If policies like paid parental leave and subsidized child care enabled more mothers to work, the United States could add five million prime-age workers to its labor force, according to a new economic letter from the Federal Reserve Bank of San Francisco. Spending on child care makes the biggest difference in female employment, earnings and fertility, found a recent paper.
The California policy would be the nation’s biggest test of the idea that longer leave, by encouraging parents not to quit their jobs and by delaying the need to pay for infant care, can help economic growth.
But the governor will face questions about whether it would require a tax increase; how the program could stay solvent if there were a recession; and how businesses would cope with employees’ long absences. California’s existing paid leave program is financed by a 1 percent payroll tax. Increasing that tax would require the approval of two-thirds of the Legislature, not assured despite Democratic control.
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