Women and men would have made the same amount of money by 2017 if not for federal law.
The introduction of family and medical leave laws in the U.S. has had a significant impact on women’s wages, according to a commentary from The Daily Signal’s Rachel Greszler, a researcher for the Grover M. Hermann Center for the Federal Budget, the Institute for Economic Freedom, and The Heritage Foundation.
Before the passage of the Family Medical Leave Act (FMLA) in 1993, white women’s wages were converging relative to white men’s at a rate of 0.70 percentage points per year, Greszler explains after citing a new study from the National Bureau of Economic Research (read below).
But after the FMLA was passed, this rate of convergence fell to 0.03 percentage points. Similarly, the rate of convergence for black women to white men dropped from 0.30 percentage points per year prior to the FMLA’s passage to 0.05 percentage points after.
“It’s important to note that the raw, so-called ‘gender wage gap’—which claims that women made only 82 cents on the dollar compared to men in 2021—is not a scientific metric because it simply compares the wages of all full-time women to all full-time men,” Greszler argues. “After factoring in observable characteristics like occupation, experience, and education, the so-called ‘gap’ shrinks considerably.”
After accounting for changes in such observable characteristics, the study authors found that “the introduction of [family leave laws] can explain 94% of the reduction in the rate of gender wage convergence that is unaccounted for after controlling for changes in observable characteristics of workers.”
The study authors then determined that “if gender wage convergence had continued at the pre-family leave rate, wage parity between white women and white men would have been achieved as early as 2017.”
Greszler also emphasizes how the study demonstrates the tradeoffs inherent to government benefits, as well as the limitations of “one-size-fits-all” federal mandates.
“This study confirms the basic economic principle that there is no such thing as a free lunch, meaning that with any supposed government-created benefit, there are tradeoffs,” Greszler writes. “And it demonstrates the impossibility of providing flexibility to employees and their employers via one-size-fits-all government mandates.”
Greszler concludes by recommending policymakers expand access to paid family leave, doing so by enacting policies such as the Working Families Flexibility Act, Universal Savings Accounts, and removing costly regulations. This would make it easier and more economically feasible for private employers to offer tailored programs.
“Instead, policymakers should help expand access to paid family leave through policies that make it easier and more economically feasible for private employers to offer their own programs,” writes Greszler. “They can do that by passing legislation such as the Working Families Flexibility Act, by enacting Universal Savings Accounts, and by removing costly and unnecessary regulations so that employers have more resources to provide paid family leave that’s better tailored to their businesses and to their employees’ needs.”
