Creating a twenty-first-century social insurance system for today’s “juggler families.”
Social Security retirement-benefit calculations should be re-jiggered so as not to penalize parents who take time off of work. The years when parents cut back on work to care for children should not weigh down average earnings for the purpose of calculating benefits. This could be done by allowing parents to subtract from the 35 years any year, up to 10 years, in which they have a child at home.
Third, unemployment insurance must be reformed to accommodate today’s families and help them maintain their labor-force attachment. Most states restrict U.I. eligibility to those who meet requirements designed around a breadwinner’s job patterns. They provide benefits to workers who quit as a reasonable response to an action taken by their employer but, according to the National Employment Law Project, only 15 states provide benefits to workers who quit for equally compelling family circumstances–such as the requirement to work night shifts when an employee cannot find child care. In addition, 24 states categorically deny U.I. benefits to part-time workers (although nearly one-fifth of American workers are part-time and their wages are subject to U.I. taxes). Many nonstandard workers are misclassified as independent contractors and thus ineligible for U.I. benefits altogether. The result of these and other outdated rules is that the proportion of workers in jobs that even qualify for unemployment insurance who received benefits during a period of unemployment has decreased dramatically, from 80 percent in 1947 to 38 percent in 1995. In response, unemployment insurance should be made available to workers who leave a job involuntarily because of family, those looking for part-time work, and those who have been in the workplace a shorter period of time or are contingent workers. Eligibility should be calculated based on hours worked rather than wage rates.
A New Social Compact
While our current social insurance programs call out for renovation, we also must build anew. Adapting existing programs would help families better navigate retirement, unemployment, and disability, but it is also time we took seriously the new economic challenges that loom in the lives of today’s families. Today, the United States is one of only two industrialized countries that does not guarantee paid maternity leave, and, as a result, only five percent of workers have access to a job that provides paid leave on the birth of a new baby. Just as before the passage of the Social Security Act, the states have begun experimenting on their own. Five states require employers to have temporary disability programs, which pay benefits to pregnant women. A few others offer low-income families subsidies for infant care. And, in 2004, California became the first state to expand its state disability insurance system to provide paid family and medical leave.
What is needed, though, is a national commitment to mitigating the new risks to the economic well-being of families. Social Security took on the problem of financial vulnerability in old age and won. We have no equivalent commitment to addressing the financial vulnerability of Americans earlier in their lives, before they have had time to save, when they are hit with the exorbitant costs of raising a child at the very same time as they find their earnings and benefits slipping because of their childrearing responsibilities.
We need a new, universal Family Insurance system in America. It would not eliminate the costs of having and rearing children–parents who cut back on work would still receive less in wages, and they would still have to pay for housing, clothes, and education–but it would prevent the more common catastrophic economic disruptions that too often send today’s families to bankruptcy court.
Family Insurance would address the very real possibility that income will decline when one parent–or the only parent–stays home with a new child, takes a part-time job to be home after school with a kindergartener, or is forced into a temp job to gain the flexibility to care for a parent with Alzheimer’s. Families would be able to draw down benefits to replace earnings lost as a result of taking family and medical leave up to a capped amount, just as they do in retirement. The benefits could replace partial earnings if a worker goes part-time instead of taking full-time leave–including if he or she decides to take part of his or her child leave as reduced leave.
Family Insurance also would encompass the common risk that a family loses health insurance, which is all too often the casualty of a flexible job. In order to allow parents who can’t work nights, go part-time, or even stay home access to the same tax-subsidized group health insurance available to full-time workers with employer-provided insurance, Family Insurance would provide a progressive credit to help families buy into the federal employees’ group health plan.
Finally, to address the vulnerability that results from the fact that the high costs of raising children hit at the same time as the part-time penalty, Family Insurance would include an add-on account, like the accounts some have proposed for supplementing Social Security. These new Parent Accounts would be a substitute for today’s little-known flexible spending accounts, which allow employees to put aside $5,000, pre-tax, for health care expenses and another $5,000 for childcare expenses. Flexible spending accounts are available only to employees of participating firms and regressive to boot, whereas all workers could establish new Parent Accounts for the health-, child care-, and education-related expenses of raising a child. The government would match a family’s pre-tax contributions to the account on a progressive basis (giving a higher match to low-income families and none to high-income families).
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