A New Agenda for American Families and the Economy

Child care providers in Bellflower, CA, 2010 (SEIU/Flickr)

Political leaders used to believe that economic security for workers and their families was good for the economy. Franklin Delano Roosevelt’s New Deal put the family at the core of its political and economic platform, connecting the day-to-day reality of families to the well-being of the American economy. It wasn’t just political rhetoric; this platform was actually good for the economy. Policies implemented in the early part of the twentieth century as a part of the Progressive Era and New Deal laid the foundation for strong economic growth through the 1970s.

Of course, this isn’t what we hear today. The idea that family economic security is good for the economy has fallen out of favor for several reasons. First, we have a “ladies problem.” The intellectual legacy of the New Deal, which was at once progressive and patriarchal, has married us to a set of policies and proposals geared for a time when women had only recently won the vote and tended to work inside, rather than outside, the home. Second, despite research showing that policies that ad-dress economic inequality and support workers and their families are good for the economy, today’s political class believes that a healthy economy requires only business-friendly policies. Finally, we do not have a politics that connects and transcends these first two problems. Too often, so-called women’s economic issues appear as an afterthought, rather than as fundamental to family economic security and the economy overall. Yet there is a set of policies that has the potential to help grow the economy and enhance productivity while also supporting families as they live and work today. Together, this collection of new policies can lay the foundation for a new strategy for economic growth as well as a new broadly progressive political coalition that could be as transformative and as durable as FDR’s New Deal.

Our “Ladies Problem”

In the 1960s women began entering the labor market and remaining in it even after they married and had children. The share of working-age women in the labor force increased steadily from the 1970s to its peak of 73 percent in 2000 (about where it was in 2007, right before the financial crash and ensuing Great Recession). What’s more, about three-quarters of working women are employed full time. This shift toward paid employment, especially full-time work, has led to a remarkable transformation in how women spend their days and how they contribute to their family’s economic well-being. In over 40 per-cent of all families with children, women are now breadwinners, defined as either a single, working mother or a married mother who brings in at least as much as her husband—and they are co-breadwinners in another 25 percent.

Yet the formula for economic growth established in the early part of the twentieth century was designed to support families that typically had a male breadwinner and a female homemaker. Benefits were typically provided to the breadwinner, with little or nothing for the stay-at-home caregiver. Unlike many European countries, the United States did not implement policies for child care, parental leave, paid sick time, or other forms of paid time off. Our inherited social policies did not anticipate the huge influx of overwhelmingly female caregivers into paid work. As a result, individual families and espe-cially women and mothers have been left to fill the gap and bear the costs of providing child care, elder care, and other forms of care that used to be provided on an unpaid basis by millions of home-makers. But there are policies that would address the economic challenges facing today’s families and counter economic stagnation.

Flexibility

The 1938 Fair Labor Standards Act (FLSA) was a monumental piece of social legislation. It eradicated child labor, limited hours of work for production and non-salaried employees, and established the federal minimum wage. But the FLSA was designed for a world where workers worked full time and could count on a stay-at-home spouse to fulfill a family’s caregiving obligations. As a result, it did not address part-time parity (it is legal to pay part-time workers less than full-time workers doing exactly the same job, for example), sufficient hours of work (too many hours was a problem in the 1930s, but too few hours is a problem for many workers in retail, restaurants, and other industries today), or scheduling issues (workers in many of the same industries can’t predict, let alone control, their schedule from one week to the next, which creates serious conflicts between paid work and care work). All of these concerns have been magnified significantly by the huge increase in women’s participation in paid work.

None of the periodic updates of the FLSA over the years have addressed issues of work-life balance in any meaningful way. The lack of progress on the federal level, however, has prodded states and localities to act on their own to establish workplace flexibility that works for workers. San Francisco and Vermont recently passed right-to-request laws (modeled in part on legislation already in place in Australia, New Zealand, and the United Kingdom), giving workers the right to request a flexible schedule without fear of retaliation. Because many U.S. workers are subject to disciplinary action for even asking about schedule flexibility or predictability, the right to request could be a very important addition to U.S. work-family policy.

Workers also need to be able to stay home when they are sick or when they have a sick child. Earned sick time allows workers to take short, unplanned leave when the worker or a family member has an everyday illness, which is increasingly important as families often don’t have a stay-at-home caregiver who has flexibility. Some have argued that workers who have paid vacation or other personal leave are covered for sick time, but many workers cannot take this kind of leave without giving their employer advance notice, making it unusable when a child wakes up with a high fever or any other urgent care is needed.

Too often, so-called women’s economic issues appear as an afterthought, rather than as fundamental to family economic security and the economy overall.

A handful of cities and states (San Francisco, Washington, D.C., Connecticut, Seattle, New York City, Portland, Jersey City, and Newark) have guaranteed the right to job-protected leave in the case of illness. Congress could move forward with the Healthy Families Act, which would enshrine this right nationwide, but so far has chosen not to act.

Paid Family and Medical Leave

Assumptions about who works and who cares are deeply embedded in our social insurance programs. The Social Security Act of 1935, which established Old Age and Survivors Insurance, unemployment insurance, and income assistance to mothers and children, assumes that individuals are either care-givers or breadwinners, but not both; that married couples typically stay married for life; and that most families have a stay-at-home parent, usually a mother, to care for children, the sick, and the elderly. But that’s not the reality most families face today. These assumptions leave gaps in coverage and eligibility for today’s families, in which caregivers also do other paid work, men and women get laid off, and divorce is much more common.

We have seen some progress. In 2009 the American Recovery and Reinvestment Act provided initial funding for states to revise eligibility rules to make it easier for lower-paid, part-time, and part-year workers to qualify for unemployment insurance benefits. Congress explicitly recommended that states focus on the needs of workers with care responsibilities, encouraging states to modernize their pro-grams to allow unemployed workers to qualify if their unemployment was due to compelling family reasons—specifically domestic violence or sexual assault, caring for a sick family member, or moving because a spouse has relocated for employment.

However, we’ve made little progress at the national level on what is by far the most notable gap, which is our failure to cover caregiving leave. The United States stands alone among developed nations in leaving families to cope with caregiving leave without a national program for some kind of income support. The Family and Medical Leave Act, or FMLA, of 1993 was the first piece of legislation in U.S. history to give workers the right to job-protected leave for caregiving. The law provides up to twelve weeks of unpaid leave per year to eligible employees who need time off to care for a new child, recover from a serious illness, or take care of a seriously ill family member. However, the law excludes workers in firms with fewer than fifty employees and those who were with their employer for less than a year or worked fewer than 1,250 hours in the year before they left. Unlike programs that address time out of work for other reasons, such as a short-term disability or unemployment, the FMLA is not a social insurance program and does not provide workers with any financial benefits.

Here, too, states are leading the way, providing workers and their families with policies that address the realities of today’s economic insecurities while demonstrating that these policies are economically efficient. Four states have passed legislation to provide benefits to workers for family leave. Three of these states—California, New Jersey, and Rhode Island—have expanded their long-standing Temporary Disability Insurance programs, which cover medical leave including childbirth, to cover caregiver and bonding leave for new parents or workers who need to care for a seriously ill family member. In 2007 Washington became the first state to pass legislation establishing a new standalone program for paid parental leave (although seven years later it remains to be implemented because the financing mechanism has not been worked out). The federal government could follow the lead of these states and implement family leave insurance as proposed in the Family and Medical Leave Insurance Act, or FAMILY Act.

Child Care and Elder Care

Since most families do not have a full-time, stay-at-home caregiver, they need affordable and high-quality care options for their children while they are at work, and they often need help caring for ailing older family members. Most children under five years old receive child care from someone other than a parent. In addition, this year approximately 9 million Americans over the age of sixty-five need long-term care, a number that is projected to increase to 12 million by 2020. Yet the United States does not have a national child care system, and our national elder care system is entirely inadequate. This leaves many workers pressed for both time and resources to simultaneously provide child care and elder care. When the New Deal was passed, this care work would have fallen almost entirely on un-paid homemakers. With the vast majority of working-age women now working outside the home, old solutions simply don’t work anymore (if they ever did).

In 1971 a universal child care bill passed Congress that would have created federally financed child care centers, provided free child care to parents below a certain income level, and tiered subsidies to help the middle class pay for child care. But President Nixon vetoed it. Since then policymakers have expanded and added to a mix of programs aimed at providing child care assistance to low-income families, including Head Start and the Child Care Development Block Grant program, alongside child care tax breaks aimed at middle- and upper-class families, including the Child and Dependent Care Tax Credit, but these are not enough.

States are again leading the way in developing programs for pre-kindergarten. New York City mayor Bill de Blasio has his finger on the pulse of a new vision for working families. He has put forth a plan for a universal pre-kindergarten program. California’s state senate leader Darrell Steinberg is heading a legislative effort to extend preschool to all of the state’s four-year-olds. President Obama has also called for such a program in his 2013 and 2014 State of the Union addresses.

A New “New Deal”

A handful of places in the United States have implemented family-friendly legislation, and economists have been studying their experiences, as well as the experiences of other countries that have pushed well ahead of the United States. In 2007, for example, San Francisco became the first city in the nation to give employees the right to earn paid sick days. Researchers found faster job growth in San Francisco than in surrounding cities in the first two years after paid sick days were mandated. After the implementation of a paid sick days law in Connecticut in 2013, researchers found that critics’ concerns that such a law would negatively affect employers were unfounded. In fact, employment rose in several of the sectors most directly affected by the legislation, including hospitality and health services.

Economists are finding that access to family and medical leave insurance increases labor-force participation and employee retention. There is no evidence that family and medical leave insurance negatively affects business operations. For example, Eileen Appelbaum and Ruth Milkman’s evaluation of California’s family leave insurance program found that nine out of ten employers reported that the pro-gram has had either no effect or positive effects on business operations. This is consistent with a study of companies listed in Working Mother magazine’s “100 Best Companies for Working Mothers,” which finds that employers providing work-family programs and policies attract higher-quality workers, reduce ab-senteeism and tardiness among employees, and lower employee turnover, all of which boosts both productivity and profits.

Evidence also strongly supports the view that few social investments pay a higher return than those made in early childhood development. The level of skills that children have when they enter kindergarten is correlated with later employment outcomes, even after accounting for the quality and quantity of elementary, secondary, and post-secondary schooling children receive later in life. The economic evidence is so compelling that in 2012 then-chairman of the Federal Reserve Ben Bernanke told an audience at the Children’s Defense Fund National Conference, “When individuals are denied opportunities to reach their maximum potential, it harms not only those individuals, of course, but also the larger economy, which depends vitally on having a skilled, productive workforce.” The business community has also endorsed early childhood education: a joint report by the U.S. Chamber of Commerce and the Institute for a Competitive Workforce stated that investment in early childhood education was a “smart investment with positive returns, but [also] is the right thing to do.”

Addressing the time bind facing women and families should lie at the heart of efforts to revitalize progressive politics in the United States.

Policies that help caregivers, especially women, stay employed are good for the economy. In a re-cent paper I wrote with Eileen Appelbaum and John Schmitt, we found that GDP would have been roughly 11 percent lower in 2012 if women had not increased their working hours as they did. In today’s dollars, this translates to more than $1.7 trillion less in output—roughly equivalent to combined U.S. spending on Social Security, Medicare, and Medicaid in 2012. Our findings were consistent with other research: Chicago Booth School economists Chang-Tai Hsieh and Erik Hurst and Stanford Uni-versity economists Charles Jones and Peter Klenow find that 16 to 20 percent of U.S. economic growth between 1960 and 2008 was due to women and people of color entering professional occupations.

None of this should come as a surprise. We know that many New Deal–era policies provided a stable foundation to increase consumer demand and related investment. Decades of research have confirmed that in economic downturns, unemployment benefits have a strong, positive effect on demand. The minimum wage helped to put a floor under consumption for workers at the lower end of the wage distribution. Social Security’s programs to aid the elderly and later the disabled also prevented drops in consumption for families and for the economy more generally. (Social Security remains our most important anti-poverty program.) New Deal–era policies also improved productivity by investing in people. Consistent consumption growth signaled to business that there would be consumers in the future, promoting business investment. Ensuring that wages grew in tandem with productivity also stabilized demand.

New Economic Strategy, New Politics

Addressing the time bind facing women and families should lie at the heart of efforts to revitalize progressive politics in the United States. Some politicians have started to support parts of this new vision. During his 2014 State of the Union address, President Obama argued, “It is time to do away with policies that belong in a Mad Men episode.” And the appeal of this agenda reaches, if only tentatively, across the aisle. House Majority Leader Eric Cantor has staked a claim on the issue of scheduling flexibility, noting, “Federal laws dating back to the 1930s make it harder for parents who hold hourly jobs to balance the demands of work and home.”

The public knows that wages are important, but also that wages are not enough in today’s economy. In a 2014 poll conducted by Anzalone Liszt Grove and the Feldman Group, for example, almost two-thirds of voters favored a plan that would raise the minimum wage, reduce the gender pay gap, and provide workers with paid sick days and family and medical leave insurance. A full 60 percent of voters believe that these policies would make women and families more secure. And 60 percent also considered a candidate’s support for family-friendly policies as a major factor in how they cast their vote.
But seeing work-family issues as “women’s issues” or merely as an electoral tactic misses their epochal economic and political potential. The rise of women’s participation in paid work is probably the single most important economic development of the last fifty years. It has brought with it a tremendous economic payoff, but one that has come at a great price for families. We have as much need for care work now as we did fifty years ago, but families have far less time to do it. These costs are not borne solely by families: the lack of child care, elder care, paid sick days, paid family and medical leave, and flexible schedules constrains economic growth and reduces the productivity of our workforce. The right package of policies can increase economic growth and increase living standards for millions of workers.

The political coalition behind work-family issues is potentially vast. Working-class and middle-class women, who don’t have the family income or wealth to solve the care and scheduling problems with money, are the most obvious members. But most of these women also have husbands who are in the same boat. Because these policies are explicitly pro-family, they also have the capacity to make in-roads into more conservative “family values” voters, who might be turned off by business opposition to measures that would make it much easier for them to care for their children and their parents.

Done right, work-family issues can form the basis of a new political coalition that can set the economic and political agenda for the foreseeable future, in the same way that the New Deal did for almost a half-century.


Heather Boushey is executive director and chief economist at the Washington Center for Equitable Growth.

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