How to Build a Paid Family Leave Plan That Doesn’t Backfire
Congress is designing a policy as part of Democrats’ safety net spending plan. Evidence from around the world suggests what works and what doesn’t.,
Paid family leave could become law in the United States, if Democrats succeed in pushing through their large social safety net spending plan. But lawmakers are still debating the details of the policy.
Policy design matters a lot, experts say, because depending on the choices made, paid leave could be inaccessible to those who need it, or even end up backfiring by penalizing people who take it. Also, lawmakers may not get a second chance anytime soon. When Congress passed 12 weeks of unpaid leave in 1993, proponents hoped it was a first step toward a paid benefit. But little has changed in 28 years.
What is the best evidence about what works and what doesn’t? There’s lots of research from states, and from other nations, that mandate the offering of paid leave. (The United States would be the last rich country to do so.)
“What we’ve seen in the states is when you make poor policy compromises, it supercharges inequities in the programs,” said Lelaine Bigelow, vice president for congressional relations at the National Partnership for Women and Families.
Democratic lawmakers, though, will most likely have to give up items on their wish list to reach a deal on the $3.5 trillion safety net plan, which is also intended to support things like child care, elder care and community college.
Here are six main features of paid leave policy — any of which could be whittled down during negotiations — and a look at how the latest proposal in Congress compares with what works elsewhere.
The Democrats’ plan is broad, covering workers at companies of any size or who are self-employed, work part time or collect unemployment. Currently in most states, those working at companies with fewer than 50 people don’t even qualify for unpaid leave.
In addition to births and illnesses, the leave would include a wider range of circumstances than those covered by even the most generous state policies, including domestic violence; a spouse’s military deployment; bereavement; and caregiving for extended family, in-laws, domestic partners and people who are the “equivalent” of family.
Most of the international research on paid leave is about new parents, but studies in the states that offer leave have shown that broadening the definition increases uptake. The main challenge for employers has been difficulty covering for absent employees, especially at small firms. But a majority of firms were still supportive of it, according to a study this year of paid leave’s effect on employers in New York.
Studies suggest that broadening the reasons for taking leave could also decrease the chances of employer discrimination against women of childbearing age. Under the broader definition, nearly everybody could have a caregiving or medical need at some point during a career.
“There is evidence that employers penalize people who take leave,” said Kathryn Anne Edwards, an economist at the RAND Corporation. “So when we design family leave, is this an accommodation for some workers, or is this just what work is — the ability to leave for three months when something happens to someone close to you?”
How long is leave?
The most recent draft of the plan, from the House Ways and Means Committee, would grant 12 weeks of paid leave. (It would also let people take it in four-hour increments instead of all at once.) But the Senate, to decrease the cost, could reduce the number of weeks.
Research suggests that there’s a sweet spot for the length of leave — at least three months, but not much more than six.
When paid leaves are too long, it can end up hurting women’s careers. In Europe, where it’s common for women to take a year off after giving birth, they are less likely to achieve senior roles than women in the United States, and more likely to work part time. In Spain, women are more likely to get contract work instead of salaried jobs.
There’s also a risk to shorter leaves, researchers said, because they prevent people from achieving the benefits of leave in the first place.
“There’s no research-based reason one should go down from 12 weeks,” said Maya Rossin-Slater, an economist at Stanford and an expert on parental leave policies. “There’s nothing you gain, and in fact you lose some of the benefits, like breastfeeding, maternal mental health and child immunizations.”
Will leave takers’ jobs be protected?
The Biden plan, as of now, would not provide job protection. Democrats are trying to pass the legislation under a process called budget reconciliation, which requires that new policies directly affect revenue and spending. A job protection mandate wouldn’t qualify.
Some workers would still have job protection, under the Family and Medical Leave Act, but that excludes nearly half of workers, including those at businesses with fewer than 50 employees and those who have been employed less than a year.
When paid leave doesn’t include job protection, a significant share of workers are unlikely to take it even if they’re eligible, research shows — particularly Hispanic workers, low earners, those who work at small businesses and those who work part time or frequently switch jobs.
“My view is if leaves aren’t job-protected, it’s barely leave,” said Christopher Ruhm, professor of public policy and economics at the University of Virginia. “You’re going to have lots of people being very hesitant to use it, so it loses a lot of the benefit.”
How much does it pay?
The plan would pay two-thirds of most workers’ average weekly wages, up to $4,000 a month, and 85 percent of low earners’ wages, about $1,000 a month.
Larger wage replacement for low-income workers has been shown to increase the chance that they will take it, researchers said, though the lowest earners may need close to full wage replacement to afford leave. California, which became the first state to pass paid leave in 2002, increased the share of replacement pay in 2016, to 70 percent for low earners from 55 percent. Usage rates increased for those earning $20,000 or more, though not for those earning less.
To make the policy most effective, Ms. Edwards said, “try to think of the most vulnerable worker in society, with the lowest-paid, most precarious work — are they covered?”
There is also evidence that men are more likely to take leave if a higher share of their income is replaced. When men take leave, research shows, it has a host of benefits, including decreasing the penalties on women who take it and increasing the health of the women and children men care for.
Who pays for it?
Republicans have proposed ideas like pretax savings accounts or allowing people to draw down their future benefits, like Social Security or child tax credits. An idea generally supported by Democrats — which is how it works in the nine states (and D.C.) that have passed paid leave — is to fund it through a small payroll tax that goes into a paid leave fund, similar to the way disability works.
A 1 percent payroll tax has been sufficient to finance the program in the states that do it, research has found, and a survey of employers’ opinions on the policy in California found that nine in 10 supported it or were neutral. Here’s the catch: President Biden pledged not to raise taxes on anyone but the rich. Instead, federal paid leave would be an entitlement for all workers (as it already is for federal workers), paid for by tax increases on corporations and rich Americans.
How will people find out about it?
The current draft of the legislation includes $150 million a year for outreach to make people aware of the program and its details, and to assist employers in doing so. Common obstacles are informing people about it and persuading them to take it. After paid leave went into effect in California, for instance, only one-fifth of workers knew it existed, and they were more likely to be women; high earners; white; and workers at large firms that already provided leave.
“Policy is only as good as the paper it’s written on,” said Amy Beacom, co-author of “The Parental Leave Playbook,” published this month, and chief executive of the Center for Parental Leave Leadership. “It’s really the practice that is how it comes alive.”