Lori Ames worked for a small New York public relations firm for 20 years and was only able to get two weeks of paid time off when her 22-year-old son was diagnosed with a brain tumor this past October.
Her employer could not provide any more of the paid time off she needed to take her son to chemotherapy and radiation. As a result, she ended up resigning a few weeks later.
“Having no income wasn’t working for me,” she said.
“I don’t blame my employer because it was a small agency, but I was expecting more than I got,” said Ames. “When you get laid off you get unemployment. When your son has a brain tumor you get nothing.”
Ames was forced to go out on her own in order to bring in some money, and her situation is not unique. While the Family and Medical Leave Act — which entitles employees to take unpaid, job-protected leave for specified family and medical reasons — provides many workers with unpaid leave of up to 12 weeks, the system has a low participation rate, in part because many employees can’t afford to take time off work without pay.
And paid family leave among U.S. companies is rare, with only 24 percent offering it, according to the Society for Human Resource Management, an advocacy group for human resource professionals.
Work-family advocates have argued that the United States lags behind other industrialized nations that offer government-mandated paid leave programs and should catch up. But such a benefit, many business advocates have long argued, will hurt company operations and cost jobs, especially during tough economic times.
Well, new evidence suggests that may not be entirely true.
California, which is one of only two states including New Jersey to have adopted a paid family leave program, was the first to implement it six years ago, and a study released last week on how the plan is doing found no economic Armageddon.
“For most employers it’s a non event and is no job killer,” said Eileen Appelbaum, senior economist at the Center for Economic and Policy Research and former Professor and Director of the Center for Women and Work at Rutgers University, one of the co authors on the “Leaves that Pay: Employer and Worker Experiences with Paid Family Leave in California.”
According to the study:
- The majority of employers surveyed reported that paid family leave had either a “positive effect” or “no noticeable effect” on productivity, profitability or performance, turnover and employee morale.
- Small businesses were less likely than larger establishments (those with more than 100 employees) to report any negative effects.
The one disheartening finding in the study was the number of employees actually taking advantage of the benefit was low.
The researchers found a variety of reasons for the low participation, including not knowing the benefit existed to fearing retaliation if they took the time off. About half of the employees surveyed (who had a life event that would have been covered under the program) did not take advantage of it because they said they were unaware of the benefit. And 37 percent said they knew of the plan but feared taking leave would negatively impact their jobs.
One of the problems with California’s paid family leave program is there are no protections for workers who are either fired or demoted for taking time off under the state plan. Economist Appelbaum recommends that the leave statute be amended to include job safeguards.
Even though fewer than expected workers took advantage of the program, a total of 1.2 million claims have been filed since the program started in 2004, according to the Employment Development Department, the agency that administers the plan. And in fiscal year 2010, there were 167,523 bonding leaves and 23,220 care leaves.
Among those employees who took the leave, Appelbaum continued, “it was very beneficial and enabled them to better care for a new baby or an ill family member.” The study found that nearly 80 percent said they were “very satisfied” or “somewhat satisfied” with the length of their family leaves; and 95 percent said they returned to their employer after taking the leave.
The study found that nearly 80 percent said they were “very satisfied” or “somewhat satisfied” with the length of their family leaves. And 95 percent said they returned to their employer after taking the leave.
California’s plan works as a type of insurance and piggybacks on the state’s existing disability insurance system. Employees, not employers, pay into the pool through a payroll tax, and it’s available to full-time and part-time workers. It provides for six weeks per year of paid family leave for employees at 55 percent of their weekly salary (up to $987) for everything from bonding with a new born to caring for a seriously ill family member.
Such paid leave policies, Appelbaum said, should be adopted nationally, especially given the findings in California that show little impact on companies.
In fact, there’s a growing movement to do just that. In addition to New Jersey passing paid leave legislation, Washington State passed a paid parental leave law, but it has yet to be funded. Other states are considering similar laws, including Arizona, Illinois, Maine, Massachusetts, Missouri, New Hampshire, New York, Oregon and Pennsylvania.
However, some business advocates still see paid leave programs on the state or federal level as a bad idea.
“Even if the statistics in California support no adverse impact, I’m looking at it from a psychological value [standpoint],” said David Lewis, president of OperationsInc, an HR outsourcing and consulting firm. During times of economic uncertainty, he continued, it puts an added burden on businesses.
“At a time when so much of the emphasis is placed on creating jobs, it will potentially have an adverse impact on any job creation effort,” he noted.
Julie Manning Magid, associate professor of business law at Indiana University’s Kelley School of Business, says California’s experience with paid leave is an anomaly when it comes to most states in the nation. The state, she said, “has so many pro-employee laws and standards that this would only be added to a base of things people can already take advantage of. That is vastly different than many parts of country, including Indiana.”
Magid stressed that paid family leave would be a great benefit for workers, but she doesn’t think it’s practical right now. The focus, she added, should instead be on fixing the Family and Medical Leave Act, which has a low participation rate and doesn’t cover employees who work for smaller firms.
Providing paid leave could potentially hurt smaller companies or companies with smaller margins, said Ashley Brightwell, an employment attorney with Alston & Bird. Making arrangements to allow workers to take time off to care for family could have negative consequences for those businesses, she said, adding that she would like to see how the California program plays out longer term as more employees take advantage of it.
“If employers have no negative effect then it’s a win-win,” she noted.
Some employers — especially those that provide better-paying white-collar jobs — see providing a benefit such as paid family leave as a win-win right now.
“It’s important for us to have generous paid leave policies because [they help] our people to be great parents and to develop strong relationships with their families,” said Billie Williamson, partner and Americas Inclusiveness Officer with Ernst & Young. “In return, we have happier employees who are motivated, productive, and stay with our firm.”
Ted Phai Chung, an analyst with Ernst & Young’s People Team Integration & Operations, was able to get two weeks off with full pay after his son Liam was born on June 4, and then he got another four weeks paid leave when his son was about three months old and his wife had returned to work.
“It was great for morale to have this,” he said. “Knowing I could (and did) take advantage of it — a once in a lifetime opportunity to bond with my child and learn how to be a parent and learn how to be a better husband.”