It happens constantly, everywhere. People respond to new incentives and constraints by changing their behavior. Employers are not exempt from this basic human trait. When my costs change, my spending behavior changes. Just recently I discontinued one service I subscribe to that had gotten too expensive (home telephone), switched a second service to a different provider (cable TV/internet), and changed to a cheaper service level on a third (mobile phone). These savings are significant, but won't really make any appreciable difference in my lifestyle. If my income were lower I would be even more sensitive to changes in my costs. Several years ago I was the co-owner of a small business. It was my signature on our employees' paychecks. We offered a generous wage and had no problem attracting employees, even with offering essentially no benefits. We employed few enough people that we'd probably be exempt from most regulations and mandates, but if we were not then any new required benefit definitely would have affected our pay scale. We simply would not have been able to afford to continue to offer the same wage as well as an expensive new benefit. Well, rather, we could have afforded it by dipping into our own pockets to pay it, but that would not have been the highest-probability outcome. On the other end of the spectrum, I currently work for a fairly large employer. We have a negotiated contract, with exceedingly generous benefits. In response to recent major U.S. legislation, we have lately been required to start paying a portion of the cost of an important benefit that used to be entirely employer-paid. This is functionally identical to a pay cut. The percentages in our negotiated annual pay increase schedule have also been reduced in the latest contract. Wages are sticky, but there are common, obvious workarounds. Sure, that's why I pointed that out. If wages are already stagnant, then they will remain so longer than they otherwise would have, or the increase in unemployment will be worse; probably both. Direct salary is unlikely to fall for current employees (at least those who remain employed after the mandate), but there will be downward pressure on their total compensation until it is back in equilibrium. New hires will face lower salaries, though. And some who would have been new hires will not be offered a job at all. The world is not static. People change their behavior in response to incentives. I think actually this is true in general, at least for businesses that are not on the margin, and for policies that only affect input prices. Government regulation, at least in this sphere, is functionally indistinguishable from natural disaster. Harsh winter in Florida, orange prices go up. Dairy Price Support Program passes, Domino's uses a little less cheese on their pizzas. Some misguided labor regulation is put in place, compensation is re-arranged, and fewer people are employed. Marginal businesses - those which their owners now consider just worth keeping open - will find the cost of re-organizing to comply with the mandate pushes them across the line to unprofitability, and close, sending their profit level to 0 (along with the salaries of their employees). Other businesses will bear these re-org costs, some of them being pushed, in their turn, to the margin, but the far greater moiety of ongoing burden will fall on employees.That's a sort of Ricardian equivalence story you're painting which generally doesn't happen in reality.
What if we're in an environment where wages are already stagnant - you think workers are going to accept a pay cut to compensate to the new benefit? Fat chance, wages are called "sticky" for a reason.
I mean otherwise you would say that no government policy could impact the profits of corporations, as they'd just rearrange the costs and prices of their inputs and outputs to maintain a target profit level. This is obviously not true in general.
Good thing it's not your call. You'd cause a fair amount of misery. And of course it's only minor friction-type costs that are borne by the business. The major costs are borne by the employees. Do you also want them to go out of the business of selling their labor if they "can't handle" the additional expense? The economy doesn't work for anyone, nor anyone for it; it's simply a by-product of the sum of transactions between individuals. This is both untrue and irrelevant. For one example, a heavy snowfall that damages fruit orchards may create benefits for fans of winter sports such as skiing, etc. But more importantly, it's the net effects that matter, not whether there is a mix of positive and negative. Again, both untrue and irrelevant. Government regulation is intended to get politicians elected [mild hyperbole, please don't feel obligated to refute]. And even if we stipulate that all regulation is drafted and passed with only pure and benevolent intent, it's still results that matter. Intentions don't create jobs. No one cares about intentions. ...and yet you are certain that your proposed mandate will be a net positive. Are you sure you want to assert both that the situation is too chaotic to know what will happen, and that you are confident enough in the outcome to impose your proposal on an entire country? Ahh, the good old gotcha-as-argument. Been a while since I've seen that one. Fair enough, I gave you the opening. For "back in equilibrium" read "back to the level it would have reached [non-statically!] in the absence of the mandate." Oh good, I was hoping someone would have this data. Please post your sources. But please keep in mind that what I am talking about is not catastrophe, but rather net negative effects, maybe large, maybe small. I think it's rather easy to demonstrate that we won't face total societal collapse by mandating paid parental leave. Demonstrating that the net effects will be positive is much harder. For one thing, you can't do a controlled experiment, comparing the effects on a society with the mandate to those on an identical society without it. And comparisons between different countries, with vs. without, will almost certainly have too many variables to control for effectively. I've given examples from my real-world experience that support my analysis. I don't think you can make a serious argument - based on either theory or data - that employees bear no costs when new labor regulations are imposed. I think that a case can be made that the positive effects outweigh the negative, but so far I haven't seen it. Based on your posts so far I am not sure which of these is your position: --It's so obvious that the net effects will be positive that no support for the proposition is necessary --It's impossible to know what will happen because the system is just so chaotic [but we should forge boldly ahead anyway!] -- All costs will be borne by employers, and if your employer is unable to stay profitable under the new mandate and closes, then you deserve to lose your job. Couldn't have been a very good job anyway, with no paid parental leave. Maybe the studies you have will help clarify.If a business can't handle the added expense of maternity leave, I would venture that that business is not socially useful enough to stay open.
Again, the economy should work for us, not the other way around.
No, because natural disaster has only negative effects.
Government regulation is intended to have on balance positive effects,
or something else will change - it's not obvious at all
You talk about compensation going "back in equilibrium" - what is this equilibrium? Won't it change? The world isn't static, right?
Also, we have decades of data from other countries that have done this and it doesn't look like what you're talking about actually happens for maternity leave. So there's that, too.
...and often makes them worse. In any case, you were claiming that regulation is different from disaster because intentions. This is indeed irrelevant. Only effects matter I'd be more inclined to be persuaded that it is unlikely if you offered analysis and evidence, instead of just talking about it. Handwaving to the effect that "we just don't know what will happen", followed up by "I'm pretty sure what what will happen" is not terribly convincing. Indeed. My examples were in support of my contention that employees bear most, if not all, of the burden of labor regulations such as the one we are discussing. Let's see how your sources do at refuting it. Thanks. This paper does zero analysis of positive effects. It simply tabulates the policies of various countries, and then offers the bald assertion "All members of society have a profound interest in the health and well-being of young children and the parents who take care of them", a declaration with which essentially no one will disagree. It does offer strong support for my position, however. From the section "Financing Structure": "Most of the countries studied here finance paid leave benefits through payroll taxes – with the overall taxation rates, and the relative shares contributed by employers and employees, varying across countries. ... The key point here is that these benefits are funded through social insurance schemes; in general, individual employers are not asked to pay the replaced wages of their own workers during periods of paid leave." So employees do bear the costs of this mandate, as I've been saying. In fact, it looks like I've been optimistic - employees not only risk increased unemployment and having to forgo other benefits they might prefer, as I'd thought. It turns out that they do pay for the benefit directly through payroll deductions - essentially pay cuts! Fat chance, indeed! Who would have guessed that government is even better than the market at finding solutions to sticky wages? Why bother working around them when you can just impose lower pay by legislative fiat? So in this instance the plural of anecdote really was data. Only in this one case, though - I don't think we can generalize the result. As to the question of the sign of the total effects, this study does not provide any evidence of positive effects beyond pure assertion, but does indicate that there are costs (the payroll taxes that fund it), although it does not quantify them. If the other sources you've found say more or less the same thing, then I think my work here is done. But your second source does provide better support for your position: Thanks. This paper analyzes the California Paid Family Leave Program. The program appears to be completely government run and funded, and does not provide job protection, so it seems there is essentially no mandate on employers. Once again, the benefit is funded via a payroll tax. I think that this firmly establishes that it's workers, not employers, who bear the burden of the costs associated with the policy (whether or not these costs outweigh the benefits). The "Key Findings: Workers" section is padded with some fluff, but here are some real benefits it mentions: --"Use of PFL greatly increased the level of wage replacement during family leaves for respondents in low-quality jobs" --"Among workers in low-quality jobs ... 97 percent of those who used PFL were satisfied with the length of their leave, compared to 73 percent of those who did not use PFL" --"Among workers in low-quality jobs who used PFL for bonding leaves, 91 percent reported a positive effect on their ability to care for the new child, compared with 71 percent of those who did not use PFL" Great. These are real benefits for lower-income workers. They're a little vague, though. Was the wage replacement greater than the wage depletion from the payroll tax? How much of a positive effect did the additional leave create, and what quantifiable improvements in the development of the children are attributable to this effect? Also, while improvement, on some measures, from ~70% to > 90% is significant, and a good thing, a satisfaction level of 70+% in the absence of the program is hardly indicative of an enormous problem requiring government intervention. Once again, though, the study makes no effort to identify any negatives associated with the policy. I would find this paper more persuasive if it considered questions such as: --Were there any effects on employment in the time period following implementation? --Are there other benefits that workers might prefer to PFL that could be provided for the same cost? --If offered the chance to opt out of the tax and forgo the benefit, how many employees would take that option? --How many workers took advantage of the policy but were then unable to return to their job? --How many people were required to pay the tax, but were unable to enjoy the benefit (older, infertile, etc.)? What was their satisfaction level with the policy?
I don't think you've demonstrated net positive effect. One source you provided makes no mention of any beneficial effects beyond simply asserting that mandating more leave is better, but does indicate that there are costs in the form of the payroll deductions used to fund it. The other does provide meaningful data relating to the actual benefits due to the policy, but makes no attempt to investigate any negative impact it may have, beyond again mentioning that the cost comes directly out of employees' pockets. It's not good enough to do studies, such as the two you cited, that only look for benefits and then proudly declare that they found no costs. When considering whether to implement a major national policy, it is important to investigate its downsides as assiduously as its benefits. More so, in fact, since the benefits are easily seen, whereas the costs are easy to obscure or handwave away.No, while government is on balance corrupt and focused on its own propagation most regulation is written to solve a problem. It's not irrelevant because it often does solve said problems.
Well I just talked about macro effects which means that is unlikely
The plural of anecdote is not data, though. It doesn't matter what your real world experience is - actual mass data is more important.
Limited evidence from the US points toward the same conclusion, see here.
We have decades of evidence from many other countries pointing toward the positive effects of parental leave on both children and gender equity, and no evidence of any net negative economic effects
The fact that net positive impact doesn't exclude some losers doesn't bother me