Expanding Paid Family and Sick Leave
September 19, 2015
by Sean Foley, C’16
In 1993, President Bill Clinton signed the Family and Medical Leave Act, which allowed eligible employees to take 12 weeks of unpaid leave with employer benefits within a 12-month work period for family and medical reasons. The legislation, however, did not require employers to compensate their employees during their leave and covers only 60% of American workers and less than 20% of new mothers. The United States is the only developed country in the world without government-sponsored paid maternity leave. According to the 2011 American Time Use Survey, 48% of workers had access to paid family leave and 53% had access to paid sick leave for their own illness. With nearly half of all workers lacking the ability to take paid time off, President Obama and other Democrats have called on Congress to pass a national paid leave program. These efforts to implement a federal policy invoke important questions: what does the proposal entail, what would be the benefits and costs of such a policy and what actions have already been taken to expand access to paid leave?
With any proposed solution to a public policy issue, questions of costs and benefits arise. A federal paid family leave program would have a significant impact, reaching millions of American workers and playing a major role in the national economy. Throughout the country, states, localities, and businesses have already begun to implement paid family leave programs, offering great insights into their impact. California began a paid family leave program in 2004. The program entails an employee-paid payroll tax that functions like an insurance program–there are no direct costs to employers. Moreover, unlike the national Family and Medical Leave Act, California’s program applies to nearly all non-self-employed private sector workers, regardless of the size of their employer. So far, studies and reports indicate negligible or positive impacts on employment and profitability in the state. According to a 2011 study by researchers at the University of Virginia and Columbia University, California’s program led to a significant 6 to 9% increase in weekly hours worked for mothers whose children were between ages 1 and 3—corresponding to an additional 2 to 3 hours worked for a 35-hour work week. With this increase in work hours came a significant increase in wages. A survey of 253 employers whose workers are eligible for California’s paid leave program reported a positive effect on profitability and retention.
Beyond California, other states and localities have witnessed positive results following the passage of paid leave policies. After Connecticut implemented a paid sick leave policy, nearly two-thirds of 251 employers surveyed reported no increase in cost or an increase of less than 2%. San Francisco saw an increase in total employment after it passed a paid sick leave law in 2007. Furthermore, studies have shown that paid leave programs lead to higher retention of employees, which reduces costs for employers by saving them money on recruiting and training. According to President Obama’s Council of Economic Advisors, a survey of 27 separate case studies found that the median cost of replacing an employee was 21% of that employee’s annual salary. Consequently, businesses can save a significant amount of money when employees are able to take paid leave and return to work rather than quitting to attend to family responsibilities or medical issues. Based on the available data and reports, paid family leave policies have led to generally positive economic impacts—affording workers more flexibility without hurting businesses.
Despite the apparent success of paid leave initiatives at the state and local levels, the federal government has been slow to take action, but President Obama and other Democrats have made recent efforts to expand paid leave. In January, Obama issued an executive order instructing federal agencies to allow their employees to take six weeks of advanced paid leave to care for new-born children or sick family members.
According to the Associated Press, Obama is considering another executive order that would require all federal contractors to offer seven days paid leave for their employees who are ill or taking care of a sick relative. Democrats in Congress have also attempted to take action by proposing the Healthy Families Act, which would allow workers employed in businesses with 15 or more employees to earn up to seven days of job-protected paid sick leave each year. Employees would earn one hour of sick leave for every 30 hours worked.
Paid family leave has become a prominent issue in the Democratic presidential campaign. In a Mother’s Day campaign video this year, Hillary Clinton called for a national paid family leave policy, and Senator Bernie Sanders, a fellow competitor for the Democratic nomination, has likewise made paid family leave a centerpiece of his economic agenda. Sanders co-sponsored the Family and Medical Insurance Leave Act, which would provide workers with up to 12 weeks of paid leave for family and health reasons. Workers would be eligible to earn up to 66% of their monthly wages, and both the employers and employees would finance the program through a 0.002% payroll tax.
Thus, as the presidential campaign progresses, as Democrats continue to push their economic agenda in Congress, and as President Obama weighs the advantages and disadvantages of issuing another executive order, the topic of paid leave will continue to receive significant attention. As the reports and surveys show, advocates for a paid leave policy will have solid data to bolster their efforts.
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