The Economic Necessity of Paid Family and Medical Leave

By Tanya L. Goldman

In 1987, Congress designated March as Women’s History Month to recognize women’s economic, cultural, and social contributions, which were consistently overlooked and undervalued. Yet 30 years later, we’re still overlooking women’s role in the workforce. That includes denying them access to key supports like paid family and medical leave.

According to the Center for American Progress, 42 percent of mothers are sole or primary breadwinners, meaning the family counts on them for at least half of its earnings. Nearly one-quarter of mothers are co-breadwinners. Black mothers have historically been more likely to work outside the home. More than 70 percent are the sole breadwinners for their families. By failing to provide paid family and medical leave, we’re forcing women to make impossible choices like caring for a loved one or keeping their job. This is especially true for low-wage women and women of color. Undervaluing these women as key assets is morally wrong and undermines our nation’s economic future.

The WORLD Policy Analysis Center recently released a report on the health benefits and economic feasibility of paid family and medical leave. It notes that the U.S. is the only country in the Organisation for Economic Cooperation and Development (OECD) that does not guarantee paid leave.

The report recommends six months of paid parental leave to support health, economic benefits, and gender equity, with three months as a minimum. There are numerous health benefits for mothers and infants, including lower infant mortality rates, improved recovery from childbirth, and increased infant preventive health care. The report also finds that stronger parental leave policies have economic benefits, including greater retention of female employees and increased earnings for women up to five years after childbirth. Additionally, more generous parental leave policies are associated with a lower risk of poverty, particularly for single mothers. 

The report concludes that six months of paid leave “is economically feasible.” What does that mean? Looking at other OECD countries, the authors found that 25 of 34 OECD countries guarantee at least 6 months of paid parental leave; 13 of these countries have done so for more than 20 years. These countries have experienced no negative impact on GDP growth. Moreover, they have higher labor participation rates than countries with shorter leave. 

An S&P Global report confirms that paid leave is necessary for GDP growth. The U.S. is falling behind other OECD countries in female labor force participation. The U.S. had the sixth-highest female labor force participation rate in 1990. However, we plummeted to 17th in 2010, surpassed by countries that enacted policies including more generous paid family leave. According to a 2013 study from Cornell University, nearly 30 percent of this drop is attributable to the lack of family-friendly policies. If women entered, and stayed, in the workforce at a pace in line with Norway, the U.S. economy would be $1.6 trillion larger than it is today.

Every OECD country except the U.S. requires income support during parental leave. In the U.S., just 15 percent of workers have paid family leave. And it’s disproportionately available to those who are wealthy. Among the bottom quarter of wage earners, 94 percent work in jobs that don’t provide paid family leave, according to the Bureau of Labor Statistics. It should come as no surprise then that one in seven low-wage workers—and one in five low-wage working mothers—reports losing a job in the past four years because he or she was sick or needed to care for a family member.

Delaying a national paid leave policy has real economic, social, and moral costs that will last for generations. As we observe Women’s History Month, it’s time for us to harness widespread public support and pass the Family and Medical Insurance Leave Act (FAMILY Act). The bill would provide up to 12 weeks of paid leave each year to qualifying workers for the birth or adoption of a new child, the serious illness of an immediate family member, or a worker’s own medical condition.

The FAMILY Act insurance program would be self-funded through employee and employer payroll contributions and cost workers less than $2.00 per week per worker. The costs of the program are manageable, but the costs of not having it are too great to overlook.