The U.S. is the only developed country in the world that doesn’t mandate employers to offer paid leave time for new parents.
Yes, that’s right, while employers — by law — must allow a new mother to take up to 12 weeks off after giving birth or adopting, there is no law stating that this time off must be paid. To pay or not to pay is left up to the specific employer. It’s a far cry from other countries, like Finland, where new mothers are allowed up to 3 years of paid leave. New moms in the U.K. get nearly 40 weeks of paid leave. In our neighbor country, Canada, new moms get up to one year. But here in the U.S., there is no such guarantee — at least nationwide. Certain states have passed legislation mandating paid leave, however.
The good news is that about one out of every three employers in the U.S. offers some sort of paid leave. Yet, there’s bipartisan support for some sort of policy to pass to make paid leave mandatory — and not optional. One new proposal making the rounds around Washington D.C. is a paid leave loan of sorts. Under the proposal, parents would be able to take paid family leave in exchange for delaying social security benefits as they enter their twilight years.
Here’s a closer look at the proposal, called the CRADLE Act, from Republican senators Joni Ernst (Iowa) and Mike Lee (Utah):
The Family Leave Conundrum
The majority of politicians, including President Donald Trump, favor some sort of paid leave for new mothers. The problem is that nobody can seem to agree on how to implement it. The proposal from Senators Ernst and Lee mark the first time that paid family leave has been tied to social security benefits. Under the CRADLE Act proposal, new parents would receive compensation for up to 3 months should they follow the appropriate guidelines. Here’s a look at those guidelines:
- New parents would have to notify the SSA of their intent to take a leave anywhere from six months to a single month before the child is expected with their plan to take a paid leave. Child birth and adoption would qualify.
- Applicants would also have to notify their employer of their plans up to 30 days in advance of the expected birth or adoption.
- Other qualifiers include U.S. citizenship and having worked at their employer for long enough. For example, those who worked four out of the previous six quarters for the company would qualify.
- New parents would be permitted to take either one, two or three months off under the CRADLE Act’s guidelines. What they would receive as compensation would be calculated based on the SSA’s current disability payout.
So, how many months of retirement pay would be postponed for those who take leave? Under terms of the CRADLE Act, for every one month of paid leave taken, retirement benefits would be postponed by two months. So, new parents who take the maximum three months of paid leave would have retirement benefits delayed by half a year. The intent is for the CRADLE Act to be budget neutral, so it wouldn’t add to the national debt or detrimentally impact the social security administration.
Could it Pass?
Like any piece of legislation, there are pros and cons. The pros of this proposal are that it offers a solution to granting new parents paid leave, and is budget neutral. It could also lead to a broader discussion of Social Security reform, which many politicians have called for. Employers would likely enjoy it too, as it would save them money and the hassle of complying with various states’ policies.
The cons? Some may argue that it works too much like a loan. Plus, it could really delay retirement benefits for parents with multiple kids that took it when they need it the most later on in life.
Regards,
Ethan Warrick
Editor
Wealth Authority
