California made history on July 1, when it became the first state in the nation to provide its workforce with comprehensive paid family leave. Our research shows that this change is wildly popular – and it may also be good for business.
The new Paid Family Leave Law provides most Californians with six weeks of partial pay when they take leave from work to care for a seriously ill parent, spouse, child, or domestic partner, or to bond with a new baby, foster, or adopted child. While the 1993 federal Family Medical Leave Act (FMLA) grants 12 weeks of unpaid family leave to eligible employees at large companies, many working families cannot afford to take the time off work without pay. Thousands of Californians will now be spared the impossible choice between caring for a seriously ill family member and bringing home a paycheck – a dilemma far too many workers in the rest of the country still face.
As an add-on to California’s State Disability Insurance (SDI) program, premiums for six weeks of paid family leave are pennies a week for a minimum wage earner ($14 a year) and the cost of a cup of coffee a month for an average worker (about $27 a year). Employees can collect 55 percent of their weekly salaries up to a maximum of $728 a week for up to six weeks while on leave from work to care for a new child or ill family member. Despite the modest costs for this benefit, however, California employers objected strongly to the law’s passage. As a result, the new 6-week paid leave benefit is entirely employee-funded and state administered. It costs employers nothing.
A report we coauthored for the California Family Leave Research Project analyzed two recent surveys, one of California residents and one of California employers. The survey of California adult residents found wide public support for paid family leave in every segment of the population, with 85 percent of respondents approving. By race/ethnicity, the proportion favoring paid family leave ranged from 81 percent of whites to 85 percent of Hispanics and 94 percent of blacks. By gender, 80 percent of males and 90 percent of females favored such a law. Finally, 77 percent of those who identified themselves as political conservatives favored such a law, as did 83 percent of moderates and 90 percent of liberals.
The survey of California employers suggests that paid family leave is also good business practice. We found that even before the new law went into effect, about half of California establishments – and more where a large proportion of the workforce is made up of technical, professional or managerial jobs or where workers are represented by a union – already provided family and medical leave benefits beyond what was required. On average, 89 percent of workers returned to their jobs following a leave in those organizations, compared with 80 percent in organizations that did not provide more than was legally required. These early results from our on-going investigation of the effects on firms and workers suggest that companies with more generous leave policies may benefit from higher employee retention rates and reduced costs associated with recruiting and training new employees.
As the first law of its kind in the U.S., California’s Paid Family Leave Law is cause for celebration. But it is sobering to note that countries in the rest of the world have been providing paid family leave for decades. A recent Harvard University study by Jody Heymann and her colleagues found that 163 countries guarantee paid maternity or parental leave to new mothers and 45 ensure that the father receives paid paternity or parental leave. The U.S. lags far behind other nations in enabling workers to care for children and other family members, and it is one of only a handful of countries that does not provide paid leave to women after childbirth or paid leave to workers recovering from short- and long-term illnesses.
Premiums for family leave insurance are modest in California because, as in four other states and Puerto Rico, a temporary disability insurance program already provides partial wage replacement to workers who cannot work because of their own poor health or disability, or because of pregnancy. The states are New York, New Jersey, Hawaii and Rhode Island. These states should follow California’s lead.
Later this summer, Congressman Pete Stark (D-CA) will introduce important legislation to assist all states in setting up state insurance programs to provide partial pay to employees unable to work because of their own serious health condition or because they need to care for a family member. Most families now depend on the earnings of every adult. Paid family leave is an urgent necessity today when most children have parents who work outside the home. In addition, as the baby boom generation ages, growing numbers of workers will need to care for frail spouses or ailing parents.
Giving workers financial security by allowing them to take paid leave for their own serious health problems, or when illness strikes a family member, not only strengthens children and families but improves worker morale and productivity. In a nation that prides itself on family values, every worker – not just those lucky enough to live and work in California – should have a guarantee of paid family and medical leave.
Eileen Appelbaum is a labor economist and director of the Rutgers University Center for Women and Work and Ruth Milkman is a sociologist and director of the UCLA Institute of Industrial Relations.