5 Forces Impacting Paid Leave Mandates — Or Lack Thereof

The United States remains one of the few developed countries that doesn’t mandate paid paternal leave for workers. What are the forces, both economic and political, preventing widespread adoption?
Paid leave parental

On Jan. 1, New York’s Paid Family Leave policy took effect. This job-protected, paid leave goes to workers who would like to bond with their new child, care for a family member with a health condition or assist a family member if their kin is called to active military service abroad.

New York isn’t the first state to enact a paid leave law; others such as California, New Jersey and Rhode Island currently require a range of coverage for workers facing illness or recovery from recent childbirth. Overall, only eight countries in the world lack a formal paid parental leave policy. The U.S. is one of them. Even with the success stories from select U.S. states and dozens of countries, as well as the proven return on investment to business, why does the U.S. still lag in offering paid leave policies?

Here are five economic and political forces at play in the work toward enacting paid leave policies.

  1. Cost of paid parental leave.

Paying an employee to be out of the office, continuing to provide benefits to them and hiring someone temporarily to perform their work is a costly endeavor.

“Basically, it’s expensive,” said Ariane Hegewisch, program director of employment and earnings at the Institute for Women’s Policy Research, or IWPR, a nonpartisan think-tank in Washington, D.C. Paid sick days, for instance, are viewed as manageable, short periods of time, whereas paid parental leave is often for weeks or months at a time. Furthermore, offering paid parental leave requires a large chunk of money, Hegewisch said, which puts business leaders off from being required to pay it. The Society for Human Resource Management found in 2015 that only 21 percent of large corporations offered paid maternity leave.

Still, many studies have shown this cost pays for itself. According to Center for Economic and Policy Research’s 2011 study of California’s paid leave, the vast majority of the state’s businesses reported positive or no negative effects to productivity (89 percent), profitability (91 percent), turnover (96 percent) and morale (99 percent).

Laszlo Bock, former senior vice president of people operations at Google, wrote in his 2015 book, “Work Rules! Lessons From Inside Google That Will Transform How You Live and Lead,” that the company changed its maternity leave policy from 12 to 18 weeks of full pay. Previously, women after childbirth departed the company at twice the average rate at Google. After the increase in leave, attrition among this group disappeared. “The cost of having a mom out of the office for an extra couple of months was more than offset by the value of retaining her expertise and avoiding the cost of finding and training a new hire,” Bock wrote.

  1. Historical differences influence countrywide policies.

World War II helped spark paid leave policies in Europe as the countries had to replenish populations, according to NPR’s “Lots of Other Countries Mandate Paid Leave. Why Not the U.S.?” Businesses needed to get workers working, including women, and offering paid parental leave helped lure them to work for companies in need of labor at the time. At the same time, U.S. troops returned to their previous jobs that women temporarily held during the war, displacing many women out of the workforce and thus delaying the economic need for paid maternity leave for many years.

Progress toward paid leave today in the U.S. follows a few events, including the Temporary Disability Insurance system, enacted in the late 1940s by California, New Jersey and New York. The Pregnancy Discrimination Act from 1978 protected women’s jobs if they become temporarily disabled due to pregnancy. And, of course, FMLA in 1993 is the final and most significant hallmark policy, which requires employers with 50 or more workers to provide job-protected, unpaid leave for 12 weeks.

Still, many employers don’t offer paid parental leave, though those three states that enacted TDI nearly 80 years ago now have paid family leave policies through their temporary disabilities programs, Hegewisch noted.

  1. Political climates in the U.S. prevent bipartisan legislation.

Today, the two-party system in the U.S. is at odds with each other, constantly fighting for a majority in the various branches of government. “It’s a very adversarial climate,” Hegewisch said. She lived in both Germany and the U.K. for much of her life before moving to the U.S., and what struck her about local attitudes is how confrontational talk of paid leave can be. Her observation is that when the topic arises, business groups in particular fear that paid leave will lead to a dip in business and loss of jobs.

At the federal level, Hegewisch feels the political climate today isn’t the most conducive atmosphere to develop bipartisan proposals on paid family leave laws.

RELATED: 10 Steps To Create a Paid Parental Leave Policy

“I think everyone agrees that paid sick leave is a good thing,” said Mathew Parker, associate attorney in employment law practice at Atlanta-based Fisher Phillips. There is support on both sides of the political aisle; the problem is how to make paid leave work. Funding could come from employers, employees, subsidies or a combination.

  1. The ROI of paid leave helps push it to broader acceptance.

As noted earlier, paid leave has a strong return on investment for businesses, especially in terms of talent attraction and retention. “The prospect of having paid leave increases the possibility that someone’s going to return to employment,” Parker said. The cost to replace a new worker is significant, so companies enjoy that paid leave helps retain top talent. It also helps in recruiting. If a well-qualified candidate has two job offers, their decision could boil down to the perks available. “These benefits can, at the end of the day, make a huge difference,” Parker said.

Sometimes leaders at companies haven’t run the numbers to see the return on a potential paid leave investment, said Terri Rhodes, CEO of Disability Management Employer Coalition, or DMEC, a San Diego-based nonprofit member organization that provides education for absence management professionals. They only see it as a cost.

  1. Business leaders view government mandates differently.

While some business leaders resist potential government mandates, others welcome it, Rhodes said. The inconsistencies in paid leave requirements around the country are difficult to juggle, especially for multistate employers. “Right now, there’s just a mishmash,” she said. A mandate would allow for more consistency across states, Rhodes said.

Past mandates, however, have been met with resistance from business, but regulations like OSHA and laws that prevented employment of children helped with workplace safety, Rhodes noted. Some employers do the right things on their own, but rules can also help push them to do so. “It’s difficult, but I also don’t think that the change that we need sometimes doesn’t come about without those mandates,” Rhodes said.

Lauren Dixon is an associate editor at Talent Economy. To comment, email editor@talenteconomy.io.