Senate Committee Considers Plan to Fund Paid Family Leave Through Social Security

July 13, 2018

In advance of the introduction of a measure by Senate Republicans, a Senate Finance Committee hearing explored offering new parents the option of collecting early Social Security benefits to fund up to 12 weeks of paid family leave.

The legislation will be introduced by Senators Marco Rubio (R-FL), Mike Lee (R-UT) and Joni Ernst (R-IA), and is expected to resemble an Independent Women’s Forum proposal from earlier this year.  Under the proposal: 

  • New parents would defer their Social Security retirement benefits by an estimated six weeks to fund 12 weeks of parental benefits.

  • The Social Security disability benefits formula would be used to calculate the amount of a new parent’s parental benefits, basing benefits on an individual’s average indexed earnings to date.

  • Participation would be voluntary and offered regardless of the size of the beneficiary’s employer.

Subcommittee Chair Bill Cassidy (R-LA) insisted any legislation must not harm Social Security, saying, “Preserving the retirement benefits promised to American workers is paramount.  Any proposal that relies on Social Security cannot weaken Social Security.” 

Opponents to the idea zeroed in on that concern.  Senator Kirsten Gillibrand (D-NY) stated that, if enacted, such legislation “would harm the current and future financial security of our seniors.” 

Supporters insisted that such a measure would be self-financing in the long term.  Dr. Andrew G. Biggs, Resident Scholar at the American Enterprise Institute, pointed to further benefits: “Paid parental leave can lead to higher labor force participation and earnings once a mother chooses to return to the workforce.  Higher earnings would lead to higher Social Security benefits, offsetting part or all of the benefit reduction associated with an increased retirement age.”

Significance: While the proposal is only the latest of many intended to increase the availability of paid family leave, it demonstrates continuing strong Republican interest in acting on the issue.  Yet, there remain significant differences with Democrats, who prefer an employer-funded mandate.