Paid family leave: While US lags behind, more states set policies

By Simon Montlake 

Two years after a campaign in which Republican and Democratic presidential candidates both promised to introduce paid family leave, more US workers now get paid to stay home and bond with newborns. Proponents say this is good for families and for the economy since it allows more parents to stay in the workforce.

But this shift is not the result of federal policy.

Ivanka Trump has promoted the issue but found little support within her father’s White House. And while Republicans in Congress support the idea of family leave, they balk at raising taxes to pay for it. Instead, the change is being driven by lawmakers in Democratic-run states and by US companies seeking to retain and recruit employees in tight labor markets.

Among employers, particularly major corporations, the adoption of paid leave has grown rapidly. In a recent survey of personnel managers, more than a third (36 percent) reported providing paid maternity leave to some or all employees. The rate was just 12 percent in 2014, when the same survey was done by the Society of Human Resource Management. More companies also offer paid leave to take care of sick family members.

Last month Massachusetts joined five other states and the District of Columbia in enacting paid family leave, as part of a hard-fought bargain struck between business and labor that includes a phased-in minimum wage hike to $15 an hour by 2023. Other states with paid-leave laws on the books are California, New Jersey, Washington, New York, and Rhode Island. Other states like Delaware offer leave benefits to all state employees, as have some cities.

But outside of a handful of blue states, private-sector workers must depend on their employers for paid leave. Hourly workers, who make up more than half of the US workforce and are disproportionately African-American and Latino, rarely see such benefits: Only 5 percent are estimated to have access to paid family leave.

“This should not be about winning the boss lottery. It should be accessible to everyone who works in this country,” says Gayle Goldin, a state senator in Rhode Island.

For example, McDonald’s offers paid leave to corporate employees, but the vast majority of its 375,000 workers are hourly and not covered. Starbucks does cover in-store hourly employees, but only for six weeks for new mothers, compared with 18 for salaried workers.

The push for state-level reforms has seen setbacks. In May, Colorado’s Republican-run Senate killed a bill to provide 12 weeks of partially paid family leave. It was the fourth time in five years that such a bill had reached the floor. The same month, Vermont Gov. Phil Scott, a Republican, vetoed a paid-leave bill that had passed the legislature with votes from all sides. (But in Massachusetts, the new law was signed by Gov. Charlie Baker, also a Republican.)

Absent a federal law, the disparity both between states and between job categories could widen further. It mirrors the national divide on wages, creating a checkerboard of wages and labor rules. While the federal minimum of $7.25 an hour hasn’t risen in eight years, more than 25 states now have higher minimum wages, in some cases nearly double the national floor.

“States are moving forward on their own because their populations are demanding this [paid leave]. All working families are facing this challenge,” says Aparna Mathur, a resident scholar at the right-leaning American Enterprise Institute.

Proposal in Congress

Congress is still mulling paid family leave. On Wednesday, the Senate Finance Committee’s subcommittee on family policy held hearings on the issue, including a proposal backed by Sen. Marco Rubio of Florida and other Republicans that would provide up to 12 weeks of parental coverage worth around $1,175 a month, less than most state policies. It would be funded not by payroll taxes but by drawing from future Social Security, effectively delaying retirement for parents who dip into their savings. (Ms. Trump attended the hearing but didn’t speak.)

This proposal is appealing to Republicans who don’t want to raise taxes, says Ms. Mathur. But it has drawn sharp criticism both from fiscal conservatives who don’t want to deplete Social Security, and from progressives who see the benefits as too miserly for those most in need.

“It’s a really bad idea,” says Pronita Gupta, who worked on paid leave at the Department of Labor under President Barack Obama. “It will hurt families more than help families.”

A particular concern is that women with low incomes who need time off to take care of babies or sick family members tend to have lower retirement savings, says Ms. Gupta, a program director at the Center for Law and Social Policy, a think tank in Washington.

In theory, even a modest federal paid-leave program would reach workers not covered by employer or state programs. If weekly payouts are too low, though, many working-class parents are likely to forgo it since they need the income (One in four new mothers in 2012 reported going back to work after 10 days.)

A pushback from conservatives is that an overly generous package could become a middle-class entitlement that crowds out private-sector leave plans. Ms. Mathur supports the idea of setting a basic federal floor on which more generous state payouts could be layered. “My biggest worry is that people won’t take it up,” she says.

Replacing lost income isn’t the only headache for working parents: Many worry about losing their jobs. Under a 1993 federal law, workers who take up to 12 weeks of unpaid leave to take care of newborns or a family health emergency have job protection. But the law exempts small businesses and recent hires, which means 4 in 10 workers aren’t covered.

US lags OECD countries

Of 41 countries in the Organization for Economic Cooperation and Development, the US is the only one without federal paid leave. Only 15 percent of US workers received paid leave benefits in 2017, according to the Bureau of Labor Statistics. Among other industrialized countries in the OECD, the average leave period is 18 weeks.

For Goldin, the inequities surrounding paid leave came into sharp focus in 2001, when she injured her back, and her husband, a lawyer, used up his vacation days to care for her. The same year the couple adopted a child, but since neither had paid leave Goldin had to take unpaid time off. Her sister who lived in Montreal had a baby the same year – and got 50 weeks of paid leave.

“This turned me into an advocate for changing our workplace policies and making them more family friendly,” she says.

Fast forward to 2013 when Goldin was elected to Rhode Island’s state Senate: She worked on a paid-leave bill that passed that year and took effect in 2014. Like most state programs, it is financed via payroll taxes on employees. Its duration – four weeks for family leave – is modest and it covers around 60 percent of average wages, capped at $795 a week.

Goldin is now an adviser to Family Values@Work, a network of 27 state-based coalitions working on family-friendly laws.

She says Rhode Island’s program has won over small business owners who were initially opposed, and has become a selling point for companies recruiting staff to work there. “It’s important not only because they [employees] think they’ll need the leave, but also about the values of the state…. It sets the tone for workplace culture,” she says.

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