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Celebrating the Success of California’s Paid Family Leave Act

Then-Gov. Gray Davis (D-CA) holds up the paid family leave bill, Senate Bill 1661, after signing it during a news conference at the University of California, Los Angeles, Monday, September 23, 2002, in the Westwood area of Los Angeles.

A decade ago, on September 23, 2002, then-California Gov. Gray Davis (D) signed into law Senate Bill 1661, which, with the stroke of a pen, made California the first state in the nation to provide paid family leave insurance to nearly every worker in the state. This remarkable achievement gave an estimated 13 million workers an insurance program that provides income when they need it to care for their family.

In the raucous debates prior to the passage of the law, the business community claimed the sky would fall if paid family leave were made available to all California workers. Opponents claimed the program would be a “job killer,” would encourage too many workers to take leave, and would bankrupt small businesses. Robert Manetta, a spokesman for Intel Corp., summed up the opposition’s position when he claimed, “it will create an extremely expensive and easily abused leave system.”

The last 10 years have proved every one of these arguments wrong.

The sky didn’t fall, and the California Paid Family Leave insurance program’s success validated the program’s worth. The vast majority of employers say the law either had no impact on their business or was good for their companies. In fact, small businesses are less likely to have experienced difficulties with the law compared to large organizations, proving that the worst fears expressed by the chorus of opponents were misguided at best.

California’s program provides up to six weeks of wage replacement to workers who need to take time off in order to provide care for a seriously ill family member, or after the arrival of a new child. An estimated 168,000 workers have taken paid leave annually since the program went into effect, according to the most recent figures. Because of this law, the median duration of breastfeeding by new mothers has doubled. Because the leave is paid, new fathers are increasingly likely to spend time with a new child, filing 26 percent of these paid leave claims in 2011, up from 17 percent in 2004. More workers were also able to take time to care for a sick parent or child. This is good for moms, dads, babies, and families.

Paid leave helps businesses because it lowers the costs of turnover when workers are able to take the time off that they need and then return back to work. And it costs business owners nothing since the leave is funded entirely through payroll taxes on workers.

Paid family leave insurance has been good for Californians, too. Paid leave helps low-wage workers when they have family caregiving needs, and makes them more likely to return to work for their same employer, bolstering the job tenure and experience of workers. As predicted by economists at the University of California, Berkeley, paid leave has helped taxpayers because mothers with access to paid leave are less likely to need to rely on government programs such as the Temporary Assistance to Needy Families program or the Supplemental Nutritional Assistance Program.

Because the law does not provide job protection, however, take-up rates have been relatively low. While workers can access the insurance benefits, if they are not among the half of all workers covered by the federal Family and Medical Leave Act, their employer could fire them while away from work. Workers were already taking leave when faced with pressing family commitments, but the California law provided an important layer of income security.

California is often ahead of the rest of the nation when it comes to implementing smart policies to help families. The success of the state’s Paid Family Leave insurance program proves that when we help working families, we help everyone. California is no longer alone. Washington state passed similar legislation in 2007, though it has not yet been implemented for budgetary reasons, and New Jersey quickly followed suit in 2008.

The hyperbolic response of organizations claiming to represent the business community in California foreshadowed the arguments now used against campaigns for paid leave legislation in other states and cities. But these tired old arguments were wrong then, and they are wrong now. The simple truth remains the same: Helping workers helps the economy, and enabling workers to better balance work and family doesn’t have to hurt a business’s bottom line. California’s Paid Family Leave insurance program has been an unqualified success, and it’s high time we start extending the same benefits to all workers.

Heather Boushey is Senior Economist and Sarah Jane Glynn is a Policy Analyst at the Center for American Progress.