Asymmetrical Information

And, of course, State-mandated paid leave for parents has led to a sharp increase in birthrates, helping to correct Europe's demographic problem... oh, sorry.

I like the subtle switch to British spellings...

I dislike the subtle shift to British spellings.

Is that all? Geez, we could invade at least two countries and impose democracy on them for that cost!

PurpleHayes: that cost reoccurs every year.

You'd think we might be able to cadge $150 billion per annum by forcing this Administration to design programs that fit within the estimated cost of those programs (the real estimates, that is; not the ones they withhold from Congress).

At what point do Republican claims to be "cost-conscious" stop being merely self-serving and become self-evidently laughable?

SCMT,

The last time that occurred (becoming self-evidently laughable) was in the 90's; it also occurred in the 80's. The GOP has shown time and time again that they can't resist adding programs and increasing spending. The only difference between the GOP and the Dems is that the Dems want to spend even MORE money.

SCMTim:

Is the propensity of gov't to create an estimate that's later as useful as the points on Whose Line limited to "this Administration"? I'd understood it to be a truly democratic evil.

What I don't get about long parental leave programs is how companies are expected to function well when they lose valued employees for a year and a half at a time, yet have to hold those jobs open. What do they do, hire a temp? How long to train the temp? How do you then transition-out the temp at the end? How do you address the lost or outdated skills of the employee, in those industries where such things apply? (whispered:) What do you do if the temp turns out to be better than the original employee?

I took advantage of the FMLA when my first was born. Working a little from home in those tricky newborns months gave me an effective four-month unpaid leave rather than the twelve weeks mandated by the FMLA. I did my best to prepare my work and my coworkers to cover that time, necessary because there was no plan to replace me even temporarily. But if I'd been gone for six months or a year, it obviously would have been impossible for my company to take up the slack I'd left; they'd have had to bring someone in. That action would have involved familiarizing a brand-new employee with all my projects, including those under litigation; getting him/her up to speed on the company's protocols and policies; and ensuring that all regulatory deadlines were met from the get-go - no allowance would have been made for the new person's ramping-up period. And that's without paying ME for the leave. Where gov't isn't already occupying the empty chair in the boardroom, how do you work this kind of thing?

Assuming that women would take advantage of this option more than men, the implementation of the plan would make the average cost of hiring a woman more expensive relative to a man. In my opinion, this would not be a good thing for women. It would be harder to start out in high paying careers, like an attorney. Less women in the workforce because of a government mandated program is not a good thing.

Parental leave obviously only works well for large companies, where qualified people already exist in the workpool and where a lot of jobs are relatively standardized. In fact, there's an "industry" where parental leave already exists--teaching. In our school district, new parents who are teachers get to take maternity/paternity leave for one year. A long-term sub is hired for the interim period. After the year, the teacher returns to active teaching. Granted, the leave is unpaid, but this is an opportunity not granted to many employees in this country. (If the long-term sub is better than the original teacher, you try to hire the long-term sub on a permanent basis for another teaching position.)

Things were so much simpler in the barefoot and pregnant days. I guess there no chance of the return of the rule of thumb. You've come along way babe.

So Fab:

As it happens, I'm barefoot right now. Not pregnant, though - it's SOOOO been done.

We have indeed come a long way, babe. The question is, having come this far, is it necessary, preferable, or feasible to go all the way to Sweden?

Rex, yes, you can make the parental-leave thing work (without pay) where training/requirements for a specific job are pretty standardized (e.g. as you say, in teaching, where a curriculum exists). But that isn't possible in a lot of jobs. I think the standardization has more to do with the feasibility of long unpaid parental leave than the size of the company. (Size of the company MAY matter more if we're talking about PAID leave - I don't know.)

Funny, when I read the CT post the first thing I thought was ONLY????

You know what they say, great minds think alike....and so do we. :)

I would think that in a society where 8 weeks of holiday is the norm, there would already be in place some of the infrastructure and hiring practices which would also make extended parental leave possible.

In other words, there has to be a lot more job sharing and duplication of skills in European countries than there is here, where vacation time is, what, 2 weeks average, less for professionals? (That's a guess, I don't know what the real statistics are). And a lot of professionals I know, aren't entirely away from work when they're on vacation. They bring the cell phones, lap tops and fax machines and spend at least an hour or so a day keeping heads above water (not that I think that part is healthy). I assume this does not happen when most Europeans vacation.

So I would expect that implementing such a parental leave plan here would be a lot more costly than the estimates suggest. (Can't get the link to CT to work, so I can't be sure the studies didn't take this into account.)

I'm the father of two small children. I do NOT think that the government should tax my fellow citizens to subsidize my choice to procreate.

Call me crazy. But then, I also don't take my toddler to a five-star restaurant or encourage my wife to breast feed in public.

Sebastian Holsclaw: Funny, when I read the CT post the first thing I thought was ONLY???? You know what they say, great minds think alike....and so do we. :)

Same here. Talk about downplaying costs!

Denise, I think most Europeans max out at 5 weeks' vacation, and in many countries, much of the professional workforce takes several of their weeks at the same time of year.

This sounds like nitpicking, but between those two factors, I think I could see how Europe would get by with short-term coverage instead of long-term replacements.

Ya' know, my familiy's life would be a lot easier if only .00001-.00002 percent of GDP was transferred to me, just once. Can I expect Crooked Timber to take up my family's cause?

The fact that you people are even talking about this is exactly why I stopped paying taxes over a quarter-century ago.

JT,

One or two countries fixed per year sounds fine to me.

'Put it another way, that's $600 per annum for every worker--minimum wage and up--in the workforce. At the high end, taxes would have to rise by 3-5 percentage points to pay for this one programme, since only the top quarter of the income distribution pays any significant tax. If it was done by payroll tax, it would require a lower increase, but it would also be regressive, unless you cap the "paid" bit.'

1) 2% of US 2003 GDP is 220 billion (CIA factbook).
2) Evenly dividing that over the workforce (140 million employed, civilian labor force) results in annual costs of $1,500/worker. You did the inverse calculation.
3) Calculating cost/worker implicitly assumes that it's entirely paid for by labor's share of income.
4) Calculating the effective rate or amount paid by spot in the income distribution is highly, highly dependent on which taxation model is used. If you just assign it all to labor & copy over the % of total taxes paid, effective rates, & marginal rates for federal income tax:

* The top 20% of workers would pay 80% of the tax.
* The top 40% of workers would pay 97% of the tax.
* The amount of money taxed from every bracket would increase by 2%. I have no idea how you get from there to a top marginal rate increase of "3% to 5%" from 35%; that'd be an increase of the top marginal rate by 10% to 20%. With the geometric distribution of income I severely doubt it'd be even close to the 35->38 bump.

In summary, "evenly divide cost by number of workers" is grossly misleading. The median worker's annual costs would be small.

http://www.taxpolicycenter.org/TaxFacts/TFDB/TFTemplate.cfm?Docid=294

I was taking 1% of estimated 2005 GDP, which is just about $14 trillion according to the source I used. I got an American labor force of 188 million by multiplying a labor force participation rate of 62.7% by US population of roughly 300 million. However, your number may be correct; that labor force participation rate may have been percentage of adults, not percentage of population.

I think you're calculating the tax rates wrong. 2% of GDP cannot be raised by increasing tax rates by 2 percentage points, because total federal taxation is only 20% of GDP. 2% of GDP would thus have to be raised by increasing tax rates by 10%. Given an effective tax rate of roughly 30% on people who pay significant taxes, that gives us an increase of about 3 %points. However, if we try to skew it towards the highest levels of taxation, that rate will need to be higher, perhaps 5 %points. Double that, of course, if you want to spend 2% of GDP rather than 1%. In both cases I'm assuming no deadweight loss, which is, of course, rather unrealistic.

Your numbers, of course, just make the case for subsidized day care look worse.

Good point. Doesn't change the cost for the median worker, though; $600 is probably off by an order of magnitude.

Personally, being a journalist living in New York, I'm living on a pretty tight budget. 1-2 percent of my income is a meaningful, important sum to me. And if I were, say, a woman who's always wanted kids but for one reason or another hasn't had them, I'd be pretty damn mad.

Didn't you get a cut in your income tax rates when Bush came into office over 4 years ago? Certainly that must have equaled at least 1% of your income. What did you do before then?

Programs like these are difficult to really measure because they are essentially transfer programs. Yea taxes go up $150B but so does income for those who have kids. So if this results in an increase in the stay at home, surfing the web buying stuff population then you may discover your income may actually go up!

Of course there's an economic cost since resources are diverted from what the market would have allocated but it would be lower than the nominal cost of the program.

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