Policy Points: Paid Leave for Less Than 1/2 Cent per Dollar of Pay

By Julia Watts

In 25 years the nation has made significant social and economic progress. We have witnessed monumental Supreme Court cases, been introduced to Twitter and the iPhone, but our family leave policy has remained the same.That’s hurting employees, but also businesses that would benefit from a more productive, engaged workforce.

February 5, 2018 marked the 25th anniversary of the Family and Medical Leave Act (FMLA). It allows certain employees to take unpaid, job-protected time off work to care for themselves, a seriously ill family member, or a new child. FMLA protections have been used over 200 million times by employees since its enactment in 1993. Though FMLA was an important first step for businesses and their employees, its anniversary reminds us how far we still have to go.

The United States remains the only industrialized country in the world without a national paid family and medical leave program. FMLA protection is unpaid, and almost half of the workforce cannot afford to use it. Even if they could, roughly 40% of employees in America are ineligible because they work for small companies or other exempt categories.

With paid leave, businesses win by reducing hiring and training costs. For example, when employees have paid leave, they are more likely to return to work after having or adopting a child. Also, a 2016 study found that roughly 80% of companies offering paid medical leave reported a positive impact on employee morale. The same study found that over 70% of companies with paid leave reported increases in employee productivity.

States lead now, but federal program needed

National momentum for paid leave is mounting. Programs in California, New Jersey, New York, and Rhode Island provide paid leave for employees in those states. Legislation has been filed to create a national paid leave insurance program modeled on those successful state programs. The Family and Medical Insurance Leave (FAMILY) Act would allow employees to earn part of their pay while taking time off.

Business leaders know that paid leave is good for productivity and the bottom line. Seven in 10 small business owners support a comprehensive and national paid leave program. However, many companies, especially small businesses, cannot afford to offer paid leave. The FAMILY Act is low cost for both employers and employees. They each contribute only 0.2 cent for each dollar of pay.

Business leaders across the country support the FAMILY Act. Patagonia CEO Rose Marcario notes that economic returns from paid leave are tangible, especially in employee replacement costs. Care.com CEO Sheila Lirio Marcelo has said that businesses and the government have the responsibility to work together to support employees. They and many others have signed the American Sustainable Business Council’s business statement in support of the bill. All businesses are invited to show their support by signing.

Over the last 25 years the FMLA proved that policies allowing employees to balance work and family helps both employees and businesses. But it leaves out too many. Employees are forced to quit when they need to care for themselves or loved ones. Businesses are forced to shoulder poor morale, low productivity and even lose good employees who have no option but to quit when they need medical time off.

On this 25th anniversary of the FMLA, it is time to address what it lacks — paid leave for everyone. Business leaders can do their part by supporting the FAMILY Act. Sign on to endorse the bill.

Julia Watts is the Assistant Policy Director at the American Sustainable Business Council.

Photo (cropped): Flickr/Creative Commons

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American Sustainable Business Council

The American Sustainable Business Council (ASBC) is a network of companies and business associations. Its column, Policy Points, identifies public policies where a business voice, grounded in principles of innovation, fairness and environmental stewardship, can make an essential difference in the advocacy process. The goal is to arm readers with information and specific actions to take. As business leaders, we can and must support policy change to help make the economy more green and sustainable. The column editor is Richard Eidlin, ASBC's Vice President - Public Policy and Business Engagement.

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