Category: Financial Security

Lessons from the Private Sector: The Need for Paid Leave

Today, women make up nearly half of the total workforce in America, yet many are forced to choose between having children and continuing their career. While women strive to have it all, they find it difficult to do so. This shift in the makeup of the American family requires a change in paid family leave policy to accommodate the millions of Americans who must choose between family responsibilities and their careers or earning an income. A 2013 Center for American Progress study found that seventy-one percent of children live in a family with either two working parents or a single parent, further demonstrating the need for such a policy change. Perhaps most striking, the United States is one of only three developed countries (out of 185 surveyed) that does not guarantee some form of paid family leave. This omission represents a severe lack of forward-thinking on the part of U.S. policymakers, and demonstrates how far behind the country is in providing what should be a basic protection in the workplace. Parents should not have to worry about losing their jobs or falling into economic hardship because they want to be involved in their child’s early development.

Private Sector Leadership

The private sector has become a leader in paid family leave policy, despite the federal government’s slow uptake on the issue. Companies such as Facebook, Netflix, Microsoft, and Nestle provide their employees with anywhere from twelve weeks to one year of paid leave to care for a newborn. Nestle has commissioned a study of its paid leave program (14 weeks of paid leave and the right to an additional six months of unpaid leave) in order to demonstrate that providing this benefit makes good business sense. The study plans to collect data on how many employees take advantage of the paid leave policy and how many of those employees remain at Nestle after returning from leave at six, twelve, and eighteen months.

Companies like Nestle, which have paved the way in progressive paid family leave policy, understand that this issue is about more than doing what’s right. Providing paid leave bolsters the economy by increasing the number of people in the labor force and strengthens an employee’s loyalty to his/her place of business. In 2013, one-in-five parents reported taking a leave of absence from work in order to address caregiving responsibilities. Similarly, a U.S. Census study on maternity leave reported that a quarter of first-time mothers either had to quit or were let go when they had their babies, and a Kaiser Family Foundation poll from 2014 found that sixty-one percent of nonworking women cite family responsibilities as the reason for their departure from the workforce. In addition to hurting the labor force, this also damages businesses because it creates a revolving door of new employees that act as a drain on a company’s morale and payroll. The average cost of replacing an employee is twenty-one percent of their salary, which oftentimes is a more significant cost than providing paid leave would have been. In addition, the cyclical pattern of parents moving in and out of the workforce is disadvantageous to women, who, if they have taken unpaid leave, are more likely to end up in a different job upon returning to the workforce, thereby hurting their chances for promotion

While fifty-nine percent of workers have access to up to twelve weeks of unpaid, job-protected leave through the Family and Medical Leave Act (FMLA) of 1993, many families (forty-six percent) cannot afford to take such unpaid leave after the birth of a newborn. This leaves families to choose between earning an income and caring for a child. This decision is particularly difficult for low-income families, as many of them cannot afford to take unpaid time off. Given the many disparities in paid family leave policy in the private sector, as well as the lack of protection afforded to low-income families with the current federal policy, it is time that the federal government take a page from the private sector and implement a progressive paid family leave policy in the form of a federal mandate.

A Federal Mandate to Follow

Only several months into the 2016 presidential campaign, candidates, including Hillary Clinton and Marco Rubio, have proposed their own paid family leave policies. While different in their approach, both policies underscore the belief that the current federal policy is not enough. Earlier this month, the D.C. Council introduced the Universal Paid Leave Act of 2015, which would provide almost all part- and full-time employees with 16 weeks of paid leave – the first of its kind in the nation. While these plans are encouraging to the future of paid leave, a federal law is necessary to ensure equal access across the nation. Federal paid family leave is the most practical and equitable way to protect new parents from having to choose between a career and caring for their child. A competitive, responsive work-sector, which comes as a result of offering paid family leave, will guarantee that the U.S. remains competitive in a global economy. Federally mandating at least twelve weeks of paid family leave would have a positive impact on the large number of parents in the workforce and would benefit the economy. In order to best serve the parents, children, and businesses in this country, it is time to pass paid family leave legislation.

*The views expressed are my own and do not reflect those of Priorities USA Action.

Image credit: Your Somerset

The Individual and Retirement Security

During the first Democratic primary debate, Bernie Sanders advocated for Social Security to be expanded to provide greater assistance for seniors, as millions of retirees are struggling to survive on that income alone. While Sanders looks to expand the program to help seniors, Republican presidential contenders like Marco Rubio and Chris Christie support means-testing beneficiaries and gradually raising the retirement age to keep the program intact for future generations by limiting eligibility. The conversation on retirement security is dominated by ideas on how to reform the massive entitlement program, but there is little mentioned in the way of encouraging greater private savings from workers to prepare for retirement.

The Problem

According to most recent estimates, the Social Security trust fund will be completely depleted by 2034. At $848.5 billion in FY 2014, Social Security is one of the largest entitlement programs – combined with Medicare, the behemoth constituted 42% of federal government expenditures last year. Its depletion presents a major gap in the form of retirement security for millions of workers.

Policy options to improve the program range from increasing payroll taxes, limiting benefits, and even changing program eligibility. While these measures seek to extend the life of the program, they do little to address individual retirement planning. Current incentives exist for individual savings, but these efforts must be revisited to better improve the retirement savings of the most vulnerable within our population. Policymakers can best address the lack of access to retirement savings, which predominantly affects minority and underemployed communities, by pushing for different incentives and options for individual plans.

The Current Gridlock

Social Security is unique because its depletion is the result of both the longevity of retirees that draw more benefits and demographic shifts resulting in a larger influx of retirees entering the program with far fewer workers paying in. Some of the most common policy options for reform that aim at extending the life of the program are met with disdain. For example, opposition to any form of tax increases prevents raising the current payroll tax of 12.4%, or raising the maximum taxable income for workers that could help finance more retirees. At the same time, changing the eligibility for receiving entitlements by raising the retirement age or by determining benefits based on means-testing individuals has met fierce opposition. In addition, large constituencies of retirees oppose elimination of the cost-of-living adjustments (COLAs) and other cuts to monthly benefits. Some other financial suggestions, including investing a portion of the trust fund into stocks would help expand the longevity of the program, but the financial risks associated are unforeseeable and can hinder retirement security.

The solutions presented are not entirely out of the question, and combined, they could actually help stabilize the program’s funding streams.

However, the political feasibility of these suggestions remains minimal, with both sides sticking to their traditional views of maintaining the current program benefits for retirees and refusing to raise taxes on workers. Individuals with their own retirement accounts and savings are much better prepared as they can supplement their retirement income and are less reliant on entitlements.

Challenges for Individual Retirement Savings

Current options for individual savings are taken advantage of by many workers who contribute toward employer-sponsored 401(k)s or IRAs (individual retirement accounts). Incentives for saving are mostly through tax-deductible contributions or tax-deferments, with some employer-sponsored plans even matching their employee contributions.

These individual savings options have existed for decades, but are they helping us save for retirement? Labor Secretary Tom Perez recently noted that nearly $12 trillion has been accumulated in individual retirement savings, but data from his department highlights that just 53% of American workers take part in retirement plans through their jobs. The data shows that employers who are less likely to engage in retirement plans are part-time, small employers, or businesses with lower revenues.

For ways to bring retirement security to minority populations and those who need financial security the most, there are alternative models being proposed. Last year, Marco Rubio proposed giving workers without access to a 401(k) plan the option to enroll in a Thrift Savings Plan (TSP), similar to those available to members of Congress. TSPs allow individuals to invest pre-tax income into savings with the government matching that amount for all but military personnel. The TPS model would benefit a large portion of the population and workforce not eligible for employer-sponsored plans and those earning too little to invest into their own savings account.

At the state level, credit unions have also introduced a lottery-based system that has proven to incentivize savings for middle- and low-income Americans. The ‘prize-linked savings’ (PLS) account was popularized at the state level, where depositors, in lieu of receiving interest on savings, would be entered into a raffle if they did not withdraw funds for a specific period of time. In states like Michigan and Nebraska, this model has proven popular. Legislation passed by Congress in late 2014 has attempted to build on this momentum by offering PLS products at banks and savings and loan associations. This option has led to increased savings because the chance of winning a lottery is a great motivator, and more deposits and contributions to PLS will yield larger returns for winners and secure savings for others.

Looking Forward

While the entitlement program has time before depletion, reform must be considered soon to preserve benefits for future generations. As solutions to extend the life of Social Security are explored, reforming our current retirement saving system is the best way to ensure a secure retirement for our workforce. Providing incentives to lower-income or minority populations to start saving now will help supplement entitlement earnings in the future. Prize-linked accounts and TPSs are just two ideas that represent the forward-thinking individual retirement solutions that can help increase access to retirement plans and secure savings for a more stable retirement.

Child Care Policy Needs Coherent Advocates

The Problem  

In his 2015 State of the Union address, President Obama listed numerous policies intended to help middle class families, including a proposal for additional assistance for child care. Days after the SOTU, a White House blog piece  by Betsey Stevenson indicated that child care is an issue for women as well as a financial security issue. According to the post, 63% of American families do not have a parent at home to care for children. Traditionally, since men are considered ‘breadwinners,’ it is a choice for women to work or not, and if they choose to work, then they are responsible for finding solutions for child care (Palley, 2010).  The cost of center-based child care in 3 out of 5 states is indicated to be higher than the cost of tuition to a four-year college. This is consistent with reported figures in 2006 from the National Association of Child Care Resource and Referral Agencies (NACCRRA) which indicate the average cost of center-based child care as between $3000 and $13,000 per year (Palley and Shdaimah, 2011).  In the past, child care policy has often been connected to other welfare policies. Many of the current national policies for childcare focus on the most vulnerable groups such as children in poverty and/or children with disabilities (Palley, 2010).

Current Potential Solutions

Stevenson’s piece mentions several proposals that the President is pushing to address these problems. They include investing in the Child Care Development Fund (CCDF), simplifying and increasing tax credits for young children with an emphasis on assisting the middle class,  and creating an innovation fund for states to “…better serve families who face unique challenges in securing access to child care” (Stevenson, 2015). Several of these proposals appear to be contained in The Right Start Child Care and Education Act of 2015, a bill introduced in both the House (HR 2703) and the Senate (S 446). These bills modify the Internal Revenue Tax Code by increasing the tax credit rates for employer-provided child care facilities and increase the tax exclusion for employer-provided dependent care assistance. Additionally, they allow for a new $2,000 tax credit for child care providers who hold a bachelor’s degree in early childhood education, child care, or a related degree, and who provide at least 1,200 hours of child care services in a taxable year. The House and Senate bills also increase the eligibility threshold amount and rate of the household and dependent care tax credit and make such credit refundable. These bills have been introduced in their respective bodies and assigned to the Ways and Means Committee in the House and the Finance Committee in the Senate; however, no hearings have been scheduled.

One key question that arises when considering these policy options is which specific issues within child care are being targeted. The objective of the CCDF is to assist poor children (Palley, 2010), so “landmark investment” in that program seems to be focused on low-income families. The new tax proposals apply to the “middle class,” so that may be a more universal approach (Stevenson, 2015). The focus of the “innovation fund” on families with “unique challenges” (Stevenson, 2015) isn’t clearly in support of poor families, but it suggests focus on a subset of families rather than all families. The Right Start Child Care and Education Act does have a universal focus for the most part, except one small aspect of the bill that would make the dependent child care tax credit refundable. A refundable tax credit allows those who do not have to pay taxes (low-income families) the ability to receive a tax credit (Blau, 2001/2002).

Advocacy Coalitions – Lacking Coherent Beliefs

One of the several theories that suggest ways in which policies are developed and passed focuses on actors forming coalitions based on shared core beliefs in policies. Jenkins-Smith, Nohrstedt, Weible, and Sabatier (2014) define advocacy coalitions as “actors that share policy core beliefs who coordinate their actions in a nontrivial manner to influence a policy subsystem”.

Do child care policy advocates have coherent policy core beliefs? Evidence suggests that advocates that support the expansion of child care policy in the US are not closely connected on core beliefs.  In interviews conducted with 20 different child care advocacy groups, Palley found that the groups used one of four frames when discussing child care policy: (1) Child care is necessary for poor mothers to allow them to work; (2) Poor children are disadvantaged and thus need additional services; (3) Create universal pre-K programs; (4) All families need assistance with child care. This final universal frame of the issue includes tax breaks and a quality rating for child care facilities (Palley, 2012). Only one group indicated a focus on the universal child care approach. Palley’s research indicates that although these groups use many similar terms such as “early childhood education”, which suggests that they have very similar policy core beliefs, the priorities of these organizations actually differ (2012). This makes a true advocacy coalition unlikely to form.

When President Obama elected to include child care policy in his most recent State of the Union, the potential for reform was illuminated. Shortly after this, the Right Start Child Care Act was drafted. However, the advocacy coalition for child care policy change is somewhat fractured. Due to the coalition’s lack of unity, they are not in the best position to take advantage of child care reform being a top-tier policy issue for the administration. The minor changes in these bills may get passed, but this is unlikely to open the floodgates to further change that many advocates (and parents of young children like me) would support.

Hope for the future?

Early Childhood Education has started to gain traction in several states.  Perhaps using the states as a forum to push for policy changes to support families who need child care will eventually help to open the federal government for additional reform.

 

 

References

Blau, D. (2001). Rethinking U.S. child care policy. Issues in Science and Technology, 18(2), 66–72.

Committee on Ways and Means. (n.d). Full Committee. Committee on Ways and Means. July 19, 2015. http://waysandmeans.house.gov/subcommittee/full-committee/

Fiene, R. (2015). A Comparison of International Child Care and US Child Care Using the Child Care Aware — NACCRRA Child Care Benchmarks. International Journal of Child Care and Education Policy, 7(1), 60–66. http://doi.org/10.1007/2288-6729-7-1-60

Jenkins-Smith, H. C., Nohrstedt, D., Weible, C. M., & Sabatier, P. A. (2014). The Advocacy Coalition Framework: Foundations, Evolution and Ongoing Research. In Theories of the Policy Process (3rd ed.). New York: Westview Press. Retrieved from http://proquest.safaribooksonline.com.proxyau.wrlc.org/book/social-sciences/9780813349275/part-ii-theoretical-approaches-to-policy-process-research/ch6_html?uicode=amerudc

Palley, E. (2010). Who cares for children? Why are we where we are with American child care policy? Children and Youth Services Review, 32(2), 155–163. http://doi.org/10.1016/j.childyouth.2009.08.005

Palley, E. (2012). Expected struggles: U.S. child care policy. Children and Youth Services Review, 34(4), 628–638. http://doi.org/10.1016/j.childyouth.2011.12.007

Palley, E., & Shdaimah, C. (2011). Child care policy: A need for greater advocacy. Children and Youth Services Review, 33(7), 1159–1165. http://doi.org/10.1016/j.childyouth.2011.02.008

How Carly Fiorina’s Super PAC Made Her the Feminist Candidate

Last week’s GOP debate again reshaped the field of candidates vying for the Republican nomination. Political pundits and polls largely agreed that Carly Fiorina is on the rise while Jeb Bush is fading as voters look towards outsider candidates.

But beneath the headlines, Carly Fiorina made a subtle shift in how she defines herself as the only female candidate in the field for the GOP nomination. It was a shift that may have been forced by supporters outside of her campaign.

CNN made a point of highlighting both personal and political differences between the candidates during the debate. The most prominent personal conflict was the spat between Donald Trump and Fiorina.

The feud began after Trump, the real estate billionaire turned outsider political candidate who is known for his brand of political incorrectness, criticized Fiorina’s looks in an interview with Rolling Stone:

“Look at that face! Would anyone vote for that? Can you imagine that, the face of our next president?! I mean, she’s a woman, and I’m not s’posedta say bad things, but really, folks, come on. Are we serious?”

Before the debate, Fiorina brushed off Trump’s insult. When asked by Megyn Kelly to respond, Fiorina simply acknowledged that the voters helping her rise in the polls really were serious. Pressed further about Trump’s criticism of her looks, Fiorina sidestepped again and asserted that her rise in the polls is what is getting under the skin of The Donald.

But supporters of Fiorina took a different approach. After the political commentariat derided Trump’s comments as sexist, Fiorina’s Super PAC responded to Trump with an ad entitled “Faces”,

The political class applauded Team Fiorina for standing in the face of Trump’s sexism with headlines like “This Carly Fiorina ad is the perfect comeback to Donald Trump’s sexist insults” and “In Your Face! Carly Fiorina Responds to Donald Trump’s Insults About her Looks in a New Campaign Ad”.

Reports also glossed over the fact that the ad came from a Super PAC instead of Fiorina’s campaign, assuming that the divide between outside groups and campaigns is so small as to be nonexistent.

This teed up the most prominent contrast CNN sought from the candidates. Shortly after the debate began, Jake Tapper threw Fiorina the pitch, asking for her direct response to Trump’s comments.

Clips from the post-debate analysis and reports in the following days would only show the moment when Fiorina laid the hammer on Trump. Without directly condemning Trump, Carly dismissed his comments from the perspective of all women.

“I think women all over this country heard very clearly what Mr. Trump said.”

But watching the debate live led me to question Carly’s enthusiasm for taking on Trump. For a candidate who won on style all night and whose convictions showed in every response, she hesitated when given the Trump softball question.

She touched her lip, looked down, and first pivoted to how “Mr. Trump said that he heard Mr. Bush very clearly,” as if she needed a moment to grab her hammer. Then when the moment passed, she paused and stared emptily into the crowd, displaying the gap between what she wanted to say and what the crowd wanted to hear.

In predictable fashion, Fiorina was again praised from the left for taking down Trump. Emily Bazelon said on the Slate Political Gabfest that she experienced a “feminist moment” with Fiorina. Huffington Post praised the heels that Fiorina wore while she “put Donald Trump in his place.”

But Carly hasn’t always been a feminist political champion. In fact, she’s largely been critical of using gender as a strategy to win votes. Her website states that it’s time to end identity politics. She’s argued that Democrats treat women like an interest group and pit them against men in the pursuit of winning elections.

From a policy perspective, she opposes proposals seen as particularly beneficial to women. She’s against a federal mandate for paid family leave. She would repeal the Affordable Care Act. And in her most impassioned moment in the second Republican debate, she claimed that the recently released videos targeting Planned Parenthood’s role in fetal tissue research included footage of a live fetus kicking while a doctor discusses a procedural change meant to “harvest the brain”.

Fiorina’s momentary hesitation to slam Trump may be reflective of her hesitancy to carry the feminist banner as the first woman to become president of the United States.

But it also reveals the potential downside for candidates supported by outside money. While coordination between campaigns and their supportive Super PACs is legally prohibited, its is generally assumed that the actions of a PAC represent the interests of the candidate. In this case, it appears plausible that Carly for America may have gone out front of Carly for President, boxing the candidate into being more aggressive in her female-focused messaging than she otherwise would have been.

As the field thins and supporters of vanquished candidates look for someone new, how the Fiorina campaign frames her gender in this race will tell us what the campaign understands about the Republican primary electorate. Would a gender-based rationale help her gain the marginal support from Republican women she needs to secure the nomination? Or will an older and majority male primary electorate deter Fiorina from being the “woman’s candidate”?

Fiorina’s speech kicking off her campaign made this seem like an irrelevant question. But because of her Super PAC and Donald Trump, her answer may determine the fate of her candidacy.

Op Ed: No One Should Work Full-Time & Live in Poverty

In December 2013, President Barack Obama stated that deficit of opportunity is a bigger threat than our fiscal deficit and the growing income inequality in the US is the “defining challenge of our time.” Americans and the leaders of our country are concerned about economic recovery and stability. Moreover, stagnant (and dropping) wages combined with globalization and de-unionization, strips workers from the bargaining power and economic power they once possessed. No one should work full time and live in poverty. Raising the minimum wage for workers will not only help close the income gap, but also get local economies moving, benefit millions of families, and improve the overall health of our citizens and country.

Indicators of an Insubstantial Minimum Wage:

Over the past 50 years, we have seen a $5.65 increase in the nominal federal minimum wage from $1.60 in 1968 to $7.25. However, in real value, that $1.60 minimum wage in 1968 was actually $10.69, almost 50% more than the current minimum wage.  In comparison, workers making minimum wage are nominally per hour making almost one third of the average private sector earner (who makes $20.31/hr). This vast inequality affects 28 million workers, of which 19 million would see a direct increase in their wages from an increased minimum wage. Right now, a full time minimum wage worker makes $14,500 a year which leaves families far below poverty lines for families of 2, 3, and 4. 

Five years and counting…

So why hasn’t the federal minimum wage changed in five years? A lot of the stagnation has to do with the public perception of those in poverty, the fear of “big government”, and the belief that higher wages are bad for the economy. For most of history there has been a distinction between the deserving and undeserving poor, or that poverty is a matter of choice. Reagan once stated that (in terms of homelessness) some people choose to sleep on grates.This school of thought holds that those in poverty are there not because of government failings, but rather because of poor choices. Viewing the cause of poverty as an intentional or inadvertent action taken by citizens.  In essence, this reasoning blames the victim for their misfortune and poverty. Others may fear government intervention citing simple economic theory as reasons for why regulation of wages fails workers, but we have seen that living wages are in fact better for the community. Dan Mitchell, senior fellow at Cato Institute has said “Businesses are not charities and that they only create jobs when they think a worker will generate net revenue. Higher minimum wages, needless to say, are especially destructive for people with poor work skills and limited work experience.”  This sentiment has been a common one within the opposition of raising the wage. The rhetoric of missing a rung on the ladder, free market economies, and exaggerated minimum wage examples like $50 or $100 are employed to diminish the importance of a wage mandate. However, the rhetoric used comes mainly from those who are not making the minimum wage, or leaving in poverty, but from elites. Those with the power and resources to help solve poverty would not benefit from changing the structural and institutional causes of it, and might even jeopardize their power. [9] 

Connecting Poverty & the Minimum Wage:

A stagnant minimum wage is failing workers and failing the United States by stripping millions of people from the bargaining and economic power they once possessed, it has contributed to the collapse of the working class, and has far reaching negative consequences. In the US, nearly 50 million people are considered poor. In March, Sen. Bernie Sanders said, “Unfortunately, despite our great wealth, more of our citizens are living in poverty than ever before and we have the highest rate of childhood poverty of any major country in the industrialized world. We have a moral responsibility to end childhood poverty in America.” More than 1 in 5 children in America live in households that lack consistent access to adequate food because their parents don’t make enough money. Michael Reisch, a professor of social justice at the University of Maryland, has said that “Poverty not only diminishes a person’s life chances, it steals years from one’s life.”  Frequently news stories appear discussing the alarming effects of poverty on health including increased occurrences of cancer, high rates of obesity, high levels of stress, and more. In fact, a recent study has shown that even those who “pull themselves up by their bootstraps” cannot escape the long term, ill-health effects of poverty. Raising the minimum wage would provide a sound foundation to build a system that could begin to reverse and end the deleterious effects of poverty.

Based on the Fair Market Rent for a two-bedroom unit, raising the wage to $10.10 could help minimum-wage workers ($7.25/hr) afford more than 6 months of rent. Workers making $10.10 an hour rather than $7.25 would afford families 36 weeks of groceries. Raising the wage to $10.10 could help minimum-wage workers afford 103 tanks of gas each year (1 tank = 15 gallons, which is the average for a mid-size car.). Raising the wage to $10.10 could, over a year’s time, help minimum-wage workers afford the equivalent of 3.5 years of electricity.

The government has a duty to invest in the wellbeing of its citizens, raising the federal minimum wage would benefit workers and in turn their families. After five years of stagnation, where the minimum wage hasn’t been adjusted to living costs, and an unprecedented, widening income inequality gap, it is time for a more comprehensive, up-to-date labor and wage policy. A policy that holds corporations more accountable and better protects employees.