Paid Family Leave

Paid Family Leave policies are rare in the United States. Around the world, one hundred and eighty-two countries provide some form of paid maternity leave, and seventy countries also offer paid paternity leave. It is estimated that only 36 percent of U.S. employees have access to paid leave if they get sick, a policy that is almost universal in other developed countries, and only 12 percent of employees have access to paid family leave. Presently, just three states have implemented Paid Family Leave (PFL) to help offset the cost of time taken off of work to care for a newborn baby or sick family member. These policies have been gaining traction in the past year in other states. On September 24, 2014, the Obama Administration announced that the Department of Labor would be funding feasibility studies in Massachusetts, Rhode Island, Montana, and the District of Columbia for future implementation of Paid Family Leave policies. Our publication is a response to a growing call for analysis and feedback beyond the existing body of literature of general implications available to researchers and policy makers. Associate Professor Shanna Pearson-Merkowitz and I co-authored this paper to present new findings and evidence explaining various benefits and drawbacks of current Paid Family Leave policies, with a specific focus on Rhode Island’s new program. It serves as a comprehensive, yet succinct analysis of the structure of Paid Family Leave policies in California, New Jersey, and Rhode Island, and will be published by the Collaborative in January of 2015. Our examination reveals that low-income workers who need paid compensation for time lost from work the most are the least capable of utilizing the policy. All three states structure their policies through an employee payroll tax. For businesses, this funding mechanism is an overall success. The policy presents minimal overall costs to employers. However, our findings show that low-income workers are unfairly burdened by the regressive payroll tax structure of the program in all three states, and are the least likely to have awareness of the program. Of greatest concern is our finding that these workers cannot afford to utilize the program, despite the fact that they are mandated to pay into it. In response to our pertinent findings, we conclude that while Paid Family Leave policies in California, New Jersey, and Rhode Island have much to applaud, states should take three specific measures to maximize usage among the working poor: 1) Undertake a statewide education campaign, especially in low-wage workplaces to educate employees about their entitlement to the program; 2) Eliminate the “cap” in taxable income so that all workers pay the same percentage of their income into the program; and 3) Create a progressive wage replacement system to make sure no beneficiaries fall below the poverty line as a result of taking PFL benefits and that all workers who pay into the program can afford to take advantage of it