BPC, in conjunction with Morning Consult, conducted a poll of more than 500 business owners and executives who have 50 or fewer employees to understand how this community would feel about paid family leave.
In the recent push to expand access to paid family leave, the question of how small businesses might be affected by a new federal paid leave policy has emerged as a central concern.1 On the one hand, there is wide recognition that paid leave can provide many benefits to workers and their families. Paid maternity and paternity leave, for example, has been shown to improve health outcomes for mothers and newborns, increase workforce attachment for mothers, and lead to greater engagement of fathers in their children’s lives. At the same time, however, there is concern about potential costs to employers, particularly in the case of small businesses that rely on a relatively small number of workers and thus might have more difficulty managing when an individual employee is out on leave for an extended period of time. According to the Census Bureau, employers with fewer than 100 employees make up one-third of private sector employment.2 Understanding the attitudes and needs of employers is essential to designing effective paid family leave policies and building support for those policies.
To learn more about these needs of employers, and small businesses in particular, BPC, in conjunction with Morning Consult, conducted a poll of more than 500 business owners and executives who have 50 or fewer employees. Because the Family and Medical Leave Act (FMLA) exempts businesses with 50 or fewer employees from the requirement to provide unpaid family leave, it is important to understand how this community would feel about paid family leave. Our survey produced several key findings:
- The share of small businesses that provides paid family leave remains low
- Most small business executives would like to provide paid family leave
- Many executives see paid family leave as good for business
- Small business executives say they still need support to provide paid family leave
- Businesses with 16-50 employees support paid family leave at higher rates
- Small business leaders see positive community impacts from paid family leave
- Business owners who are part of the millennial generation are much more supportive of paid family leave
Most executives reported providing parental, family caregiving, or medical leave of some kind (including unpaid leave) but, as shown in Figure 1, the vast majority of workers do not have access to paid family leave. Significant percentages of executives reported that they did not provide any family leave at all. Of those that did provide paid family leave of some type, 59 percent reported that they did not have a formal policy but work with employees to find ways to provide paid family leave.3
These findings are consistent with existing data on workers’ leave-taking patterns. Department of Labor surveys indicate that only 12 percent of employees at businesses with fewer than 50 employees have access to explicit paid parental or family leave benefits and only 28 percent have access to paid medical leave. However, an analysis by the American Action Forum found that many workers cobble together different types of leave, such as sick days or vacation time, to cover their leave needs. It is likely that business executives also use these benefits to provide paid family leave to their employees absent a formal leave policy.
A majority of small business executives reported being interested in providing paid family leave benefits of all leave types. Fewer than one-third of surveyed executives said they were not at all interested in providing any paid family leave.
Importantly, interest in providing paid family leave is bipartisan. Whether they self-identified as Democratic or Republican, majorities of small business executives expressed interest in providing maternity, caregiver, and medical leave.
Most small business executives believe that providing paid family leave would have a positive effect on their business overall, compared to fewer than a quarter who believe it would have a negative effect. Over 60 percent of executives also believe paid family leave would have a positive impact on employee morale, employee retention, and their company’s ability to attract new employees. Opinions on the issue of profitability were more mixed, with 34 percent of surveyed executives saying paid family leave would have a positive effect on their business’s profitability and 33 percent saying it would have a negative effect.
Despite strong support for paid family leave, about half of surveyed executives reported that it is somewhat or very difficult for their business when employees take leave. This result is consistent with mixed opinions about the impact of paid leave on profitability and does not come as a surprise: For businesses with 50 or fewer employees, a single employee taking leave for an extended period of time represents a significant impact in terms of the business’s overall workforce.
Much can be learned from the approach states have taken in addressing small business concerns as part of their paid family leave programs. Across all states with such programs, small business employees have access to paid family leave benefits. Some states that have funded paid family leave through joint employer and employee payroll taxes have exempted small businesses from paying the employer share of the payroll tax. The state of Washington has gone even further and provides grants to small businesses to offset the costs incurred when workers take paid family leave, such as hiring temporary employees while workers are on leave.
Attitudes toward paid family leave among surveyed executives varied widely depending on business size, with pronounced differences emerging between businesses with fewer than 16 employees and those with 16 to 50 employees. As shown in Figure 5, executives with 16 to 50 employees were much more likely to express the view that paid family leave could have a positive impact on all categories of their business, including profitability. These executives were also much more interested in providing paid family leave, with more than 75 percent reporting that they would be very or somewhat interested in providing maternity, caregiver, and medical leave.
These differences also appeared in the reported difficulty of complying with a hypothetical mandate to provide unpaid family leave. Respondents were asked if it would be helpful or hurtful if they were required to offer 12 weeks of unpaid family and medical leave, on a scale of 1 being “helpful” and 10 being “hurtful.” Overall, 60 percent of small business respondents indicated that such a requirement would be hurtful; that number dropped to 38 percent, however, among executives with 16 to 50 employees. This implies that as businesses grow, even to a relatively small size of 16 to 50 employees, it becomes easier for them to provide family leave.
It is important to note that paid leave policies do not necessarily require businesses to also provide job protection, which is the situation that our survey question was designed to simulate. As we have already noted, the FMLA provides job protection for parental, caregiver, and medical leave for workers at businesses with more than 50 employees—thus it effectively requires those businesses to provide unpaid family leave. Most states that have implemented a paid family leave policy address job protection through separate laws, such as Washington State’s Family Leave Act, which was first implemented in 1989. This means that the businesses in BPC’s survey could continue to be exempt from job protection requirements even if paid family leave policies are enacted. In these cases, a small business employee who took leave would receive pay from the state program, but might not have a job to return to after the leave period ends.
The BPC survey also asked executives how they thought paid family leave would affect the broader community outside their personal businesses. Overwhelmingly, respondents expressed the view that paid family leave would have broader positive benefits. Sixty-eight percent believed that paid family leave has a positive effect on newborns, 54 percent believed it has positive effects on the local communities, and 47 percent believed it has positive impacts on the U.S. economy. Relatively small percentages believed paid family leave has negative effects.
Our survey revealed wide generational differences in small business executives’ perspectives on paid family leave. Executives from the millennial generation and, to a lesser extent, Gen Xers were much more supportive of paid family leave than executives from the baby boom generation; they were also much more likely to view paid family leave as providing benefits to their business. Figure 7 shows that, among surveyed executives, more than 70 percent of millennials reported interest in providing paid family leave. In contrast, most baby boomer executives were interested in providing paid maternity and medical leave, but less than 45 percent were interested in providing paid paternity or family leave. Support for different types of paid family leave among Gen X executives fell somewhere in between.
Executives’ personal interest in providing paid family leave was reflected in reported business practices. Businesses led by millennial and Gen X executives were much more likely to have codified paid family leave policies. Of the executives that said their business provided paid family leave, around half of those from the millennial generation and Generation X reported enacting a formal rather than informal paid family leave policy. By contrast, just 29 percent of baby boomer executives whose businesses provided paid family leave had enacted a formal policy.
Again, these results are not surprising. Millennials, who currently range in age from 22 to 37, are the cohort that is most likely to be considering having children and, consequently, to anticipate the need for parental leave. Gen Xers, who are currently aged 38 to 53, are quickly joining the so-called “sandwich generation”—that is, Americans who still have one or more children at home but who also face caregiving needs for an older adult. Workforce trends could also be influencing generational perceptions about the need for paid family leave. When the average baby boomer turned 20, dual-earner households accounted for only about half of all households. When the average millennial or Gen Xer turned 20, by contrast, dual-earner households were the norm, accounting for more than two-thirds of all households. This change and other profound social and economic shifts have undoubtedly affected the American public’s attitudes toward paid family leave.
Crosstabs for BPC’s new survey of small business attitudes towards paid family leave can be found here.
Kevin Gawora contributed to this post.
1 BPC includes three types of leave under the general term “family leave”:
• Parental leave provides time to bond with a newborn, newly adopted, or newly fostered child.
• Family Caregiving leave (or “caregiving leave”) provides time to care for a seriously ill family member, including a child, parent, or spouse.
• Medical leave provides time to recover from a serious health issue that makes the employee unable to perform the functions of his or her position.↩
2 Calculated based on the U.S. Census Bureau’s Statistics of U.S. Businesses Survey, 2015-2016 SUSB Employment Change Data Tables. March 2019. Available at: https://www.census.gov/data/tables/2016/econ/susb/2016-susb-employment.html ↩
3 While not summarized in this post, the survey also included questions on the availability of paid family leave for bereavement and the deployment or injury of a military service family member. ↩