Providing paid leave is not just good for families, but for taxpayers and businesses too

August 9th, 2013 | Economic Opportunity Institute

parentsAugust 5th, 2013 marks the 20-year anniversary of the Family Medical Leave Act – the nation’s first law guaranteeing most workers job-protected unpaid leave for certain medical or family emergencies. This week our blog will focus on the importance of family and medical leave programs and the need to pass the next generation of family and medical leave protections.

When we think of paid maternity leave, we often think the benefits are constrained to the mom, child, and immediate family. But actually, the gains of paid family leave go much further.

Providing paid family leave for new moms generates enormous savings for the state and taxpayers. Paid family leave allows new moms to take care of their family with stable, predictable income without becoming dependent on public resources like unemployment insurance or food stamps.

According to a 2002 study in California, for example, only 5 percent of those taking paid leave end up on public assistance during their leave, as opposed to 11 percent of those who did not have paid family and medical leave. The study’s estimates “show that instituting the paid family leave program would lead to approximately $253.5 million in public savings that year.” States without paid family leave systems have a 140% greater use of food stamps among new mothers.

Similarly, an April 2012 study by the Rutgers Center for Women and Work showed that women on paid leave are 39% less likely to request public assistance in the year after a child’s birth and, when taking public assistance, use $467 less on average in that year. The report notes that women who have paid leave tend to not only remain in the workforce after the pregnancy, but have higher wages over time than those who do not.

But the benefits do not stop there. Businesses also see improvements in productivity and cost-savings as a result of providing paid family leave for workers. Experts estimate that the California FLI law saved $90 million annually for businesses in turnover costs. The savings might actually be higher though; while the previous number was calculated assuming a $1,100 per employee turnover cost, some studies suggest it actually “costs businesses about one-fifth of a worker’s salary to replace that worker.”

So while there are obvious benefits for the mom, child, and immediate family, it is just as important to consider both private and public savings as a result of FLI implementation. Out of 178 countries, the U.S. is one of three that does not offer paid maternity leave benefits to its citizens, but that doesn’t mean American mothers are without hope. States have the opportunity to enact policies that help their working mothers, and  D.C.’s stagnancy means local action is crucial.

Paid family and medical leave insurance (FMLI) is a good option for not only families, but taxpayers and business too. In 2007, the Washington state legislature approved the Family and Medical Leave Insurance Program to provide five weeks of partially paid leave for new parents, but implementation has been delayed and funding blocked by Republicans in Olympia. Last session, several state senators tried to repeal the act altogether.

Women make up a majority of the US workforce – ensuring women have access to fully-funded FMLI is not only crucial for working families but for taxpayers and businesses as well.

By EOI Intern Bill Dow

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Posted in Family Leave Insurance

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