Paid Family Leave: Economical Conclusions From Three U.S. States

President Trump, with the encouragement of his daughter Ivanka, has been promoting paid family leave as a means to help families with income and work after the birth of a child or to care for a loved one who falls ill.

Democrats have long supported such plans, and Republicans are coming on board. That may surprise many who think paid leave is an unaffordable boondoggle, but the evidence overwhelmingly suggests that it’s a boon not a boondoggle, and not just for families but for businesses that offer paid family leave.

Evidence of such claims are drawn from studies of paid family leave programs in three U.S. states — California, New Jersey, and Rhode Island — that have already implemented such programs. Here are some of the conclusions:

  1. 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.
  2. 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.
  3. Paid leave encourages men to help more at home, freeing up time for women if they want to work, which boosts household income and spurs economic growth.
  4. Fathers who take time off work at and around childbirth are more likely to be involved in childcare later in the child’s life. Children whose fathers are more involved in their early years perform better on language and cognitive tests, and social development than those with fathers who are less involved.
  5. Paid leave has had a positive or neutral effect on profitability, according to employers in California and New Jersey.
  6. State paid leave programs have helped employers recruit and retain talent, lower turnover, and boost morale and worker productivity.
  7. Paid leave reduces the burden on government assistance in states, suggesting potential longer-term positive budgetary implications.
  8. Uneven availability of paid family leave in the private sector ends up disproportionately benefiting higher-income workers, while low-wage workers also often lack other forms of paid days off that higher-wage workers can use for family leave. Providing low-wage, low-skill workers time to care for their families encourages work.

OK. There must be downsides, right? There are some potential hazards. These are some:

  1. States looking to develop their own paid leave policies will have to build an administrative structure to create the system.
  2. Lawmakers will grow government rather than make cuts to other programs to pay for paid family leave.
  3. Employers dropping their paid leave programs for a federal program could become quite expensive if not offset.
  4. There is the potential for “time-off creep” and the costs associated with that. Paid leave programs are now only four-six weeks, but New York has already passed a law to make its program 12 weeks.

The United States is the only developed country in the world that does not offer paid family leave.

What do you think of implementing a universal system?

Read the entire blog series on the impact of paid family leave.