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.

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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.

An Introduction to Paid Time Off Banks

By Andrea Lindemann Gilliam

This blog was originally posted on the CLASP blog.Many people have heard of Paid Time Off (PTO) banks, but the contours of such policies are often little understood, especially outside the human resources world. To shed light on PTO banks, CLASP and the Institute for Women’s Policy Research (IWPR) have released a report using Bureau of Labor Statistics data to explore what is known, and what needs more study, about PTO banks. This report is a first step in understanding PTO banks so that further questions about PTO banks and how they affect low-wage workers and their employers can be explored.

PTO banks are an alternative to traditional paid leave plans. PTO banks consolidate multiple types of leave (paid vacation, sick, and personal days) into a single bucket, which workers can draw upon for absences. About 19 percent of private industry employees in the U.S. have access to a PTO bank. PTO banks are more common for higher wage and full time workers and are more likely to be offered at larger businesses.

Many low-wage workers don’t have access to any paid leave at all; 41 percent of low-income working parents (with household incomes below twice the federal poverty level) do not receive paid sick leave, vacation days, personal days, or other forms of compensated leave. Low-wage workers are less likely to have access to any paid time off regardless of whether it is in a traditional form or as a PTO bank. While 51 percent of employees in the lowest wage quartile have access to paid vacation time, only 9 percent have access to a PTO bank. In comparison, 89 percent of employees in the highest wage quartile have paid vacation time and 28 percent have access to a PTO bank. This means that millions of workers face difficult decisions like whether to take a needed day off work to care for a sick child or visit the doctor and risk losing a day’s wages (or even their jobs).  Paid leave not only helps keep workers and communities healthy, but helps workers balance work and family obligations and stay productive.  Unfortunately, there is no federal standard requiring these types of paid leave.

In Washington, D.C. an employer with experience of PTO banks has good things to say about how paid leave has impacted his workers and their business. Bradley Graham, co-owner of Politics & Prose, said in a recent BNA Human Resource Report article that ‘‘Some employers worry that too generous a leave policy will be abused by workers and will cost the company too much money in missed hours,” but that “employees have appreciated [their PTO policy] and it has not been abused.” Graham noted that he thinks the policy shows respect for the staff and makes economic sense. You can also see Graham explaining how Politics & Prose implemented the D.C. Sick and Safe Leave Act in a recent Spotlight on Poverty video. Spotlight on Poverty is a CLASP-managed initiative to highlight perspectives on issues affecting low-income families. In that same article, Stacey Bashara who helps run a web development firm in Chicago, discussed what PTO banks have meant for her employees. Bashara is also a supporter of the Illinois paid sick days campaign.  CLASP will continue to research and investigate PTO to identify pros and cons for low wage workers.

PTO banks are just one vehicle employers may use to give employees paid time off. While this paper is a start in understanding PTO banks, the real work is ensuring that workers at all wage levels have access to some form of paid time off so they can take care of their own health and that of their families without losing income or a job.

For more information, read Paid Time Off:  The Elements and Prevalence of Consolidated Leave Plans. IWPR has information available on Family Leave & Paid Sick days online.