Once upon a time, I ran a construction business with my brother, and, like most small business owners, we faced the ceaseless challenge of liquidity. I remember one particularly tight stretch when several customers were late paying their invoices. On paper, the company was healthy. In reality, payroll was due, suppliers needed to be paid and the cash simply wasn’t in the bank yet.
One afternoon, I called my brother and told him I had run the numbers. We realized that if our customers didn’t pay soon, our only option would be to drain every dollar the company had and then start maxing out our personal credit cards to keep our employees paid and the doors open.
That’s the daily struggle for the small business community. It’s a nerve-wracking reality where a few missed invoices can threaten employers’ ability to pay their staff. So many small businesses function with tight margins that even the slightest cost can force them to close shop.
And that’s precisely what will happen if Allegheny County adopts a highly contested proposal: mandatory parental leave. Under the proposal, all businesses — regardless of size — would be required to provide 18 weeks of fully paid parental leave to any employee who has been on the job for as little as 30 days.
Let me be perfectly blunt: This mandate will decimate the county’s small business community. Forcing them to pay 4.5 months’ worth of wages to off-the-clock employees would cause countless Allegheny County businesses to either shutter operations or move elsewhere.
If adopted, this policy would be unprecedented. Allegheny would become the first county in Pennsylvania to impose mandatory paid parental leave on private employers.
Plus, the proposed measure would be among the most burdensome of its kind nationally. The policy contains neither size exemptions nor a grace period for small businesses to adapt. Every employer, from a 10-person restaurant to a two-person accounting firm, would face the same onerous obligation as a multinational conglomerate.
But big businesses are better equipped to comply with such mandates. A large employer can absorb the cost of an extended leave, shuffle responsibilities across its deeper bench and keep operations running.
The same can’t be said about mom-and-pop shops. When a key employee at a 10-person landscaping company or a family-owned restaurant takes 18 weeks of paid leave, the owner faces impossible choices: hire and train a temporary replacement at a significant cost, overburden the remaining staff with added responsibilities, or watch the business suffer.
If Allegheny County progressives don’t want to shill for big business, they are going about it the wrong way.
The marketplace has been addressing this issue faster than government. According to the Mercatus Center, two-thirds of women today have access to paid leave — a 280% increase since the 1960s. The market, left to function, has expanded parental leave access considerably over time, and it does so in ways that are sustainable and tailored to what each business can afford.
What makes this proposal particularly damaging is its geography. This is not a statewide mandate that levels the playing field for all Pennsylvania employers. It is a county-level rule that creates a sharp competitive disadvantage for Allegheny County area businesses. A Pittsburgh company faces the full weight of this mandate, while its competitors in Butler or Washington counties do not.
This geography issue will quickly spiral into a demography issue, too. Allegheny County has witnessed year-over-year population declines, with a net loss in migration in 18 of the last 25 years. This mandate will only exacerbate this brain drain. When businesses leave, employees will follow.
In all fairness, paid parental leave is undeniably desirable. All parents understand the value of quality time with their newborn children. It’s a once-in-a-lifetime opportunity that all parents hate to squander.
And countless employers understand that — if they can swing it — they can improve their bottom lines. Many businesses voluntarily offer paid leave because they understand it helps attract and retain talented employees. Polling shows that four out of five business owners want to provide more paid leave, but with one crucial caveat: They lack the financial ability to do so.
But there is a huge difference between a business choosing to offer parental leave and a government compelling it. When benefits emerge voluntarily, they reflect genuine economic conditions. When government mandates them with no regard for businesses’ size or financial capacity, they become a de facto employment tax — one paid by small business owners who have already maxed out their credit cards to make payroll.
Paid parental leave is a worthy goal, but this one-size-fits-all mandate won’t achieve its desired effect. If Allegheny County officials genuinely want to keep businesses open, workers employed and families in the county, they had better take leave from such onerous proposals.
Andrew Lewis is the CEO and president of the Commonwealth Foundation.