Paid family leave: An issue whose time has come?

This is the first in a series of blog posts on paid family leave jointly sponsored by AEI and Brookings. Aparna Mathur at AEI and Isabel Sawhill at the Brookings Institution are the co-directors of the AEI-Brookings Project on Paid Family Leave. The project includes a diverse group of individuals from different organizations with expertise on this topic. Following our initial blog to tee off the series, we have invited each of the working group members to offer their thoughts on the topic.

Over the next few weeks, you will get to read their opinions and offer your comments. We invite you to engage with us as a new administration takes office and charts out policies on these topics. This will help us better inform policymakers of the practical day-to-day realities of living in a country where millions lack access to paid leave at the birth of a child or to meet other caregiving needs.

Polls show that the public is overwhelmingly in favor of paid family and medical leave. Support for the concept is bipartisan, with 83 percent of Democrats and 71 percent of Republicans in favor of this policy. Yet, the United States is the only advanced nation that does not have a paid leave policy at the national level. While the federal government has been slow to act on this issue, many private employers and states have recently come forward with their own benefit policies for their employees. Tech companies like Google, Apple and Netflix offer many months of paid leave to accommodate the needs of working parents in their organizations. Paid family leave is provided in California, New Jersey, and Rhode Island. The state of New York has recently passed a paid family leave policy that will phase in by 2021. The District of Columbia recently passed a bill as well, and Washington state is considering one.

Paid leave laws are a recognition of the changing picture inside people’s homes. Back in the 1960s, few women worked, and most of them dropped out of the workforce when they gave birth. Today, most women and mothers are working or attached to the workforce. While a few still choose to exit at the time of birth, for the vast majority, not working is not a choice. Families depend on the incomes provided by both parents to meet their financial needs and to provide children the resources they need to grow. This is especially true of single mothers, who tend to have lower average incomes and few fallback options if they do not work. For working parents, paid leave and other workplace policies that recognize this reality are critical.

That said, there are numerous controversies surrounding the topic. From the business perspective, paid leave creates a variety of worries. One is that the proliferation of state laws and regulations will make it increasingly difficult for them to operate efficiently across state lines and will raise their costs of doing business. They may well prefer one federal law to 50 state laws. In addition, there is also an obvious cost associated with the lower productivity imposed by an absent employee or the wages that must be paid to a replacement. At the same time, paid leave may reduce turnover costs by encouraging parents to return to work after a leave. And if the costs are covered by a payroll tax on employees, the costs to firms are minimal.

From the employee perspective, paid family leave laws in California, New Jersey and Rhode Island allow families to feel more comfortable taking time off when they need it and encourage mothers to return to the workforce and continue their careers. While state paid leave laws have generally improved access to leave, particularly for low-income workers and disadvantaged groups, take-up rates have considerable room for improvement. In surveys, many low income employees generally report that they could not take full advantage of available paid leave either because it did not come with job protection or because the wage replacement rates were too low for them to stay out of the workforce for long. In many cases, employees were simply unaware that they had access to this type of paid leave.

The design of these policies is critical. Making them gender-neutral so that women are not adversely impacted when it comes to hiring is critical. They should also be designed in a way that does not burden businesses excessively, especially small business. And ensuring access for the least advantaged workers should be a primary goal.

The Trump administration has signaled its interest in doing more on this front, but some aspects of its preliminary proposal could be improved. For example, the Trump plan focuses on maternity rather than parental leave available for both parents. This could exacerbate gender bias in hiring and reinforce the stereotype that mothers should be the primary caregivers.

Moreover, the idea that reduced waste and abuse in the Unemployment Insurance program could serve as a sustainable and continued source of funds for an ongoing paid family leave program seems unrealistic. Such a program would require an assured source of funding year after year.

Now we invite you to join this conversation and to follow along as we share the views of our expert working group. We would love to hear from you as we embark on this journey. Please add your comments in the space below.