What are the true economic effects of paid leave? Real-life experiments are underway in three states that already have operational paid leave programs.
When Larisa Casillas gave birth to a boy two years ago, the Bay Area nonprofit organization where she worked gave her no paid time off. But she took leave anyway, receiving 12 weeks of income from California’s state family leave program, one of the few of its kind in the nation.
Casillas said the time was essential for bonding with her son, meeting other mothers and staving off postpartum depression. “Honestly, without that income support, I wouldn’t have made it,” she said.
In Seattle last week, Mayor Ed Murray and Councilmember Jean Godden proposed legislation that would give all regular city employees with a new child, both women and men, up to four weeks of parental leave at their normal wage or salary. And if President Barack Obama has his way, paid leave for new parents and people caring for ailing relatives will become national policy. Last month, he gave federal employees the right to take six weeks of paid leave when they become parents. In his State of the Union address earlier this year, Obama framed paid leave as a crucial economic matter.
“It’s time we stop treating child care as a side issue or a women’s issue, and treat it like the national economic priority that it is,” he said. Paid leave could help increase the percentage of women in the work force, he said, and help middle-class families earn stable incomes.
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On the other hand, opponents of paid leave say it is an economic burden that can be expensive for businesses, which do not need more mandates from the government on how to operate their enterprises.
What are the true economic effects of paid leave? Real-life experiments are underway in three states that already have operational paid leave programs: California, New Jersey and Rhode Island. Their experiences — particularly California’s, where the policy is a decade old — offer some answers. (New Jersey’s started in 2009 and Rhode Island’s last year.)
Economists have found that with paid leave, more people take time off, particularly low-income parents who might have taken no leave or dropped out of the work force after the birth of a child. Paid leave increases the probability that mothers return to employment later, and then work more hours and earn higher wages. Paid leave does not necessarily help businesses — but it does not seem to hurt them, either.
“For workers who use these programs, they are extremely beneficial,” said Ruth Milkman, a sociologist at the City University of New York. “And the business lobby’s predictions about how these programs are really a big burden on employers are not accurate.”
The Obama plan would provide six weeks of paid leave — very little compared with other industrialized countries. Britain gives 52 weeks, for instance. At the moment, though, only 11 percent of American workers have access to paid family leave, according to the Bureau of Labor Statistics. The Family and Medical Leave Act gives workers 12 weeks of unpaid leave, but only about half of employees are eligible.
Taking more time
For mothers, social scientists say, the benefits of paid leave go well beyond the fact that newborns need round-the-clock care, and mothers need time to recover from childbirth.
In California, for example, the paid leave law doubled typical maternity leaves to six to seven weeks, according to a study by three researchers, Maya Rossin-Slater, Christopher J. Ruhm and Jane Waldfogel. The increases were striking for unmarried and nonwhite women and those without a college degree, who have been less likely to work at companies with paid leave. Leave-taking among high school graduates rose 8 percentage points and 12 points among black mothers. Among college-educated and white mothers, by contrast, it rose by a statistically insignificant amount.
“The punch line is it reduces disparities in leave-taking between low and high socioeconomic groups, and does so without damaging these women’s later labor market prospects,” said Rossin-Slater, an assistant professor of economics at the University of California, Santa Barbara.
Still, only 36 percent of California voters were aware of the state’s program, a Field Poll in October found. Awareness has declined among nonwhite, noncollege-educated and female voters — exactly the people who benefit most from the policy.
What happens down the road?
Mothers in California who took leave were 6 percent more likely to be working a year later than those who did not, according to another study co-written by Ruhm of the University of Virginia. That matters because the percentage of women who work in the United States has been declining.
In New Jersey, in the year after giving birth, women who take paid leave have been about 40 percent less likely to receive public aid or food stamps, a Rutgers study commissioned by the National Partnership for Women and Families found.
Women who took leave and returned to their jobs worked 15 to 20 percent more hours during the second year of their child’s life than those who did not take leave, Ruhm found, and their hourly wages increased about 5 percent.
Jennie Pasquarella, who took paid leave from her job at a Los Angeles nonprofit organization when she had twin boys a year and a half ago, said the time off was an enormous help. “I was not sleeping for most of that period, so if the circumstances were different and I would have had to go back earlier, I don’t know how I would be able to properly function at work.”
Washington state can’t foot the bill
The three states that offer paid family leave finance it through payroll taxes that pay into the states’ existing temporary disability insurance programs. Another state, Washington — which does not have temporary disability insurance — approved paid family leave in 2007, but has not started the program for financial reasons.
At California companies, many of which lobbied against the law, fears about its effects have not played out. From 89 percent to 99 percent of employers say it has had no effect or a positive one on productivity, profitability, turnover and morale, according to a report by Milkman and Eileen Appelbaum, an economist at the Center for Economic and Policy Research. Eighty-seven percent say it has not increased costs. Nine percent say they saved money because of decreased turnover or benefit payments.
Still, social scientists say, leaves can backfire on workers if employers penalize them by denying promotions or raises.
In short, a paid leave law helps, but it is not enough. There must also be changes in public awareness and workplace culture. But a national policy would be a step in that direction.