From Where Does The Money for Long Paid Maternity Love Come?

cropped-smallivy1.jpgI was reading an interesting commentary in Yahoo Parenting called “The Real War on Families: Why the U.S. Needs Paid Leave Now.”  It was talking about how other countries have a requirement for businesses to provide a year or more of paid time off when a family has a child and that the US should adopt this model.  Personally I think that every family that can should have one parent take a really long leave after having a child – like ten to twenty years.  I just think its very important for a child to have a parent home to care for and teach them during the early years.  Even when the child starts school and doesn’t need some one home all the time, having a parent with a flexible job so that they can stay home with the child when sick, take care of all of the things that come up that require a parent during the day, and be there for the class parties, field trips, and awards ceremonies makes things a lot easier.  Probably the best thing would be to have a parent who is able to take part-time assignments with long due dates and then work from home so that they can flex their time as needed.

Still, I’m not sure that requiring companies to provide lots of paid time off, rather than simply allowing employees to negotiate for such benefits as part of their employment package, would be a good idea.  It just seems like there could be unintended consequences of forcing companies to pay for a year or two of salary and benefits to employees who were not working during that time.  For the employer, it would mean paying for work that was not being done, plus paying someone else to fill in for the parent that was out to complete the work.  This would be a relatively small expense for a company with a thousand employees who had one out on leave at any given time, but it would really be an issue if there were several employees who ended up having children at the same time.  Certainly small businesses cannot cover the loss of three or four employees, and even large businesses would feel the strain if one to two percent of their were out and they needed to pay for the work twice and only receive it once.

Now, I love free stuff as much as the next person.  I would love to have my boss give me three months off per year of paid time, give me fantastic health insurance that paid for anything but still gave me full flexibility in the doctors I see and the medicines I take, and even pay for my gas to get to work and lunch each day.  The issue is that the money to pay for those things would need to come from somewhere.  Without something to offset these generous benefits,  I would be consuming more than I would be producing, which is an imbalance that cannot continue for very long.  I would expect to have a smaller salary, such that I would really be the one paying for those things, pay more for things since I’d now need to cover more lavish benefits for others like me, or both.  Not everyone can work for the government and force your “customers” to pay you for more than you produce under threat of jail time.

So there are several questions that arise, and I’d love to hear from people in foreign countries that have long maternity leaves required for businesses to understand how this would work.  I’d also love to hear from advocates for long paid leaves about how they think it would all work.  Specifically:

Where does the money come from?  If your country requires long paid maternity leave, do you make the same salary as someone in the US in a similar job, or do you make less, such that you’re trading salary for this benefit?  Also, do things generally cost more than they do in the US, meaning you’re paying for this benefit for other people when you shop?

For young couples, are employers reluctant to hire you?    Having the choice between a more senior person less likely to have children or a young married man or woman in prime child-bearing age, the employer might select the former to reduce the chance of needing to pay for a long maternity leave.  Do you notice this happening?

If you could be paid 10% more or have a paid one-year maternity leave, which would you take?  Having forced maternity leave makes the decision for you and those who don’t have children are penalized.  Would you rather just get paid more and then decide to take the time off unpaid, using the additional salary you received before and after the leave to make up for it?

Do people who don’t have children get ahead of those who do?  Just because you’re able to take paid time off doesn’t mean you’re not losing experience, both forgetting some of what you know and not getting the experience others are getting while you’re gone.  Do coworkers who don’t have children end up moving ahead while you’re out, and is it hard to catch up again once you return?

I’d love to hear your comments on this! Please let me know what you think, especially if you have experience in the matter.

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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Comments appreciated! What are your thoughts? Questions?

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