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A public policy blog from AEI
The issue of paid family leave is gaining increasing attention, as we discussed at a recent event at AEI where we hosted Senator Deb Fischer (R-NE) and a panel of experts. Here are some reasons why. The labor force participation rate of mothers with children under 18 years has increased from 48.8% to 70.9% between 1976 and 2012 and from 34.1% to 60.7% between 1976 and 2012 for mothers with children under 3 years. Both these figures show a dramatic increases and underline the importance of addressing topics such as paid family leave that would accommodate women and mothers in particular.
Currently, there is no federal program for paid family leave. Instead, the Family Medical Leave Act (FMLA) requires employers provide up to 12 weeks of job protected unpaid leave for qualifying medical and family reasons. Eligibility, however, is complicated and the Department of Labor finds that 40% of employees, including hourly workers, are not covered by FMLA.
Four states have passed legislation to create paid family leave. While these programs have had some success, the take-up rate is still pretty low. California, the first state to pass a paid family leave plan, has struggled with take-up since implementation in 2004. Few are aware of the program and many of those who are aware cannot afford to live the wage replacement rate offered, or cannot afford to take leave without job protection. New Jersey and Rhode Island have faced the same challenges. Washington has also passed legislation but the program has been delayed for the past several years due to lack of funding.
At the federal and state level, it is often the case that those who need paid family leave the most are not eligible or cannot afford to take advantage of the programs. Even in the private sector, companies make paid leave inaccessible lower wage workers. Netflix, for example, has promised one year of paid, unlimited leave following the birth of a child. This policy, however, does not extend to non-salaried, low-skilled workers such as those in the company’s DVD distribution centers.
Meanwhile, studies have shown that mothers who take paid maternity leave are more likely to retain full-time employment following childbirth, leading to higher future earnings. This trend emphasizes the importance of making paid leave more accessible, especially for lower income families who would benefit from higher future earnings.
There have been a lot of conversations about the how to approach paid family leave going forward. There are questions including, but not limited to, the optimal wage replacement level and the optimal length of leave. It’s quite possible that the answers to these issues differ from state to state and then the question of whether to implement a program at the state or federal level arises.
California has led the way with its paid leave program and due to the size of the state and its multi-faceted diversity, it can be a useful tool in considering future state-level programs or a federal program. Meanwhile, Senators Deb Fischer (R-NE) and Angus King (I-ME) have introduced the Strong Families Act to incentivize employers to voluntarily provide employees with paid parental or medical leave at the federal level.
Paid family leave, especially for new mothers, is so critical not only because it has been proven to help women return to the labor force after the birth of a child but also because increasing women’s working hours can have a substantial impact on the economy. Had women’s employment patterns remained unchanged in the past decades, GDP would have been roughly 11% lower in 2012 than it was. Clearly, not only do household earnings rise when women go back to work following leave; the overall economy benefits as well.
It’s time to have a national conversation about paid family leave.
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