Why is family leave still so complicated to take?
First, the good news: Connecticut and Oregon have joined the ranks of states enacting paid family leave legislation.
The bad news: That brings the total to only eight states (not counting the District of Columbia). Out of 50, the last time I counted.
After decades of discussion, proposals and (in a few cases) new laws, still only 17% of U.S. civilian workers have access to paid family leave, according to the Bureau of Labor Statistics. And that number drops to only about 6% for low-income workers — arguably those who need this vital benefit the most.
Why are we still struggling to implement paid family leave in this country? I think it comes down to two concerns:
· It costs too much.
· It’s too hard to manage.
Both of these, it turns out, are ungrounded fears. Let’s take them one at a time.
Fear of financial impacts
Some employers fear mandatory paid family leave will cost the business too much, from lost productivity while workers are out, to hiring, training and paying temporary replacement staff, to declining customer service levels.
But in California — the first state to pass paid family leave laws and now with 17 years of history to draw from — that hasn’t proven to be the case. According to the Center for Economic and Policy Research, about 90% of employers reported California’s paid family leave policies had either a positive effect or no effect on productivity and profit.
Around 96% agreed it decreased employee turnover and about 99% believed it boosted employee morale. Less turnover means companies don’t lose talent essential to their success and function, contributing to the company’s overall stability. And companies such as Google have found it’s easier and more cost- effective to hire a temp for 12-18 weeks than to go through the entire recruiting, interviewing and hiring process of finding new talent to permanently replace the employee.
It’s not just employers nervously eyeing the bottom line, though: Employees also may worry about their share in funding universal paid leave. Again, turning to the state most experienced in implementing paid leave, the California Employment Development Department says every employee pays around $30 a year for the paid leave fund — less than a dollar a week.
This calculation is confirmed by a cost-benefit analysis recently released by the University of Denver. It reported a premium of approximately .678% of total state payroll would fully fund a statewide paid leave benefit with job-protected leave of up to 12 weeks per claim. With the cost shared evenly between workers and private-sector employers, that translates to an average contribution of roughly $4 per week by workers, with those in the lowest third of income paying just under $1 per week.
In addition, new mothers who take paid leave are more likely to stay in the workforce and to make more money than those who don’t take leave: Californians who took leave were 6% more likely to be working a year later and 54% more likely to report wage increases.
On the flip side, the Center for American Progress reports families lose an average of $20.6 billion dollars each year because of a lack of access to paid family and medical leave. And those costs are only the tip of the iceberg: tack on depressed future wages, lost savings and jeopardized retirement security when caregivers take extended time out of the labor force or when parents take lower paying jobs in exchange for greater flexibility.
Taxpayers — that’s you and me — often end up picking up part of the tab for families whose incomes drop when they must take unpaid leave or stop working. That’s because they’re significantly more likely to need to rely on public benefits compared with families with paid leave. For example, women in New Jersey who took paid leave were 40% less likely to receive public aid or food stamps than women who did not get this benefit.
Keeping complications under control
It’s not hard to understand why both employers and employees could be overwhelmed when it comes to understanding leave options, then submitting and managing requests to use it. Leave can include everything from a couple vacation days to short-term disability, long-term disability, workers’ compensation and the FMLA — and that’s before we even touch paid family leave. Federal, state and municipal laws may be involved. Sometimes leave is planned well in advance, such as the birth of a baby or planned surgery. Other times it’s unexpected, such as an accident or sudden illness.
As is often the case with other benefits, employees often don’t really know what coverage they have — until they need to use it for the first time. If they’re distracted with worries about their (or a family member’s) health or finances, it can be even harder to navigate the system.
Fair and consistent leave management practices are essential to avoid regulatory scrutiny, legal action and other financial liability. The solution for both employers and employees is technology: a software platform that makes learning about, submitting and managing leave simple and transparent. It can help reduce the complexities of absence management, minimize inconsistency and mitigate risks.
Software systems or third-party administrators for leave management generally provide tools to support three main areas:
· Compliance and case management. These tools allow employers to set their policies and log conversations. Each interaction with employees can be documented to ensure compliance with internal policies and external regulations.
· Employee education and navigation. These tools make it easy for employees to find information about their benefits, including the paid and unpaid leave options available to them — and just as importantly, and how to use them.
· Payroll coordination. These tools give employees freedom to request time off at their leisure, and provide exact tracking of requests, approvals and denials. Employers can then use this information for efficiency and compliance analytics.
What’s next for paid family leave in corporate America? In my final column in this series I’ll look at the future of family leave, and what we can and should do to get there.
This is the fifth in a six-part series on paid parental leave for America’s workers: how it started and where it’s going, who’s doing it well, why it’s such a challenge for employers and employees, and why it’s essential to the long-term economic growth of our country.