Paid Family Leave in the United States

The three sections that follow describe the factors that are elevating the need for paid family leave for American workers. The first section describes recent changes in the U.S. workforce and discusses how these changes interact with caregiving needs to create new challenges for families. The next section outlines the case for instituting a national paid family leave policy as a way to improve economic productivity and labor force participation, increase families’ financial security, promote gender equity in the home and workforce, and support children’s early development. The third section summarizes current state and federal policy on paid family leave, reviews recent proposals to strengthen leave policies, and discusses public attitudes on this topic, especially among millennials.

For the reasons noted above, the number of Americans working low-wage jobs with meager benefits has also been growing. According to one estimate, approximately 53 million Americans—44 percent of all U.S. workers ages 18-64—are working in low-wage occupations with a median hourly wage of $10.22 and median annual earnings of $17,950. Given that the service sector as a whole is projected to grow faster than other sectors, this share is expected to increase, even in the context of a strong economy and low overall unemployment.

Non-traditional work arrangements also complicate the task of designing policies to provide benefits to workers. “Gig economy” jobs, such as driving for Uber, have drawn considerable media attention but in fact account for only a small share of such arrangements, which commonly include temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers. Studies indicate that most workers in these jobs use them to supplement their income, but lower educational attainment is correlated with higher dependence on income derived from alternative sources (in other words, less educated workers are likely to be more dependent on non-traditional jobs). And typically, these do not receive traditional non-wage benefits (e.g., health insurance, leave, retirement savings, etc.). Those who solely rely on non-traditional work for income are unlikely to be eligible for FMLA job-protected leave given the law’s strict requirements concerning hours worked for single employer.

1.2 New Caregiving Demands

As a result of the economic and social trends discussed in the foregoing section, the ‘typical’ American household is now one in which all resident adults work. Without a stay-at-home parent, working families, especially if they are low- or middle income, have little flexibility to provide home-based care for a new baby, a sick child, or an elderly relative without jeopardizing the jobs and income on which the family’s financial security depends.

Lack of parental leave, in particular, is squeezing new families across the country, especially new parents, most of whom are part of the millennial generation. In 2018, the number of people having children in the United States dropped to a historic low. Total births declined 2 percent between 2016 and 2017, to an overall rate of 60.2 births per 1,000 women ages 15 to 44. This decline continued a general downturn that started with the Great Recession of 2008. As a result, America’s fertility rate is now the lowest it’s been in 30 years. While new research shows that millennials are building strong families and driving down the divorce rate, they are having significantly fewer children. Many cite costs—specifically, the lack of paid family leave and the cost of child care, as well as lack of time to provide meaningful care—as the main reasons why they are having fewer children than they would like.

Millennials are almost twice as likely as the baby boomer generation to have their spouse or partner working outside the home. A declining birth rate, if it persists, could significantly affect the U.S. economy and the country’s ability to care for an aging population.

For many families, the aging of the baby boomer generation means that many workers are joining the so-called sandwich generation. That is, they are providing informal care for older relatives while they still have children at home. A 2018 study by the AARP found that nearly 40 million Americans provide support for their aging loved ones. Of these 40 million caregivers, nearly half are sandwich generation caregivers and about one in seven is providing financial support to both an aging parent and a child. At present, more than 10 million millennials are family caregivers, and every year 1.2 million millennial women give birth for the first time.

These caregiving demands are forcing some to leave the workforce to take on informal or unpaid caregiving responsibilities despite a desire to continue earning. RAND Corporation has estimated that Americans currently spend
over 30 billion hours per year providing informal care to elderly relatives and friends. According to RAND, the annual opportunity cost of providing this unpaid care, based on 2011 and 2012 data, totals $522 billion.

With caregiving demands for the elderly expected to continue growing as the population ages, paid family leave also remains a source of significant support for adults caring for sick or injured children. According to the Department of Labor’s FMLA survey, around 1.8 million workers per year—or nearly 40 percent of all workers who take caregiver leave—take leave to care for a sick or injured child. Research shows that children recover faster when their parents
are present: according to one study, for example, the presence of a parent can shorten a child’s hospital stay by 31 percent.

Among workers who use FMLA protections, medical leave is the most cited reason. According to the most recent national study of the program, 55 percent of workers who took FMLA leave did so to care for a serious personal health condition. Not surprisingly, access to paid medical leave varies by occupation, income, and firm characteristics. Today, 40 percent of all workers have access to short-term disability—that is, employer- or state-provided benefits for a non-work-related injury or illness (typical coverage per disability is 6–12 months). Among lower-wage workers (i.e., workers in the lowest quartile of earnings), however, only 20 percent can access short-term disability (compared to 54 percent of workers with earnings in the highest quartile). Research on existing short-term disability and state-paid medical leave programs suggests that a new paid family leave policy, by providing critical support to workers who would otherwise be at higher risk of eventually claiming Social Security disability benefits, could substantially reduce the probability of prolonged workforce separation.

Evidence for this link can be found in data that show a much smaller wage gap when women and men first enter the workforce right after college and a much smaller wage gap between unmarried women with no children and men (compared to the gap between married women with children and men). As women get married and have children, however, the wage gap widens. The fact that a woman’s childbearing years tend to coincide with her peak earning years (the average American woman has her first child at age 26) amplifies the long-term effect on earnings and professional opportunities. For example, a University of Massachusetts study found that, for every child a woman has, her salary decreases by 4 percent—and that penalty is worse for low-wage workers. But for men, fatherhood increases earnings by more than 6 percent.

With lower wages and a larger share of the caregiving burden within the home, even when a male partner is present (on average, women still spend more than twice as much time as men on childcare and household chores in two-parent households), it is perhaps not surprising that women’s participation in the labor force is still somewhat lower than that of men’s (nearly 60% for women, compared to just over 70% for men) and that women are more likely to work part-time.58 And among prime-age women who are currently outside the labor force, more than half cite caregiving as the main reason for their nonparticipation.

Single mothers and women in low-wage jobs face a particularly unforgiving set of trade-offs between work and caregiving and are also among the group of workers least likely to benefit from family-friendly workplace policies and programs. Again, women are disproportionately affected: though they account for about 47 percent of the overall U.S. workforce, women comprise two-thirds of the low-wage workforce. And as we have already noted, 40 percent of women with children under 18 are the sole or primary breadwinners for their families, earning at least half of their total household income. While this group includes households where married women out-earn their husbands, a larger share— nearly one-quarter of all households with children under 18—is comprised of households headed by a single mother. Compared to all mothers with children under 18, single mothers are younger, on average, and more likely to lack a college degree. They are also significantly poorer: in 2018, the median income for family households headed by a single mother was $45,128—well below the median income for all family households ($80,663) and less than half the median income of family households headed by a married couple ($93,654). Given these disparities, the benefits of a federal paid family leave policy in terms of increased earning potential and workforce participation would be particularly meaningful for low-income and single mothers, and for the millions of children who depend on them.

In response to persistent gender pay disparities, a growing number of OECD countries are reserving non-transferable periods of paid parental leave exclusively for fathers (these are sometimes called “daddy quotas”). Other countries are offering “bonus” paid weeks if both parents take leave in an effort to normalize the idea of fathers taking leave, diminish potential employer discrimination, and increase gender equity at home and in the workplace. Recent research data from Norway, Sweden, and Canada show that earmarked paternity leave tends to significantly increase the parental leave taken by fathers. In a 2019 study, researchers in Canada found that “daddy quotas” increased mothers’ labor force participation and full-time employment, while also reducing mothers’ part-time employment and unemployment. Additionally, they found that the quotas had a positive or statistically insignificant effect on hourly wages.

Helping women stay in the workforce isn’t the only goal of paid family leave policies. Another is enabling parents to spend time with their children. This is important as several studies of paid parental leave, as we discuss in the next section, point to strong benefits from early parent and childing bonding. Research on whether similar benefits result from family caregiving and medical leave, by contrast, is limited; thus, this is an important topic for further study.

2.3 Parental Leave and Early Childhood Development

As discussed in previous sections, most American parents, including nearly two-thirds of those with minor children, are in the workforce, either full- or part-time—some by choice, others by necessity. And while all working parents, especially those with young children, have to balance childcare with work demands, the challenges are particularly acute for new parents. Relatively few people—only 19 percent of Americans, according to BLS—are able to use a defined paid family leave benefit to take paid time off after the birth of a child. The fraction is even lower, only 6 percent, for low-wage workers. As a consequence, about a quarter of new mothers return to work as early as 10 days after giving birth.

As a previous BPC report on early childhood development noted, the years from birth to five are a critical period in a child’s development. When parents return to work in the early weeks of life, they cut short a critical period for bonding with a newborn and establishing breastfeeding, which has demonstrated benefits for infants’ health and later development.

Children are learning at birth, and their earliest experiences are the foundation for lifelong developmental outcomes. A child’s early development, as emphasized in a groundbreaking report published by the National Research Council and Institute of Medicine in 2000, “is both highly robust and highly vulnerable”, meaning that while children in their earliest years develop at a rapid pace, they are susceptible to both positive and negative environmental factors. It is critical that families and children have the support needed to help them thrive during this period. Parental leave can play an important part of the early care and learning continuum; as more families have access to this type of leave, there will be greater benefits for the entire early care and learning system.

International studies have found that access to paid family leave is linked to lower infant mortality and higher rates of breastfeeding, and, for new mothers, lower rates of depression and higher levels of relationship satisfaction with their partner, both of which also benefit children. Longer periods of maternity leave have also been associated with higher rates of infants receiving wellbaby care and immunizations. Conversely, a 2005 study using data from the National Longitudinal Survey of Youth found that “a mother’s return to work within 12 weeks of giving birth was associated with a greater likelihood of the child having externalizing behavioral problems at age 4.” Though discussions about parental leave tend to focus on the mother–infant relationship, studies also point to benefits of paternity leave. Specifically, researchers have found that fathers who take longer paternity leaves are more involved in childcare later; greater paternal involvement, in turn, has been linked to higher cognitive test scores in children.

Paid parental leave is beneficial for children in another way: by helping new parents avoid a loss of income at a critical time and by reducing the likelihood that new mothers leave the workforce, it contributes to families’ longer-term financial security and stability. This type of stability is strongly linked to other child development outcomes, including academic achievement, behavior problems, and mental health.

3.2 State Policies

To date, eight states and the District of Columbia have passed paid family leave legislation. California’s policy has been in place the longest: more than 15 years. Studies of state policies have, in some cases, led to later modifications, including raising wage replacement rates and expanding the definitions of who qualifies as a family member to provide care. In 2019, paid family leave bills were pending before more than 25 state legislatures, but Connecticut and Oregon were the only states to pass a law. In their proposed or adopted paid family leave policies, states have adopted different approaches to specific design issues, such as exemptions and opt-in or opt-out provisions. For example, most states exempt small business employers, while allowing small business workers to opt in, and many do not allow government employees to qualify for the paid family leave benefit. Concerned about the potential for a patchwork of different state and municipal leave policies, a number of large companies with employees in multiple jurisdictions have begun calling for a national policy. Existing state policies are summarized in Table 1.

3.3 Private Sector Policies

In the private sector, the technology, financial services, insurance, and professional services industries lead the way in terms of offering paid family leave. The lowest levels of access to paid family leave are found in the leisure and hospitality industry. The amount of leave available under different employers varies greatly. For example, Netflix provides as much as 52 weeks of paid parental leave; by contrast, Boeing offers three weeks of paid family leave.

There was more private sector movement on the issue of paid family leave in 2018. In January, Walmart announced that it would extend the same parental leave it offers corporate employees (ten weeks of paid maternity and six weeks of paid paternity) to
its full-time hourly cashiers and store workers. In February, Starbucks said it would expand its six-week paid parental leave benefit to full-time hourly fathers (previously this benefit had only been available to new mothers and adoptive or foster parents).

More recently, companies including Apple, IBM, PepsiCo, Target, Lowes, CVS, Dollar General, and Gap, among others, have introduced or expanded parental leave benefits for hourly employees, though several limit benefits to employees who work at least a certain number of hours per week.105 For example, CVS now offers full-time employees up to four weeks of paid parental leave, while Dollar General offers two weeks of paid parental leave for full and part-time employees to care for a new child (birth, adoption, or foster), with an additional six weeks for birth mothers.

3.4 Small Business Attitudes Toward Paid Family Leave

Across the country, small business sentiment on paid family leave is mixed. On the one hand, there is support for a uniform national policy that could help millions of small employers offer a benefit that is typically only available through large companies. On the other hand, the small business community is concerned about the potential cost and difficulty of managing operations while employees are on extended periods of leave.

In a recent BPC poll of more than 500 owners and executives of businesses with 50 or fewer employees, most executives—both Democrat and Republican—reported interest in providing paid family leave benefits to their employees. Fewer than one-third of surveyed executives said they were not at all interested in providing any type of paid family leave. Moreover, over 60 percent of executives believed that providing paid family leave would have a positive impact on employee morale, employee retention, and their company’s ability to attract new employees. Nonetheless, despite strong interest in providing paid family leave, more than half of small business owners or executives said they would need support in some form to offer this benefit.

Unsurprisingly, BPC’s survey also 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.

Understanding the barriers and benefits to adopting or expanding paid family leave for budding entrepreneurs is essential to designing smart policies for small businesses, which account for about one-third of private-sector employment in America. Unlike larger employers, small business owners are much more vulnerable to workforce changes, potential abuse of a paid family leave policy, and changes in profitability. Aware of these barriers, Washington state’s paid family leave program provides small business assistance grants to businesses with 50–150 employees and businesses with fewer than 50 employees that opt in to the employer share of the premium.

Paid family leave can also provide competitive advantages by helping small business owners attract and retain qualified, motivated workers. One study found that 88 percent of all workers would take benefits over a raise in pay, with millennials being the largest demographic group to support that view. The same study found that paid family leave and a flexible schedule were among the benefits rated most important by millennials.

3.5 Public Attitudes Toward Work And Leave

Public attitudes toward family and medical leave reflect current economic and social realities. In a wide-ranging survey of these attitudes, conducted in 2016, the Pew Research Center found broad public support for paid family and medical leave. Paid maternity leave and medical leave to address one’s own serious illness drew especially strong support (80–85 percent of respondents supported these forms of paid leave). Support for paternity leave and for medical leave to take care of an ill family member was not quite as strong but a solid majority (67–69 percent) expressed support for these types of leave also.

Among respondents who voiced support for paid family leave policies in the Pew survey, more than 70 percent said that employers, rather than workers or state or federal government, should pay for leave benefits. There was less consensus, however, on the question of whether employers should be required to provide paid family leave—slightly more than half (51 percent) said it should be required, while 48 percent said it should be up to employers—and only about a third said that expanding access to paid family and medical leave should be a top policy priority for the federal government.

The public’s sense of urgency about the need for paid family leave may be changing, however, given evidence that support for such policies is higher among young people. In 2016, millennials (defined as people ages 22 to 36 in 2018) became the largest cohort in the workforce, comprising 35 percent of American workers. This is also the group that is most likely to have children soon. Millennials differ from prior generations in many ways that are relevant for policy discussions that concern the relationship between parenting and work. A global survey of millennials by Ernst and Young found several key differences compared to previous generations:

• Millennials are more likely to be in dual-earning households. More than threequarters (78 percent) of millennials with a partner reported having a spouse/ partner working full-time as compared to 47 percent of boomers.
• Millennials are more likely to make sacrifices to balance work and family responsibilities. Nearly 60 percent of millennials say they are willing to stop working to take care of children at home, 12 percent more than Generation X. Millennials also express greater willingness to change jobs, take a pay cut, or move to another country to have access to better parental leave benefits.
• Millennials value parental leave more than prior generations. More millennials (compared to other generations) reported that they would recommend their employer, be more engaged and happier in their jobs, and be less likely to quit if their employer offered additional work flexibility and paid parental leave.

Thus, changing public attitudes and a growing sense of urgency about the difficulty of balancing work and family demands in today’s economy seem likely to motivate continued bipartisan interest in pursuing paid family leave policies at the federal and state level.