How paid leave can be a financial safety net for your employees

During this past year, we’ve heard countless stories about workers having to take time off or quit their jobs to tend to a serious illness or care for loved ones throughout the pandemic.

Consider the lack of paid leave on workers such as the breast cancer survivor who quit their part-time job to undergo chemotherapy, or a parent who reduced needed hours to care for an injured child.

Read more: How to get employees to take their PTO

Workers shouldn’t have to choose between having financial stability and caring for a sick or injured loved one or themselves. Yet, recent data from the Financial Health Network and the National Partnership for Women & Families finds that as of May 2021, only two-thirds of workers could take time off to tend to a serious illness or injury in their household and still receive some pay. And among those with access to some paid time off, the majority (66%) had less than 12 weeks of paid leave available for serious health and caregiving needs.

Still, the United States remains one of the only wealthy nations that has yet to pass a comprehensive paid leave policy, despite broad support across the political spectrum. While the Family and Medical Leave Act (FMLA) provides unpaid, job-protected leave for some specific purposes, less than 60% of workers report having coverage through this policy.

Read more: Employees don’t have to sacrifice their mental health to be good caregivers

Our new research on paid leave, in collaboration with the National Partnership for Women & Families, calls for workplace paid leave policies for caregiving and medical purposes. The report, “Unpaid and Unprotected: How the Lack of Paid Leave for Medical and Caregiving Purposes Impacts Financial Health", brings attention to the importance of paid leave for medical and caregiving purposes. Our research adds to the studies on the public health, economic, and gender and racial equity benefits of paid leave for new parents. Our report found that paid leave has multiple benefits for both employers and workers including:

Greater job satisfaction: Having access to paid leave for medical or caregiving purposes is correlated with less financial stress, better financial health, and higher job satisfaction.

Controlling for other factors, our research found that workers who have access to paid leave are 14% more likely to report low (or no) financial stress, 10 percentage points more likely to say they’re “living comfortably” and 22 percentage points more likely to recommend their job to a friend than those without access to paid leave.

Helping workers stay afloat: Among workers who experienced a serious illness or injury in their household over the past year, those who took paid leave were less likely to report financial hardships related to housing, food, and healthcare than those who took unpaid leave.

Controlling for other factors, workers who took paid leave in the past year and received some pay were 26% less likely to say they had trouble paying their rent or mortgage, 25% less likely to say they worried about affording food over the past year, and 16 percentage points less likely to say they did not receive healthcare due to its associated costs, compared to those who took unpaid leave.

Read more: Employers are recognizing 'financial wellness' isn't just a buzzword anymore

Paid leave for medical and caregiving purposes can serve as a financial safety net for workers who must tend to a serious illness or injury in their household, which can improve their overall financial health.

A lack of paid leave exacerbates gender disparities: It is no surprise that women bear the brunt of unpaid leave in the United States. Women (62%) are less likely than men (70%) to report having access to paid leave for medical or caregiving purposes. Women (9%) are more likely to have less than one week of paid leave, compared to their male counterparts (6%).

Among workers who took time off to tend to a serious illness or injury in their household, women (35%) were more likely than men (23%) to report reducing their hours. As such, paid leave for medical and caregiving purposes is not only a financial security solution, but one for gender parity as well.

Read more: Caregiving benefits still aren't doing enough for working moms

It’s clear from the research that paid leave for medical and caregiving purposes can promote workers’ financial health, while supporting women’s participation and progression in the labor force. As shown, having access to paid leave is correlated with higher job satisfaction and lower levels of financial stress. Moreover, workers who took paid leave to tend to a serious illness were significantly less likely to report housing, food, and healthcare hardships, compared to those who took unpaid leave.

As the COVID-19 pandemic continues, employers and policymakers have the opportunity to prioritize the financial health and stability of their workers through promoting workplace paid leave policies for medical and caregiving purposes.