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This is the ninth 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 post to tee off the series, we have invited each of the working group members to offer their thoughts on the topic. This week’s contribution comes from Heather Boushey and Elisabeth Jacobs of the Washington Center for Equitable Growth.
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.
— Aparna Mathur
Looking to the states on paid family leave
The drumbeat around paid family leave has grown louder, propelling it into an issue of bipartisan concern on the federal level. The United States is one of a handful of countries that provide no leave after the birth of a child, for self-care, or to care for a loved one in the case of an illness. Federal policymakers on both sides of the aisle concur that this is a problem that they need to address.
As policymakers consider their options, models developed right here in the United States show what a paid family leave program can accomplish. Millions of Americans have access to paid leave, and not just from employer-sponsored programs. Three states—California, New Jersey, and Rhode Island—have successfully enacted their own paid leave systems, with New York set to join them in 2018 after adopting legislation last year with near-unanimous bipartisan support. The experience of these states are a valuable resource for those thinking about what successful policy should look like on a national level. They show that a well-designed national paid leave system can be beneficial to families and businesses, strengthening the economy for everyone.
State paid leave programs have helped millions of families, especially those in low-income jobs who are less likely to have employer-sponsored paid leave. Paid leave raises the likelihood that a new mother will remain in the labor market, which can help boost her lifetime income and contributes to our economic productivity overall. Researchers have found that in these states, women who take parental leave are less likely to suffer from maternal depression and are more likely to breastfeed— and do so for longer periods of time — outcomes that are beneficial for the lifetime health and development of the child, with long-term consequences for human capital, and, in turn, individual economic well-being and macroeconomic productivity.
Researchers have found that in these states, women who take parental leave are less likely to suffer from maternal depression and are more likely to breastfeed— and do so for longer periods of time — outcomes that are beneficial for the lifetime health and development of the child, with long-term consequences for human capital, and, in turn, individual economic well-being and macroeconomic productivity.
Paid leave programs aren’t just for women, and as they’ve become more well-known, states have seen a rising number of men taking leave to provide care for infants, and themselves and other loved ones in the case of illness. This points to important cultural shifts that impact both families and the economy as a whole: Research shows that paid leave encourages men to help more at home, freeing up time for women if they want to work, which boosts household income and reduces the gender wage gap. This is also good for the economy, as improving women’s labor force participation spurs economic growth.
It’s clear that paid leave is good for families, but how have businesses fared in these states? Quite well, according to the research. In places without state paid leave systems, it’s up to individual businesses to decide whether or not to grant an employee paid leave. While many companies may care about their employees, they may not be able to cover their salaries for an extended period of time. Government programs, however, mean that employees’ don’t have to make the choice. The “risk” of paying for an employee’s leave is broadly shared across workers and businesses, in exchange for universal access to leave.
Surveys of employers in California and New Jersey overwhelmingly report that paid leave has had a positive or neutral effect on profitability, turnover, and morale. And a study done by the Council of Economic Advisors under the Obama Administration has found that state paid leave programs can help employers recruit and retain talent, lower turnover, and boost morale and worker productivity. Paid leave also reduces the burden on government assistance in these states, suggesting potential longer-term positive budgetary implications.
The three states — and New York, whose program begins next year — built their paid leave programs as extensions of half-century old state-wide temporary disability insurance (TDI) programs. No other states in the nation have TDI programs to build upon.
What’s the downside to these programs? One problem is a lack of knowledge of their existence. This information gap seems to be especially true for those who need leave for medical purposes, or to care for an elderly relative. A second problem is that these state-based programs administer benefits through institutions that don’t exist in other states. The three states — and New York, whose program begins next year — built their paid leave programs as extensions of half-century old state-wide temporary disability insurance (TDI) programs. No other states in the nation have TDI programs to build upon, so other states looking to develop their own paid leave policies will need to find a different administrative fix. The District of Columbia and the state of Washington are currently facing this dilemma.
The key lesson from the states that have taken the bold step of implementing paid family leave is that the evidence is clear: paid leave is a good thing not just for families, but also for businesses and the economy as a whole. Building on existing social insurance systems has worked well for the states, and represents a promising model for expanding access to paid leave to all Americans.
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