Introduction

In today's New Economy a growing number of Americans are struggling to balance work and family responsibilities, particularly their responsibilities to care for their newborn children. Research points to the great benefits for infants when a parent can stay home with their newborn. Yet, many families cannot afford to have one parent stay at home, even during the first year of life. While in 1965 only 17 percent of mothers of one-year olds worked full- or part-time, 58 percent did by 2001. So many parents of newborns must work because they cannot afford to give up the second wage earner's income. While the Family and Medical Leave Act (FMLA) made it possible for some parents to take unpaid parental leave, it did not cover all workers and did not provide workers the financial support to do so. In fact, the United States is the only developed country failing to provide widespread, job-guaranteed parental leave with some provision for wage replacement. It is time to build on the FMLA and provide partial wage replacement for new parents to stay home for at least the first six months of a newborn's life. Such a benefit would impose only minimal costs on employers and can be structured so as to not reduce employer incentives to hire workers. Specifically, PPI proposes that Congress should:

• Require states to allow new parents who have been working to collect unemployment insurance benefits for 26 weeks (the standard length of time for receiving UI benefits). To help compensate states and employers, the federal government should contribute 50 percent of the costs of the program. It should also exempt these benefits from federal income taxes.
• Extend the FMLA to cover all establishments with greater than 25 workers, instead of its current coverage of workers in establishments with 50 or more workers.
• Expand the child tax credit to $2,000 for parents with children under the age of one, where one parent is staying home with the child.
• Allow parents who take time off work during the first three years of their child's life to later make up the tax-free retirement contributions they missed.