On Tuesday, Trump revealed details of his child care and maternity leave plans during a speech in Pennsylvania. Of particular interest is the idea of extending unemployment benefits for maternity leave.
While this might ‘sound’ like a plausible idea, it’s a plan that would complicate an already overburdened state system of unemployment insurance, threatening the foundations of the program itself.
The Federal-State Unemployment Insurance Program provides benefits to workers who become unemployed through no fault of their own, but it is a program that is mostly controlled by the individual states:
- States pay into a Trust Fund, with balances ranging from only a few million to several billion, depending on how the state has implemented the program;
- State law, not federal laws, determines eligibility, benefit amounts, and length of benefits;
- It’s a program that is almost exclusively paid for by employers (three states have employee contributions as well); and
- Employers are rated based on industry averages and their own ‘unemployment rates,’ to determine the payments collected by the states.
Based on these criteria, there’s a lot of questions that need to be answered about Trump’s plan:
- What is the benefit amount? This varies wildly state to state, and the benefit amount is almost always less than the wages earned.
- Is the federal government going to add in eligibility requirements to a program that has been historically run by the individual states?
- Will employers have to pay their unemployment rates based on usage or the number of child-bearing aged women working for them?
- What happens when the ‘money runs out?’
The final question is the key. The ‘federal’ part of the Federal-State program kicks in once the state has depleted its own funds, and with different rules and eligibility requirements.
The problem with this plan is that it ‘sounds’ good on the surface, but over complicates a functioning program — one that often functions under razor thin margins during times of economic downturn.
It’s an ‘unfunded’ expansion of a state-run program, while at the same time stripping states of a significant amount of control over the program itself.
And even worse, it would probably have the same ‘appeal’ as the Medicaid expansion through Obamacare had with the individual states, with half of the states choosing not to expand the state-run program.
In the end, this is an overall bad idea. While the idea of nationally required maternity/paternity leave is an important topic, schemes like this are only doomed to failure in Congress or at the state level.
If Trump is serious about implementing a maternity/paternity leave plan, he needs to have a realistic plan that will work regardless of 50 different states balking at the idea.