NOW Opposes the Rescinding of 'Baby UI,' Calls for Comprehensive Paid Family Leave Programs

January 30, 2003

The National Organization for Women (NOW) and NOW Foundation oppose the rescinding of the Department of Labor "Birth and Adoption - Unemployment Compensation" rule (also called "Baby UI") which explicitly allows states to use their unemployment insurance systems to provide partial wage replacement to parents caring for a new child.

Rather than rescind Baby UI, the Department of Labor should enact a comprehensive paid leave program and reform the unemployment insurance system to reflect today's workforce making it more responsive to the needs of women, part-time and low-wage workers and recent entrants to the workplace.

The Federal Government is Failing Today's Families
Baby UI: An Innovative Policy With Overwhelming Popular Support
States Lead the Way On Unemployment Insurance and Paid Leave
The Need for Paid Family Leave and Unemployment Insurance Reform
National Organization for Women and NOW Foundation Recommendations

The Administration's proposal to rescind the Department of Labor rule known as "Baby UI," which extends unemployment insurance to parents caring for a new child, is a regressive move that exposes the hypocrisy of its rhetoric about families and family values.

Through nearly a decade of unprecedented economic growth and prosperity, we saw the rich become richer, and then richer still, while poor and middle-income families reaped little benefit from such prosperous times. Now that we are experiencing tougher economic times, the very same families that gained the least in terms of real wages and standard of living stand to lose the most. Many of these families struggled through what were considered "good" economic times, and they are now being asked to sacrifice critical family needs as the economic downturn continues.

In these uncertain times, families have been asked to put their trust in the "family-friendly" Bush Administration. That trust, however, is misplaced unless the Administration does more to support the families who need it most. The real needs of families include comprehensive paid family leave and unemployment benefits that reflect the make-up and respond to the needs of today's workforce.

The U.S. is behind and falling further behind in terms of providing adequate supports for workers. Though states have begun to recognize the necessity of government mandates for certain basic provisions, the federal government continues to shift the responsibility to individual employers—with little success. Over the 1990's, the proportion of workers with paid holidays in companies with 100 or more employees fell from 99 percent to 89 percent. The proportion of those with paid sick leave fell from 89 percent to 56 percent. According to the New York Times, "compared with corporations in other nations, those in the United States are far less generous with women workers who have newborn babies. In Sweden, a worker can request a six-hour day until her child is 8, for example. In Japan, a mother can receive paid maternity leave for a year at 40 percent of her salary."

Baby UI was put in place with hopes of serving the needs of parents who cannot take unpaid family leave because they cannot go without a paycheck for a week or weeks at a time. Under this program, states amend their unemployment insurance laws to allow qualified employees to collect unemployment benefits while they are temporarily not working because they are caring for a newborn or newly adopted child. This helps make it affordable for employees to take advantage of the Family and Medical Leave Act's guaranteed 12 weeks of unpaid but job-protected leave.

Baby UI enjoys overwhelming popular support. According to an October 2000 study, 84% of all adults support expanding disability or unemployment insurance as a vehicle for paid family leave.

Baby UI is not a substitute for comprehensive paid family leave because it applies only to parents caring for a new child and it pays less than full wages to covered employees. Still, it is a step in the right direction. It keeps people connected to the workforce and may help many stay off of welfare. A 2000 Department of Labor study shows that nearly one in ten people who did not receive full pay while taking parental or other types of family and medical leave was forced to go on public assistance. Paid leave for new parents, even when only partially paid, is especially important- recent estimates suggest that one-quarter of all periods of poverty in the U.S. begin with the birth of a child.

In contrast to the federal government, the states have shown remarkable leadership by proposing, and in many cases instituting, innovative UI and family leave policies.

State UI Expansions

In 2002, ten states actively debated adjusting the base period used in determining unemployment benefits eligibility to more fairly serve low-wage workers. These base period reforms would expand eligibility for low-wage workers by allowing their most recent earnings to be counted towards benefit eligibility. This measure passed in Oklahoma and Georgia in 2002 and has already been enacted in 12 other states. While Congress debated proposals to extend unemployment benefits beyond the 26 weeks of regular state UI, six states enacted state-funded extended benefits programs for the long-term unemployed. Four states and the District of Columbia also temporarily suspended the "waiting week," while New Jersey permanently eliminated it. Additionally, five states and the District of Columbia significantly increased the weekly UI benefit amount, while four other states enacted modest weekly benefit increases.

State Family Leave Expansions

In 2001-2002, 16 states issued proposals to utilize the Baby UI regulation. Unfortunately, none of these states had the opportunity to implement this program before the rule's proposed repeal.

In September of 2002, California enacted legislation that expands the state's disability insurance program to provide up to 12 weeks of partial wage replacement to workers who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a new child. Though employees will only pay an average of $27 a year, workers on leave would bring home 55-60% of their wages, up to $728 per week during the program's first year.

Another public program, At-Home Infant Care (AHIC), was pioneered by Minnesota in 1998. Minnesota adopted this program in part because it was difficult for many parents to find quality infant care. Under At-Home Infant Care in Minnesota, low-income working parents receive subsidies in lieu of child care vouchers for caring for infants under age one at home. Minnesota has enacted expansions to AHIC in 2001 and 2002. Montana and Missouri now have similar programs.

While state innovations have made improvements for some, what is really needed is fundamental reform of the unemployment insurance system. The existing system relies on outdated stereotypes of a full-time stay-at-home mom. Today's reality is quite different. Two-thirds of mothers with small children now work, and in 60 percent of families, both parents work. In the typical family, the mother and father work a combined 81 hours a week. UI was created in the 1930's when 20% of women were in the paid workforce, and little has been done since then to update it.

Repealing the rule that allows states to provide partially paid parental leave through the unemployment insurance system undermines women's equal participation in the workforce. Paid parental leave, even the partial wage replacement of Baby UI, is a crucial step towards gaining economic security for women. Rescinding these regulations signals an about-face on the progress that women in the workforce have made in recent years.

National Organization for Women and NOW Foundation Recommendations