The Role of Paid Family Leave in Reducing Workforce Disparities

In recent decades, women have entered the work force in droves, making substantial contributions to families’ financial stability. As a result, however, the once common figure of a stay-at-home caregiver is rapidly diminishing, and families are left to fill in the gaps. Despite increasing responsibilities outside the home, women still also shoulder the primary responsibility of both caregiving for children and for ill or aging adult family members. Increasing pressure to make ends meet with less time and stagnant wages is taking both a financial and emotional toll on working families.

This toll is exacerbated by the absence of a universal paid family leave program in the U.S., an issue that has been rapidly attracting attention from major political figures and working Americans alike. The Academy recently joined the conversation by devoting a session to the subject at our June 21st event, Advancing Equity and Inclusion through Social Insurance. But exactly how does paid family leave, as a form of social insurance, advance inclusion and reduce disparities in the workforce?

Providing a reasonable period of job-protected paid time off to workers caring for a new child or a sick loved one has been shown to strengthen workforce participation and other factors promoting family economic security. Unfortunately, policies related to work-family balance, and social insurance programs in general, have lagged behind in the U.S. compared to other industrialized nations. The resulting lack of job-protected paid leave coverage for working Americans reinforces existing disparities among workers by gender, race and ethnicity, marital status, educational attainment, socio-economic status, and part- versus full-time status.

In 1993, the U.S. took a notable step forward with the passage of the Family and Medical Leave Act (FMLA), which offers job-protected, unpaid time off to workers experiencing the birth or adoption of a child, a personal medical emergency, or the illness of a close family member. However, these benefits are realistically unattainable for a substantial number of Americans. Many of those who are most in need of FMLA protections cannot afford to do so without pay. Moreover, over 40 percent of employees are not covered by the law due to the strict requirements in terms of employment history and employer qualifications. While FMLA leave is a critical support for eligible families, data has shown that employees who can afford to take unpaid leave are much more likely to be white, highly educated, and of higher socio-economic status.

A few states across the U.S. have independently adopted their own paid family leave programs. California, New Jersey, and Rhode Island have implemented social insurance programs funded through a payroll tax levied exclusively on employees, and New York has recently passed a law with an even more progressive program. Studies of the California paid leave program, which has been in place for over a decade, show that in the years since the policy’s implementation, leave-taking has increased for both mothers and fathers, particularly among ethnic minorities, unmarried parents, and individuals with lower educational attainment.

However, applying the lessons learned to other states across the U.S. presents challenges. The four aforementioned states are implementing their paid leave policies through existing temporary disability insurance (TDI) programs, which have simply been expanded to include pregnancy as an eligible trigger for receiving benefits. Very few other states have comparable TDI programs in place, and therefore would have to start from the drawing board. Additionally, while California’s program has improved access and take-up rates among disadvantaged groups, stumbling blocks such as low wage-replacement rates and insufficient public awareness have prevented the program from reaching its full potential in eliminating disparities.

With all these factors in mind, what do you believe would be the best path forward for paid family leave? How could the U.S. implement a social insurance program on a national scale? What more can we learn from the states and other countries that have come before us in their efforts to support working families?