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.


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.

President’s Message: Fall 2015

By Heidi Hartmann

It has been a great year for IWPR. Among many report releases, strong press coverage, and great exposure in the popular media, I want to particularly share with you my excitement at the new era that has begun in the struggle to attain paid parental leave in the United States. From President Obama’s 2015 State of the Union speech to the 2016 presidential candidates from both parties, the call for paid parental leave has come to the fore. While one candidate attacked the need for any legislation guaranteeing such policies (claiming that employers that find it important to their business will do it on their own), many candidates have supported the call for paid parental leave policy at the federal level, although most have not yet issued detailed plans. Never before has paid family leave been addressed so prominently in these venues.

I am very proud to say that IWPR’s dogged work since the mid-1990s to present paid family leave as a realistic option for the United States is finally paying off. As noted in Jeff Hayes’ opening article in this newsletter, IWPR first highlighted the use of state Temporary Disability Insurance (TDI) programs—which already covered a woman’s pregnancy, delivery, and recovery—as vehicles for paid family care leave in a paper presented in 1995 at the annual meetings of the American Economic Association. We followed that up with a fact sheet in 1996 describing the five existing state TDI programs. California was in fact the first of these states to adopt paid family care leave, built upon their TDI program, in 2002; IWPR staff members had traveled to Sacramento to present findings on more than one occasion. More recently, New Jersey in 2008 and Rhode Island in 2013 have joined California in expanding their TDI programs to provide paid benefits for family care leave, typically four to six weeks and all paid for by workers through payroll tax deduction.

Currently, the District of Columbia is one of several local and state jurisdictions that is actively exploring how to establish a new paid leave program without a TDI system to build upon. The District won one of four competitive grants offered by the Women’s Bureau, U.S. Department of Labor, to enable research on feasibility, and the District contracted with IWPR for assistance with its analysis. This year, the Women’s Bureau awarded eight grants and IWPR is expecting to work with four of the winning jurisdictions.

The Women’s Bureau grants seemed to have started an avalanche as several other states are spending their own funds on feasibility studies for paid family leave. For sure, an avalanche began in the tech industry as firms competed with one another to offer family leave. As reported by Elle, Netflix started it by offering up to one year paid leave; Microsoft then offered 12 paid weeks for family care, in addition to 8 for maternity disability. Adobe Systems then announced an expansion of maternity leave from 17 to 26 weeks and a doubling of fathers’ time off from 2 weeks to 4 weeks. Amazon responded to all this with 20 weeks off for pregnancy including 4 weeks prepartum and up to 6 weeks off for fathers. Finally, Spotify now gives up to 6 month off with pay anytime from 2 months before birth to a child’s third birthday. Of course, firms with highly skilled talent are more likely to make such an investment, but Facebook also requires its contracting firms (providing services such as food and cleaning among other services) to provide parental leave or a lump sum of $4,000 in lieu of paid leave. Mark Zuckerberg, founder and CEO of Facebook, is currently taking a two month leave after the birth of his family’s first child. Policies and practices such as these dramatically change the climate in favor of change at a national level. It is an international embarrassment that 183 countries have paid parental leave and only the US—along with Papua New Guinea—does not (according to the International Labour Organization).

Should the current discussion on national security leave any room and the issue of family leave reverberate in the presidential election in 2016, change could happen much more quickly than is commonly expected. IWPR’s work will be central to the action! Stay tuned.

Bridging the Gap: Bringing the Benefits of Paid Family Leave to American Workers #FAMILYAct

by Lindsey Reichlin and Stephanie Román

ImageImageThis blog post was crossposted at MomsRising.

In its founding year, the Institute for Women’s Policy Research (IWPR) analyzed the costs to workers of not having unpaid leave for childbirth, personal health needs, or family caregiving in its inaugural publication, Unnecessary Losses: Costs to Americans of the Lack of Family and Medical Leave. IWPR’s research 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.

Now 20 years old, the Family and Medical Leave Act (FMLA) has become a cornerstone of U.S. employment law and human resource policy. But the law stopped short of ensuring true protection to workers: the FMLA only guarantees unpaid family and medical leave for employees, complicating the economic security puzzle for many workers in the United States.

Today, most U.S. employees still lack access to paid family leave. While the FMLA requires that employers provide up to 12 weeks of unpaid job-protected care leave for eligible workers, the lack of a paid parental leave statute means the United States is one of only four countries in the world  without publically sponsored paid maternity leave. Paid family leave can bring important benefits to both families and businesses. Yet, many parents with unpaid leave are forced to choose between financial stability and caring for their newborns.

In 2012, only 35 percent of U.S. employees had access to paid family leave to care for newborns, adopted children, or sick family members.[1] The lack of access is even more pronounced for lower income earners: only five percent of the lowest paid workers had this option. Workers with the least financial security, and therefore the least flexibility to go without pay, often do not have access to income when taking time off for caregiving duties. As a result, the burden of unpaid leave can be too much for many women to bear: almost two-thirds of those who needed but did not take unpaid family leave in 2012 were women.

Expanded access to paid leave would mean substantially increasing the amount of time parents take for caregiving. The impact of the Paid Family Leave program in California, available equally to women and men, gives insight into the difference a paid leave statute could make on a larger scale: the program has doubled the length of leave parents–especially low-income parents–take to stay home with their newborns. It has also significantly increased the number of fathers who take advantage of parental leave, even increasing the length of leave they choose to take.

The time parents spend with young children is crucial for their health and development. When that time is paid, the benefits are even greater. Studies show that paid family leave can dramatically decrease mortality rates for infants and children under age 5, a reduction that does not hold for leave that is unpaid or not job-protected. Paid family leave also increases the initiation and duration of breastfeeding, which can reduce children’s risk for serious illnesses, and improve their cognitive development.

Working women, in particular, stand to benefit from paid family leave. Paid leave could help narrow the persistent wage gap that continues to plague working women. Women who take paid maternity leave have seen an increase in wages and depend less on public assistance in the year after giving birth. Paid maternity leave also keeps women in the workforce, which increases the productivity of the labor force overall, and could potentially improve gender equality both in the home and at work.

Paid family leave has the potential to bring important economic benefits to the country as a whole, as well as to individual businesses. Providing paid leave to federal employees, for example, would save the government and taxpayers $50 million dollars per year in turnover costs by improving recruitment and retention of younger employees. Private industry also benefits from the reduction in costs related to recruiting, hiring, and training. Women in California, particularly those in low-wage jobs, were shown to be more likely to return to the same employer following paid maternity leave than those who did not have access to paid leave.

The myriad benefits of paid family leave are clear. And while a handful of states have passed policies that go beyond the federal requirements, there is much to be done to fill the gap left by FMLA and ensure all workers reap the many benefits of paid family leave. The FAMILY Act represents an important opportunity to do just that by instituting family leave insurance for workers. By allowing parents to care for their loved ones without fear of losing their jobs or incomes, the United States would better support the well-being of its workforce, while simultaneously realigning its priorities with the global norm: providing vital paid family leave to its workers.

[1] A variety of data sources measure paid leave coverage rates and some debate exists over which source provides the most accurate picture. This post uses the Department of Labor’s 2012 Family Medical Leave Act survey, which surveys workers and worksites on provision and access to paid leave for parental purposes.


Lindsey Reichlin is the Research & Program Coordinator at the Institute for Women’s Policy Research and Stephanie Román is the Mariam K. Chamberlain Fellow at the Institute for Women’s Policy Research.