In a December 16 op-ed in the Wall Street Journal, YouTube CEO Susan Wojcicki says yes to both questions. Her explanation displays unfamiliarity with elementary economics.
Wojcicki recounts joining a small startup called Google in 1999 and being the first employee to go on paid maternity leave. Sometime this month, she will do so for the fifth time. Wojcicki expresses gratitude to founders Larry Page and Sergei Brin for this fringe benefit. (YouTube is now owned by Google.)
Wojcicki then conflates paid maternity leave as an employee benefit with paid maternity leave as a governmental mandate:
Paid maternity leave is also good for business. After California instituted paid medical leave, a survey in 2011 by the Center for Economic and Policy Research found that 91% of employers said the policy either boosted profits or had no effect. They also noted improved productivity, higher morale and reduced turnover. *
As an employee benefit, a firm can effectively compete for talented female job candidates, thereby making important distinctions between itself and its labor market competitors. Wojcicki says firms providing paid maternity leave benefit from mothers’ “broader sense of purpose, more compassion and a better ability to prioritize and get things done efficiently.” These are all fine reasons for firms to choose to offer paid maternity leave, for by doing so firm can capture these benefits and their less generous competitors cannot. They do not support making paid maternity mandatory, however.
Once paid maternity leave becomes a governmental mandate, however, that distinction is lost. It becomes equivalent to a generalized tax on labor supplied to other companies. A firm like Google that previously offered it as a fringe benefit now has to find another way to distinguish itself — maybe with free gourmet food, free rides to work, and for the macabre of mind, lavish death benefits. Of course, if any of these benefits ever became mandatory, Google will have to devise new ways to distinguish itself.
There’s another important labor economics issue worth noting. By promoting paid maternity leave as a governmental mandate, Wojcicki advances a classic form of regulatory capture: promoting policies that raise the costs of one’s competitors. A federal mandate that all employers do as Google has done costs Google nothing. Only its competitors have to pay.
* The survey Wojcicki cites was conducted by an advocacy organization and consists of 253 establishments and 500 individuals. Both samples have undisclosed properties. The survey instrument, the response rate, and the presence of non-response bias are not reported. These deficiencies make independent validation impossible.