Today, on Mother’s Day, we must confront that motherhood is now a greater determinant of pay inequality than gender.
Today, on Mother's Day, we must confront that motherhood is now a greater determinant of pay inequality than gender. https://t.co/n1HhF8PyVc
— Ivanka Trump (@IvankaTrump) May 15, 2017
A day later, the White House issued a statement, calling for more and better access to women’s healthcare. President Donald Trump said that improving access to “quality prenatal, maternal, and newborn care” and implementing maternal and paternal leave are high priorities for the administration.
The headline-maker in the president’s statement deals with paid family leave, an initiative that Trump claimed earlier this year has bipartisan support. The U.S. remains the only nation in the Organisation for Economic Co-operation and Development (OECD) to not mandate paid maternity leave.
Here is what the president said on Monday:
I am committed to working with Congress to help mothers – and fathers – have paid family leave so that childcare is accessible and affordable, and to invest in the comprehensive care that women receive at community health centers.
— Sarah Sanders (@PressSec) May 15, 2017
Both statements suggest that the president is getting his policy advice from his daughter. And that is troubling.
Since the start of Trump’s bid for the presidency, Ivanka has been advocating for social justice actions. In September 2016, she wrote in The Wall Street Journal that her father’s childcare plan would “guarantee six weeks of paid maternity leave.” Although this has been something championed by the left for years, Ivanka was grilled by the media. She was immediately criticized for the proposal by Cosmopolitan magazine because it did not include gay couples.
As President Trump and his daughter promote feel-good legislation, they should ask: is forced paid parental leave the solution for women? Hardly. In fact, it does more harm to the female worker.
Free market economist Ludwig von Mises wrote in “Human Action” that a business will mull over the total cost of hiring a particular worker, and not simply a nominal wage:
In weighing the pros and cons of the hiring of workers the employer does not ask himself what the worker gets as take-home wages. The only relevant question for him is: What is the total price I have to expend for securing the services of this worker? In speaking of the determination of wage rates catallactics always refers to the total price which the employer must spend for a definite quantity of work of a definite type, i.e., to gross wage rates. If laws or business customs force the employer to make other expenditures besides the wages he pays to the employee, the take-home wages are reduced accordingly. Such accessory expenditures do not affect the gross rate of wages. Their incidence falls entirely upon the wage-earner. Their total amount reduces the height of take-home wages, i.e., of net wage rates.
It may make politicians, voters, and workers feel good to institute mandatory paid family leave. Like any other coercive peripheral benefit, it will come with a price – an unintended consequence that will primarily impact women. A small business may want to hire fewer female employees or may choose an older female candidate over a younger applicant.
Moreover, in the marketplace, large companies will bid for the best and brightest labor. In Silicon Valley and Wall Street, for instance, tech behemoths and start-ups alike are offering exorbitant benefits and job perks to attract the right talent, including female professionals.
Netflix made headlines last year when it announced it was offering its employees unlimited vacation time. Google and Goldman Sachs have provided on-site childcare for years. Evernote employees get their homes cleaned twice a month for free.
These are all incentives aimed at nabbing workers with the best human capital. But, remember, these workers do not enjoy the right to these enticements.
For years, Democrats and Republicans have often sought paternalistic, nanny-state solutions, whether it is for paid or unpaid family leave. A free market solution is never considered. But it should.
Only companies and employers can come to the decision if family leave is paid or unpaid. Akin to sick leave or paid time off, businesses are the ones that set these terms of employment. And it is up to the employee to agree to the conditions or walk away for a better position that suits his or her needs.
In a free market, workers and employers are considered to be legally consenting, responsible adults who will agree or disagree on employment contracts. Whether it is vacation pay or company shares, leave it to the free market.
If the U.S. government wants to do damage to female workers then it should enact mandated paid family leave.