San Francisco's Family-Leave Policy Is Right Goal, Wrong Approach

Hard to argue with this.

Photographer: Fiona Goodall/Getty Images

Next year, San Francisco will become the first U.S. city to guarantee fully paid family leave to almost everyone who works there. May it also be the last.

Or rather, may it be the last that makes employers pay so much of the cost. The way San Francisco has designed its program risks undermining support for the policy -- and there's little doubt that more generous and accessible family-leave policies benefit both workers and the overall economy. Workers who get paid parental leave are more likely to stay in their jobs and have healthier children, which can lower government social spending in the long run.

California -- like New Jersey, Rhode Island and, soon, New York -- has a dedicated payroll tax to ensure that most workers can get paid leave if they need to care for a newborn or an ailing family member. California's plan pays workers 55 percent of their wages for six weeks; San Francisco's law brings that up to 100 percent, and forces employers to pay the balance.

QuickTake Family Leave

The idea is to encourage more people to take advantage of the benefit; in California so far, just 25 percent to 40 percent of eligible mothers have done so. 

But the level of wage replacement isn't the only thing preventing people from taking family leave when they need it. A bigger problem is that many people don't realize the programs exist. In California, 51 percent of eligible workers don't, according to one survey. And the workers who stand to gain the most from family-leave laws -- those with low incomes and relatively little education -- are least likely to have heard about their state's program.

Another problem is that many people's jobs aren't protected. In California, only those covered by the federal Family and Medical Leave Act -- typically, people who work for companies with at least 50 employees -- can be sure they'll have a job to return to. San Francisco's law doesn't change that.

On this score, San Francisco's approach could make things worse -- by reinforcing the false impression that family-leave policies pit the interests of workers against those of their employers. Most businesses are likely to pass along some or most of the cost of the new program in the form of lower wages, higher prices or both. Yet the policy could strengthen business opposition to such laws in other cities and states.

A better way to increase parental leave benefits would be to raise the payments low-income workers receive from state programs. California will soon boost its wage-replacement level to 70 percent for people earning the minimum wage. That will shrink the gap that San Francisco is trying to close. The next step is to make sure all Californians know about it.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.