How Biden’s Paid Leave Proposal Would Benefit Workers, Their Families And Their Employers Too

The Biden administration is proposing a massive expansion of federal benefits through a 10-year US$1.8 trillion package that includes new spending on child care, the continuation of the expanded child tax credit and more robust nutrition programs. Notably, it would introduce a new federal paid family leave benefit costing an estimated $225 billion over the next decade. If it is fully phased in as proposed, workers could get up to $4,000 a month for a total of 12 weeks in paid leave to care for a newborn, another loved one or themselves.

The Conversation U.S. asked Joya Misra, a sociologist who studies how public policies influence inequality, four questions about paid leave in the U.S.

1. How much of a change would this be?

Federal law currently guarantees many employed Americans the right to take up to 12 weeks of unpaid job-protected leave to care for family members through the Family and Medical Leave Act. Because of eligibility restrictions, less than half of all U.S. workers can technically access this benefit. Even fewer of those who are eligible can afford to take advantage of it.

The U.S. is truly exceptional in this regard.

Employed women get paid maternity leave in almost every nation in the world. Many countries also provide workers with paid leave to care for their ailing parents, partners or other relatives who need care, which is what the Biden administration is proposing.

Nine states, including California and Connecticut, and the District of Columbia already offer some form of paid family leave. Their track records provide strong evidence regarding the advantages of paid – as opposed to unpaid – family leave.

2. How would Biden’s paid leave plan benefit workers?

When workers need to care for a family member with an illness, or a new child, they often find themselves out of a job. Researchers have found that the lack of paid leave leads to at least $20.6 billion in lost wages per year. Paid family leave especially helps low-income U.S. workers stay employed when they need it most. In states that fund paid leave, women are 20% less likely to quit their jobs after having a baby.

Only 16% of Americans with private-sector jobs currently get paid leave through their employer; most of them work for big companies like Facebook and American Express.

Some public-sector workers, but not all, can access paid leave, including those benefiting from a federal paid parental leave policy adopted in October 2020.

Many employees who can technically take unpaid leave can’t do that without experiencing financial hardship. In states with paid leave, evidence suggests that those policies make it easier for workers to financially whether a birth, an adoption or a short-term health crisis.

3. How would employers benefit?

Researchers have found that paid leave is good for business.

It increases worker retention, productivity and loyalty, while also allowing smaller businesses to compete more fairly with big companies. Public opinion polls and surveys have long found that most Americans, including small-business owners, support paid family leave.

For example, nearly all businesses surveyed about the effects of California paid leave program, adopted in 2004, said that the program had either a positive effect or no noticeable impact on productivity, profits, retention and morale. Employee turnover fell in California once it enacted its paid leave policy.

Other states have seen similar results.

One year after Rhode Island adopted paid leave in 2018, most employers there supported the policy. New York employers are also enthusiastic, partly because paid leave makes it easier to deal with employee absences. In New Jersey, most employers said they experienced no change in their profits, performance or productivity after the adoption of that state’s paid leave policy, which they say was easy to implement.

U.S. workforce participation has been decreasing for years, especially for women. Comparing the United States to Canada, some researchers estimate that with more access to paid leave and affordable child care, as many as 5 million more workers could enter the U.S. labor force – boosting the economy.

4. Is the Biden administration’s estimate of the cost realistic?

The Biden administration estimates that its proposed paid leave program will cost $225 billion over the next decade. I think that this is a reasonable expectation, as state-based paid leave programs have not been very expensive.

In most states, paid family leave has been funded through employee payroll taxes, though some states jointly fund the program between employees and employers. Funding through a payroll tax spreads the cost across millions of workers and employers.

However, at this point, Biden seeks to fund this program and others through taxes on people who earn more than $400,000 per year and corporations.

The nonprofit National Partnership for Women and Families estimates that someone earning the median U.S. income, currently around $36,000 per year, would pay about $1.48 per week, or $76.85 annually, to fund this program. In Massachusetts, where I live, workers pay no more than 38 cents per every $100 that they earn to fund paid the state’s paid leave program. Self-employed workers can opt into this system.

5. How much family leave is parental versus for other kinds of care?

In California, about half of all paid family leave claims are for new mothers, about one-third are for new fathers and the rest involve care for other family members – a seriously ill older child, a parent or in-law, grandparent, grandchild, sibling, spouse or registered domestic partner.

Providing paid leave for new parents could have a big impact, as currently most U.S. women lack paid maternity leave and even fewer men can take time off to welcome a new baby. That’s unfortunate, in my view, because paid leave is associated with better health outcomes for both mothers and children, less stressed families, greater connection to employers and greater economic security for working families.

I believe that federal paid leave to care for relatives is crucial, given the aging population in the U.S. and the growing number of workers who need time off to care for aging family members. With 1 in 5 adults caring for another adult, many of whom are shouldering financial burdens as a result, a federal paid family leave policy would make a big difference.