than $500,000. …
Another policy proposal will be guaranteeing “six weeks of paid maternity leave” through an amendment of current unemployment insurance policies.
Currently, employers are required to give twelve weeks of unpaid maternity leave, allowing new mothers to return to the same position (or one of similar rank and equal pay). That creates a burden on employers already to fill positions temporarily, and the costs are not a wash. If employers have to pay six weeks of salary on top of that, the costs will be enormous.
Costa’s description of this proposal sounds like it won’t be a mandate on employers, at least not directly. Trump may propose to pay benefits through the unemployment insurance system, even though the mothers will still be employed. All that does is shuffle the costs around, because employers already pay unemployment insurance tax on every employee to both the state and federal governments in order to fund unemployment payments. Adding maternity to the conditions that trigger payment will force those taxes upward, and probably sharply.
Let’s do the math. In 2014, the latest period for which the CDC has birth data, the US had 3,988,076 births — 40% of which were to single women, by the way. Using the current labor force participation rate for women (56.8%), we can estimate that women who are employed had roughly 2.27 million of these births but that figure may really be higher than that, especially given the high percentage of births outside of marriage. The average per-capita income in the US is $28,555 (2014 figures, Census Bureau), which would amount to $549 per week, or about $3300 for six weeks. The cost of this program would be another $7.5 billion in payouts from the unemployment system each year, on top of the payments already being made for actual unemployment.
Now consider the current status of budgets, not just at the federal level but also in each of the states. Almost every state has a looming pension crisis, and the federal budget operates on 40% borrowed money — on top of having an entitlement-program crisis looming. The system does not have room for another entitlement program, and businesses are already struggling with costs. This program would have to burden employers because it has nowhere else to go, and it’s going to hurt smaller businesses more because of the realities of the economies of scale. It will be yet another reason for businesses to refrain from hiring as a way to limit their exposure to higher taxes, along with the other employer mandate that came from ObamaCare.
When Ivanka highlighted the “wage gap” in her speech at the Republican convention, I warned this might be coming:
What made this stand out even more was that it was the only issue in which Ivanka went into detail. The other political points raised in her introduction were at the level of my father will fight for you on this. Ivanka spent three of the 22 paragraphs of her speech on this point alone. Clearly, Team Trump understands that they have a steep gender gap to bridge in the general election, and they may have wanted to pre-empt (or “triangulate”) the issue ahead of next week’s Democratic convention, when Hillary Clinton will ride it hard. To conservatives who already worry about Trump’s propensity toward top-down governance, it sounded like a signal for the kind of government intervention in marketplace decisions that they usually fight Democrats to stop rather than Republicans.
This is more than triangulation — it’s a surrender on the principle of limited government. The tax credits may or may not be wisely configured, but guaranteeing pay will require precisely the government intervention at which Ivanka’s speech hinted. We’re still giving away fantasy money, spending cash that even our grandchildren’s grandchildren haven’t yet earned, and now Republicans want to indulge that same Democratic fantasy.