Personal Finance

With paid family leave still up for debate, here's one way lawmakers could compromise

Key Points
  • A paid family leave proposal may be at risk of getting cut from Build Back Better legislation due to costs.
  • But there are ways to pare down the price tag, an analysis from the Bipartisan Policy Center shows.
  • By limiting the benefit to just new parents and adding means testing, lawmakers could extend the number of weeks of leave available as well as cut the price.
Alexi Rosenfeld | Getty Images

As Democrats' Build Back Better plan advances to the Senate, one key proposal — paid family leave — may be at risk of getting dropped from the $1.75 trillion package.

But there is room for lawmakers to compromise and come up with a plan that costs less, according to a analysis from the Bipartisan Policy Center, a Washington, D.C., think tank.

The House of Representatives last week passed its latest version of the Build Back Better bill with a 220-213 vote comprised solely of Democratic support. It included four weeks' paid family and medical leave for all workers, from employees to independent contractors. That is down from 12 weeks in a previous $3.5 trillion proposal.

Lawmakers could still push back on the price tag, namely Sen. Joe Manchin, D-W.Va., who has expressed his opposition.

New estimates from the Congressional Budget Office indicate the paid leave measure as proposed would cost around $205 billion over 10 years.

House Dems put paid family leave back into social spending plan
House Dems put paid family leave back into social spending plan

"What I have made clear to the President and Democratic leaders is that spending trillions more on new and expanded government programs, when we can't even pay for the essential social programs, like Social Security and Medicare, is the definition of fiscal insanity," Manchin said in a Sept. 29 statement.

However, in an interview with Face the Nation on CBS on Sunday, Sen. Kirsten Gillibrand, D-N.Y., a staunch supporter of the issue, said, "Joe Manchin has come a long way on paid leave."

Manchin's office declined to comment.

However, the Bipartisan Policy Center found that by narrowing the program to cover just leave for new parents, lawmakers could bring down the cost and perhaps even extend the length of time off.

A six-week parental leave program could slash the estimated costs for the current proposal by about half. The Bipartisan Policy Center estimates such a program would cost $85 billion to $108 billion.

Lawmakers could instead opt to extend a paid parental leave program to eight weeks, which would come with a price tag ranging from $105 billion to $133 billion. At 12 weeks, it would cost $128 billion to $169 billion, still well below the current four-week proposal that applies to most workers.

There's not a lot in this package for new parents if paid family leave falls away.
Adrienne Schweer
Fellow, Bipartisan Policy Center

Those costs could be reduced even more by "means testing" the program. A 12-week program targeted at workers with incomes less than 325% of the federal poverty level would could cost about $43 billion. If that was expanded to workers with incomes less than 450% of the federal poverty level, it would cost about $58 billion.

The estimates were calculated by the Bipartisan Policy Center, with help from research from the American Enterprise Institute and American Action Forum.

"There's not a lot of conversation about how you could play with dials that are different than just the number of weeks to get a pretty robust program for a minimal cost," said Adrienne Schweer, a fellow at the Bipartisan Policy Center and lead of its paid family leave task force.

A paid parental leave program could be easier to start versus the broader proposal that's now on the table. One reason is that it would have simpler certification requirements and be easier to verify compared to caregiving or medical leave. Moreover, the federal government already has experience administering such a program to federal employees.

It would also help bring the U.S. in line with other developed nations, due to the fact that the U.S. is one of the few countries without maternity or paternity leave policies in place.

More from Personal Finance:
House passes legislation including paid family leave
Restrictive retirement rules for the rich edge closer
House bill's child tax credit is a boon for low earners

While the Build Back Better plan has other features to help children — including extending the monthly child tax credit payments and providing for child care — those would not help babies or their parents, Schweer noted.

"There's not a lot in this package for new parents if paid family leave falls away," Schweer said.

If paid leave is not addressed now, it could take years for Washington lawmakers to revisit the issue, she said. As next year is an election year for many officials, they will likely be reluctant to pick take up big bipartisan issues.

While it is unclear whether Democratic lawmakers are discussing a parental-leave only program, some leaders have said they would be willing to consider it.

"I still would like to see paid leave for the babies, if we can't get the rest," House Speaker Nancy Pelosi, D-Calif., said of Build Back Better negotiations at an Oct. 28 press conference.