Welcoming a child into the world is an already stressful situation for most people; before that little bundle of joy can be welcomed into your life there are many questions that must be answered, precautions taken, and issues resolved.
It’s common for anyone in their 20’s through their 40’s to have children, be expecting, or have friends that fall into those categories, and beside the usual questions of who is going to help with daycare (read our article on that here: Daycare: What to look for and what to avoid), bigger questions surround how much medical insurance will cost, if they have it, going to cover there is one other question: Perhaps most importantly in those first few months is how much maternity (parental) leave will be available?
For a baseline of where the United States stacks up in the world among the 41 developed nations, here is where we rank on parental leave:
Dead last.
Yep, the land of opportunity, home of the free and brave, the place once thought to have roads paved in gold, and, if you listen to the animated film An American Tale, believed by mice to not have any cats (important), we are dead last on this list with a whopping zero weeks of paid parental leave mandated by our government.
(This article published by the Pew Research Center gives a more detailed account of how things stack up.)
This has become hot button topic today, but is often avoided as a topic all together by politicians. Thankfully, this last campaign cycle brought the issue back into view.
So, let’s take a few hundred words to explore the chances that we’ll come out of last place during this next presidential term.
The Trump Maternity Leave Policy
If you jump on the internet and search for Trump Maternity Leave you’re certain to be overwhelmed with opinion pieces. There are those saying that his plan is better than the 12 weeks of unpaid leave set by the government, and of course there is the flip side saying it falls short of what is necessary. Let me cut through the opinions and the spin, and deliver you the often confusing current reality of maternity leave in the U.S.
At the core of President Trump’s current plan is 6 weeks of paid parental leave. This seems fairly simple until you try to actually pin down who is going to be covered by the plan. As stated in this article, published in the Washington Post last September 16, 2016, his program was built only to cover biological mothers, i.e. there would be no coverage for same sex parents, fathers, or those fostering or adopting children.
Cool. Now we know who is covered under his proposed plan.
Well, scratch that. We actually don’t know as of yet who is going to be covered under this proposed plan. This is where things start to get a bit complicated.
In a speech given on February 28th, 2017 (his first speech before congress), President Trump changed the word “maternity” in “maternity leave” to the word “family.”
“My administration wants to work with members of both parties to make child care accessible and affordable, to help ensure new parents that they have paid family leave.”
This talk of family leave is a huge jump from his previous campaign speeches. It would be safe to assume that his policy may change to one that covers not only biological parents but new parents in general. This would mean coverage for anyone with a growing family; same sex parents, foster and adoptive parents, single mothers and single fathers, et al.
The question that normally comes up after a politician floats a plan is, “Who’s paying for it?”
The president is planning to use the Unemployment Insurance Fund to pay out for this leave at a state level. This is the same fund that pays unemployment to seasonal workers and those looking for work. The planned cost per year for his policy sits at $2.5 billion dollars. It is believed that the average pay out for someone on leave would be about $300 a week or $1200 a month. President Trump is saying this can be paid for by weeding out fraud in unemployment insurance. It was estimated by the department of labor that $3.5 billion in unemployment insurance fraud occurred last year (PolitiFact).
So this could be the end. But no. There are some other aspects of his plan that offer tax deductions and help setup Dependent Care Savings Accounts.
In a nutshell, President Trump is offering a tax deduction to families. This tax deduction would allow families to deduct the total cost of child care or elderly care for up to 4 dependents. This would be a tax deduction that could only be claimed by a single person that claims $250,000 a year in income or a joint return of $500,000. This deduction could also be claimed by stay-at-home parents and same sex marriages that are recognized under state law. This would amount to a household that makes $70K a year with $7k in childcare getting a $840 tax break for the year, so about $70 a month.
Another aspect of President Trump’s plan is a Dependent Care Savings Account.
This would allow for fund to be be applied to day care, after-school programs, and even to pay tuition at a school of choice. It also would allow for families that are considered low income a matching contribution up to $500.
Interestingly, this type of account could also be setup for an elderly dependent and the money used to pay off in home nursing and long term care.
One thing is clear: Trump’s policy as it has been outlined so far will definitely have those six weeks of paid leave from the government. But after that all bets are off. It may or may not be paid for by the Unemployment Insurance businesses are required to carry. There is an indication that it will be Family Leave for anyone that grows their family, though this is an assumption based on his speech to Congress back in February. Only time will tell what this policy will contain and if it will happen, or if it will just be another casualty of political maneuvering.
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