• <div class="header-image" style="background-image: url(/live/image/gid/4/3256_shutterstock_1302963724.rev.1575383343.jpg);" data-share-image="/live/image/gid/4/3256_shutterstock_1302963724.jpg"/><div class="header-background-color"/>

Economic Benefits of Paid Sick and Family Leave

August 17, 2017
As the United States continues to play its role as a leader of the global community, there is one area in which the nation falls far behind its progressive counterparts: paid sick and family leave. Paid sick and family leave is the idea that working men and women should have the ability to earn paid time away from work to care for a new child, ill family member, or themselves, while protecting against discrimination or retaliation for needing or taking leave.

According to the CATO Institution, only 12% of workers in the U.S. have access to paid family leave. [1] According to Pew Research, among 41 progressive nations across the globe, the United States is the only that lacks a federally-mandated paid sick and family leave policy. [2] As a result, many states and companies have stepped up to provide their workers access to paid sick and family leave, and have noticed a number of benefits for businesses and local economies alike.

Many major tech companies, such as Amazon, Spotify, and Adobe have introduced paid family leave policies, while California, New Jersey and Rhode Island have state-mandated paid family leave plans that allow workers six weeks of time off with two-thirds or 55% pay of their total salary. [3] But what is the cost of offering paid benefits for leave? By looking into the ways in which this public policy has affected California’s businesses over the last decade, the economic impact of paid sick and family leave can be observed. According to the Center for Economic and Policy Research, about 90% of employers reported that California’s paid family leave policies had either a positive effect or no effect on productivity and profit. Around 96% agreed that it decreased employee turnover and about 99% believed that it boosted employee morale. [4] State-mandated paid leave was an extension of the temporary disability insurance program in California, and is thus supported by payroll deductions.[5] According to the California Employment Development Department, every employee pays around $30 a year for the paid leave fund, which is less than a dollar a week.[6]Many companies, such as Google, have also noticed that it is easier and more cost effective to hire a temp for the 12-18 weeks than to go through the entire recruiting, interviewing and hiring process of finding new talent to permanently replace the employee.[7] New mothers who take paid leave are more likely to stay in the workforce than those who do not, as Californians who took leave were 6% more likely to be working a year later.[8] In addition, these workers were also 54% more likely to report wage increases.[9] With less employee turnover, companies do not lose talent that is essential to the company’s success and function, thus contributing to the company’s overall stability. Google’s senior VP of people operations, Laszlo Bock, affirmed that the 12-18 weeks of paid leave also allows workers to slowly draw their attention back to work, and thus makes the transition to work easier, faster, and more efficient. [10] Boosting morale is another important aspect to improving a company’s success and stability, as happier employees lead to more motivation and efficiency in work. According to the president of Change.org, Jennifer Dulski, when staffers in management positions take paid leave, it gives other employees an opportunity to prove themselves at higher positions, allowing the company to promote talent from within and flourish. [11] 

So what is the cost of not providing federally-mandated paid sick and family leave? By looking at the Family and Medical Leave Act, the economic impact of not offering this paid benefit can be noted. The Family and Medical Leave ACT (FMLA) was signed into law by President Bill Clinton in 1993, and gave workers the right to 12 weeks of unpaid leave. [12] The FMLA was created with the assumption that most households have a breadwinner male figure and a female figure that could care for children or sick family members, therefore making paid leave unnecessary. However, family structure has changed drastically over the last two decades, and married households with a breadwinner father has decreased from 65% to 22% between 1960 and 2012. [13] There are many women in the workplace, and between 1967 and 2012, the percentage of mothers who are breadwinners or co-breadwinners, has increased from 27.5% to 63.3%. Without paid leave, women are discouraged from staying in the workforce after periods of caregiving, and can lose an estimated $274,044 in lifetime wages and Social Security benefits. According to the CATO Institute, although FMLA protected jobs during medical or family leave, around 46% of workers eligible under FMLA were unable to take advantage of the policy because they could not afford unpaid leave. Access to FMLA depends on the socioeconomic status of the worker, as workers in lower positions with lower salaries are less likely to use paid sick and family leave. This exclusive social insurance program only succeeds to exacerbate wealth disparity, further destabilizing the national economy. 

Image: Protest for paid family leave in the European Parliament.Source: Wiki CommonsImage: Protest for paid family leave in the European Parliament.
Source: Wiki Commons Credit: Wikicommons

In conclusion, establishing a federal-mandated paid sick and family leave policy would be beneficial for the American economy. A new bill, the FAMILY Act (S.337) has been introduced by Senator Gillibrand (D-NY) and has incorporated many of these benefits in order to promote paid sick and family leave for 12 weeks with 66% of monthly wages earned. [14] The policy would strengthen the labor force by decreasing worker turnover, and would allow companies to maintain stability and success. It would also encourage women to remain in the workforce, stabilize family incomes, and contribute to the economic growth and productivity of the middle class. Paid family leave would also help support workers who earn lower wages, as women in New Jersey who took paid leave were 40% less likely to receive public aid or food stamps than women who did not. [15] By slowly decreasing the wealth gap, paid sick and family leave can contribute to economic equality and stability. The need for this policy is therefore justified, and will not only have a beneficial economic impact, but will also allow the U.S. to join countless other progressive nations as a global leader for paid sick and family leave.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


  [1] Boushey, Heather. “To Grow Our Economy, Start with Paid Leave.” Cato Institute. November 14, 2014. https://www.cato.org/publications/cato-online-forum/grow-our-economy-start-paid-leave.

  [2] Livingston, Gretchen. “Among 41 nations, U.S. is the outlier when it comes to paid parental leave.” Pew Research Center. September 26, 2016. http://www.pewresearch.org/fact-tank/2016/09/26/u-s-lacks-mandated-paid-parental-leave/.

  [3] Dishman, Lydia. “The Real Cost of Paid Parental Leave For Business.” Fast Company. January 28, 2016. https://www.fastcompany.com/3055977/the-real-cost-of-paid-parental-leave-for-business.

  [4] Miller, Claire Cain. “The Economic Benefits of Paid Parental Leave.” The New York Times. January 30, 2015. https://www.nytimes.com/2015/02/01/upshot/the-economic-benefits-of-paid-parental-leave.html.

  [5] Devlin, Dory. “What would it cost to have mandatory, paid parental leave?” Fortune. February 05, 2015. http://fortune.com/2015/02/05/paid-parental-leave-costs/.

  [6]Edd.ca.gov.Report. State of California Employment Development Department. July 1, 2014. http://www.edd.ca.gov/disability/pdf/Paid_Family_Leave_10_Year_Anniversary_Report.pdf.

  [7] Dishman. “The Real Cost of Paid Parental Leave.” 

  [8] Miller. “The Economic Benefits of Paid Parental Leave.” 

  [9] O’Leary, Ann. Mitukiewicz, Alexandra. and Boushey, Heather. “The Economic Benefits of Family and Medical Leave Insurance.” Center for American Progress. December 12, 2013. Leary, Ann.aid Parental Leave.” https://www.americanprogress.org/issues/economy/reports/2013/12/12/81036/the-economic-benefits-of-family-and-medical-leave-insurance/.

  [10] Dishman. “The Real Cost of Paid Parental Leave.”

  [11] Dishman. “The Real Cost of Paid Parental Leave.” 

  [12] Boushey. “To Grow Our Economy, Start with Paid Leave.” 

  [13] Boushey. “To Grow Our Economy, Start with Paid Leave.” 

  [14] O’Leary. Mitukiewicz. and Boushey. “The Economic Benefits of Family and Medical Leave Insurance.” 

  [15] “Rutgers Study Finds Paid Family Leave Leads to Positive Economic Outcomes.” Rutgers Today. January 19, 2012. http://news.rutgers.edu/news-releases/2012/01/rutgers-study-finds-20120118#.WXbYGNPyuRs.


  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>