Pioneering Research on the Costs and Benefits of Paid Family Leave

By Jeff Hayes, Ph.D.

Since its founding, IWPR has studied the costs and benefits of American workers’ access to leave for childbirth, personal health needs, or family caregiving. IWPR’s inaugural publication, Unnecessary Losses: Costs to Americans of the Lack of Family and Medical Leave  showed that by not recognizing the need for work-life balance, established policies not only failed to support workers and their families, but were costly to taxpayers. The study’s findings informed the passage of job-protected, unpaid leave in the Family and Medical Leave Act of 1993.

Expanding beyond unpaid leave, IWPR studied the possibility of providing paid family leave by enhancing Temporary Disability Insurance (TDI) programs operating in California, Hawaii, New Jersey, New York, and Rhode Island in a fact sheet describing the program and in a paper presented at the American Economic Association in 1995. Since that time, three states—California, New Jersey, and Rhode Island— have implemented paid family leave expansions.

3.2_Paid-Leave-Legislation

More recently, IWPR worked in conjunction with the Labor Resource Center (LRC) at the University of Massachusetts–Boston to develop a flexible econometric model for estimating the costs and benefits of paid family and medical leave insurance proposals. The original IWPR/LRC Family and Medical Leave Cost Simulation Model used data from the U.S. Department of Labor’s (DOL) 2000 FMLA survey and the March Current Population Survey (CPS), and incorporates the unique features of various proposed programs, from waiting periods to eligibility criteria. This IWPR/LRC model has been used to estimate the costs and benefits of proposed paid family leave legislation in several states: Massachusetts, New Mexico, Maine, Maryland, Illinois, Minnesota, and Washington.

This year, the model was used by IWPR to study the costs and benefits of paid leave in the District of Columbia in collaboration with D.C.’s Department of Employment Services. The analysis was part of a recent family of studies funded by the Women’s Bureau at the U.S. DOL to inform the development or implementation of paid family and medical leave programs at the state level. The research continues to show that providing leave benefits under alternative policy designs could provide substantial benefits at relatively low cost. Early results were used by members of the D.C. City Council for a proposal to provide up to 16 weeks of partially paid leave for employees of private employers in the District of Columbia and allow D.C. residents working for the federal government or employers outside of the District to opt in. The legislation, if it passes, could be the most generous paid leave policy in the country.

Beginning in 2014, IWPR and IMPAQ International have been working under contract with the Department of Labor’s Office of the Assistant Secretary for Policy, Chief Evaluation Office to update the IWPR/LRC simulation model to base leave-taking behaviors on the 2012 FMLA survey and the American Community Survey (ACS) for local labor force estimates. The larger sample size in the ACS provides greater geographic detail than what is available in the CPS for studying family and medical leave proposals in states, counties, or cities. Furthermore, the additional data available in the ACS on place of work allows for greater focus on the analysis of costs and benefits to employers in local areas considering policy changes.

Moving forward, IWPR, under federal and state research contracts, will be using the updated Family and Medical Leave Cost Simulation Model to study leave policies in Minnesota, New Hampshire, Montgomery County, MD, and the expansion of Rhode Island’s Temporary Caregiver plan.


To view more of IWPR’s research, visit IWPR.org

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