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Proposal: Empower Low-Income Working Mothers with Paid Family Leave

What do the US, Suriname, and Papua New Guinea have in common? They are the only 3 countries that don't guarantee paid family leave. This fact forces millions of low-income American parents, usually mothers, out of the workforce. If you believe that motherhood should not end a woman's career, then explore this proposal's cost-effective way to provide paid family leave to all parents. 

The Issue

Problem Defined

The Family Medical Leave Act in the US mandates that employers with more than 50 employees provide 12 weeks of job-protected leave to employees at the time of birth of a child. However, the leave is unpaid. As a result, women who have a baby face a loss in income at precisely the same time they experience an increase in expenses associated with doctor visits and childcare. 

The lack of paid maternity leave, combined with our tax system and high childcare costs, discourages married, low-income women from working. This is an issue in urgent need of fixing. 

Background
Expand all bullets
1.
The US is one of only 3 countries that doesn't guarantee at least partial paid family leaveMORE

The Family and Medical Leave Act  of 1993 (FMLA) guarantees 12 weeks of unpaid leave for employees caring for a new child or sick family members.

However, not all employees are eligible. The employee must: 

  • Work at a location where the company employs 50+ workers within 75 miles 
  • Have worked at the business for >12 months and worked  >1250 hours during that period 

Only three state guarantee paid family leave:

  • California
    • Up to 6 weeks
    • 55% of weekly wage, maximum of $1,129/week
    • Funded by employees through 0.9% payroll tax
    • Only employees eligible for FMLA receive job protection 
  • New Jersey
    • Up to 6 weeks
    • 66% of weekly wage, to a maximum of $615/week
    • Funded by employees, through 0.08% tax on first $32,600 earned; maximum total: $26
    • Only employees eligible for FMLA receive job protection 
  • Rhode Island
    • Up to 4 weeks
    • Each week, employees receive 4.62% of the wages they received during the highest quarter of the previous year; maximum $795/week 
    • Funded by employees, through 1.2% tax on first $64,200 earned
    • Employees' jobs are protected 
2.
Child and Dependent Care Credits are not available to the poorest 23% of families MORE

There are 3 main tax credits available to households with children: Child and Dependent Care Credit, Child Tax Credit, and Earned Income Tax Credit (EITC).

3.
Families receive their tax credits after the money is most neededMORE

Families below the poverty line can be eligible for as much as 50% of their annual income in Child Tax Credits and Earned Income Tax Credits. 

However, this money becomes available only after the family files their taxes.

In addition, under current law, many workers do not receive wages while on FMLA leave and may face the prospect of no earned cash income for 8+ weeks.

Without these benefits, parents may not be able to afford early childcare costs, pushing them out of the workforce. 

4.
Childcare costs often force women out of the workforceMORE

One of the most striking demographic differences between stay-at-home mothers and working mothers relates to their economic well-being. Fully a third (34%) of stay-at-home mothers are living in poverty, compared with 12% of working mothers. For some low-income women, the cost of childcare exceeds what they would earn if they were working. 

According to Census data, in 2011, families with employed mothers whose monthly income was $4,500 or more paid an average of $163 a week for child care, representing 7% of their family income. Families with income below the poverty line paid much less - $97 a week on average - but that represented nearly 40% of their family income. 

5.
Our current tax system discourages having both parents in a household workMORE

Low-income families often see little marginal benefit in both parents working.

American tax law treats spouses as the same earner. The federal tax system applies different tax rates to different levels of an earner's income. Earners' first $18,550 taxable income is taxed at a lower rate than their income above this threshold. Additional income from a second earner is combined with the existing income and taxed at the higher rates. 

Adding a second earner will often push low-income families' combined income above the eligibility threshold for the Supplemental Nutritional Assistance Program (SNAP) and reduce their eligibility for Earned Income Tax Credits (EITC). 

Sources
1.
Need Time? The Employee's Guide to the Family and Medical Leave Act

US Department of Labor - website (June 1, 2015)

https://www.dol.gov/whd/fmla/employeeguide.pdf

The US DoL's 20-page guide to an employee concerning their rights and the Family and Medical Leave Act.

2.
Leaving Time for Family Leave

TheChisel.com / More Perfect Union, Inc. - ChiselBit Series: Backgrounders on US Public Policy Issues (January 1, 2016)

https://thechisel.com/chiselbit-family-leave

ChiselBit issue backgrounder on family leave - a 3-minute read.

Go deeper
1.
Who's Minding the Kids? Childcare Arrangements

Lynda Laughlin - US Department of the Census (April 1, 2013)

http://www.census.gov/prod/2013pubs/p70-135.pdf

Household Economics Studies series on families' numerous decisions when balancing their work and home life, including choosing the type of care to provide for their children while they work. 23 pages.

Authors

Maggie Filkins is a current high school student. She was born in Chicago, IL and lived there until she moved with her family to Atlanta, GA last summer. Maggie will be a high school senior this fall and is hoping to attend college at a small liberal arts school next year. Her interests include theater, political activism, and geology. 



Maggie Wilkins
Student -

Maggie Wilkins is a high school student, born in Chicago and lived there until she moved with her family to Atlanta in 2017.  Maggie hopes to attend college at a small liberal arts college in 2019.  Her interests include theater, political activism, and geology. 

The Solution

Proposed Actions
Expand all bullets
1.
Make the Child and Dependent Care Tax Credit refundable MORE

Childcare costs appear to have the strongest effect on mothers' employment, especially for low-income women. 

The Child and Dependent Care Credit is the only of the three main child tax credits that: 

  • Directly offsets the costs of childcare 
  • Is currently unavailable to low-income households
2.
Allow workers to claim and collect child-related tax credits at the time they take family leave MORE

Allowing families to receive their Earned Income Tax Credits early ensures that parents can collect this money when they take their family leave.

In 2010, the government allowed workers to collect a portion of their Earned Income Tax Credits early, but scrapped the program a year later after only 3% of workers enrolled. The main reasons workers didn't enroll were a lack of awareness of the program and the fear of being overpaid and having to later pay the money back.

To avoid the risk of overpayment, give households the option of receiving only part of the credits in advance. To allow the IRS to track individual recipients and avoid abuses, employers would need to verify employees' Social Security numbers. 

Expected Results
Expand all bullets
1.
More women in the workforceMORE

Refundable Child and Dependent Care Credits will make low-income working parents eligible to receive between $300-$1,250 in subsidized childcare costs. This would cover up to 13 weeks of low-income families' average childcare costs, helping the parent return to the workforce.

A study by the Rutgers Center for Women and Work found that women who took paid maternity leave were 93% more likely to be working 9-12 months after giving birth compared to women who took no leave. 

2.
Few negative effects to business ownersMORE

Survey results from the 3 states that currently mandate paid family leave:

  • California: 91% of employers found that paid family leave had either a positive effect, or no noticeable effect on profitability/performance 
  • New Jersey: 67% of New Jersey businesses found that paid family leave had no effect on business profitability/performance, with 2% finding a positive effect
  • Rhode Island: 61% of Rhode Island employers support the state's paid family leave law, with 15% feeling neutral.

Caveat to the above data: Fewer than 2% of workers used these programs, so they are unlikely to have a major impact on businesses 

Budget

To be determined 

The Conversation

5 months ago
Would there also be tax credits given to employees that take a leave to take care of a sick family member?
James Pew
Student
5 months ago
It seems that a common issue here is that families often don't take advantage of already-legislated paid leave because of lack of awareness. It might make sense, in addition to these changes, to find some way to raise awareness of these programs or to automatically enroll new parents in paid leave programs.
5 months ago
In addition to Tax Credits, maybe mothers and fathers on parental leave can receive Social Security benefits to shoulder the cost of everyday expenses.
5 months ago
A good suggestion!
Deborah Devedjian
Founder & Chief Citizens' Officer
5 months ago
How do fathers factor into this proposal? What is/could be their role?

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The Proposal Empower Low-Income Working Mothers with Paid Family Leave needs your vote by February 14, 2019.
Time remaining: 2 months

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