DC ’s Paid Family Leave Bucks the Trend—and Economics

As the Washington DC City Councilprepares to vote on a bill that would provide workers in Washington, DC up to 11 weeks of paid family leave upon the birth of a child, a fundamental question remains unanswered: how much should government intervene in how employers compensate workers?The federal government does so quite a bit at present. By exempting employer-provided health insurance from income taxes, our tax law is responsible for the fact that a majority of Americans get their health insurance from their employer. The exemption is also largely responsible for the fact that so many of these employers have what can only be described as overly generous health insurance plans, which can cover health care expenses both routine and exceptional.The tax code also nudged American businesses to provide pensions as well, since the money set aside in a defined benefit plan generally isn ’t taxed. When pension law created the tax breaks for employer-provided health insurance these spouted up instead.In the heyday of unionism, labor union leaders pushed for more fringe benefits for their workers, often more fervently than they sought out wage increases. They did so in part because of the tax break —why not get a tax-free benefit for workers rather than have workers pay for the same benefit with after-tax wages, they reasoned—and partly because such benefits could be made more durable than other forms of compensation. For instance, the UAW contracts in the 1970s-1990s typically pro...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs