T O T O ork Time On with Baby and Time Off from Work

Time On with Baby and Time Off from Work

Time On with Baby and Time Off from Work

Maya Rossin-Slater and Jenna Stearns

Summary

Compared to unpaid leave, paid family leave may better help working parents balance the competing needs of job and family early in a child's life, among other advantages. Yet the United States remains one of only two countries in the world without a statutory national paid maternity leave policy, and one of the only high-income countries that doesn't provide access to paid paternity leave for new fathers at the federal level.

In theory, Maya Rossin-Slater and Jenna Stearns write, paid leave can benefit families in two ways: by changing the amount of income available in the household (and the amount of resources available for the child), and by increasing the amount of time parents spend with their children. Despite the lack of paid leave at the federal level, several US states have their own paid family leave programs, all of which provide partial wage replacement during leave to care for a newborn or newly adopted child, and aim to cover a broad segment of the workforce through minimal eligibility requirements. Rossin-Slater and Stearns review research about the effects of these state-level programs, as well as paid leave programs in other countries.

The authors find that paid family leave has a number of benefits. For one, compared to unpaid leave, paid family leave increases leave-taking rates and leave duration, especially among disadvantaged parents. Paid leave programs that range from a few months to up to a year in length also appear to improve both infants' health and mothers' outcomes in the job market. At the same time, the research finds that existing paid leave programs have minimal impacts on businesses, suggesting that these programs confer benefits to workers and their families at little to no cost to their employers.

Finally, because rising economic inequality in the United States is in part driven by disparities in early childhood, the authors argue that paid family leave may be one way to level the playing field for children from all backgrounds and help improve intergenerational mobility.



Maya Rossin-Slater is an assistant professor of health policy at Stanford University School of Medicine, a faculty fellow at the Stanford Institute for Economic Policy Research, and a faculty research fellow at the National Bureau of Economic Research. Jenna Stearns is an assistant professor of economics at the University of California, Davis.

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Maya Rossin-Slater and Jenna Stearns

In the United States today, most parents of young children work outside the home. In 2018, over 71 percent of mothers and 93 percent of fathers with children under age 18 were in the labor force, and more than half of all mothers with infants were employed. Despite the rise in the share of working parents in recent decades, paid family leave and other family-friendly benefits have lagged those of other countries. Perhaps unsurprisingly, most working parents report that balancing work and family responsibilities is a significant challenge.1

Maternity and family leave policies provide time off from work so women can prepare for and recover from childbirth, and so both mothers and fathers can care for their newborn or newly adopted children. These policies aim to help new parents balance work and family responsibilities, with the goal of improving the family's wellbeing and promoting career continuity. Because women typically take on more caregiving responsibilities than men, proponents of family leave argue that such policies may also reduce gender inequities both in the labor market and at home.

The United States is one of only two countries in the world without a statutory national paid maternity leave policy (the other is Papua New Guinea). It's also one of the only high-income countries that doesn't provide access to paid paternity leave for new fathers, parental leave that can be taken by both new mothers and fathers, or family leave that can be taken to care for ill family members in addition to new children. Paid leave policies vary substantially across countries on several key dimensions, including duration,

36 THE FUTURE OF CHILDREN

benefit amount, whether they include job protection (that is, a legal clause that ensures workers can return to their previous jobs following leave), eligibility requirements, and financing. However, the United States is clearly an outlier in its lack of access to paid leave at the national level. The federal 1993 Family and Medical Leave Act (FMLA) allows some workers to take 12 weeks of job-protected unpaid leave, but only about 60 percent of workers are eligible for this program.2 Although we have no paid leave at the federal level, eight states and the District of Columbia have passed their own paid family leave legislation. In other states, the provision of leave is left to the discretion of individual employers. Employer-provided coverage is uncommon--only about 18 percent of private sector workers have access to employer-provided paid family leave.3

Paid family leave not only helps working parents balance the competing needs of job and family early in a child's life, it can also affect the health and wellbeing of parents and children alike. And paid family leave programs can bolster families' economic security through their effects on the parents' labor market outcomes. In this article, we first describe the current state of access to paid and unpaid leave in the United States; we then discuss what we know about its effects on families. The evidence suggests that paid family leave improves child health and development and maternal wellbeing, while causing minimal harm to employers. Therefore, a national paid family leave program may be an effective tool for improving early-life outcomes for children from all backgrounds, curbing the rise in inequality and boosting long-term economic growth and stability.

Paid Family Leave in the United States

Although the United States has no national paid family leave policy, paid leave is available to new parents in select states under two types of programs. Birth mothers in five states (California, Hawaii, New Jersey, New York, and Rhode Island) qualify for six to 10 weeks of paid leave under their state's temporary disability insurance (TDI) system. This leave has been available since the 1978 Pregnancy Discrimination Act mandated that states with TDI programs cover pregnancy as a disability, allowing women to take leave to prepare for and recover from childbirth.

More recently, several states have enacted their own paid family leave (PFL) programs. California was the first to do so, in 2004, followed by New Jersey (2009), Rhode Island (2014), New York (2018), and Washington and the District of Columbia (2020). Massachusetts, Connecticut, and Oregon recently passed laws to start providing paid family leave benefits in 2021, 2022, and 2023, respectively. At least 16 other states have introduced similar legislation.

These state-level PFL laws all provide partial wage replacement during leave to care for a newborn or newly adopted child, and aim to cover a broad segment of the workforce through minimal eligibility requirements. But the policies differ on several key dimensions, including the benefit duration, the wage replacement rate, whether job protection is included, the scope of use, and the funding mechanism (see table 1).

In all states, PFL benefits are paid as a percentage of a worker's average weekly earnings calculated over a base period, up to a weekly maximum. Both the wage replacement rate and the maximum benefit

Time On with Baby and Time Off from Work

vary significantly across states. Wage replacement rates range from 50 to 100 percent, while the maximum benefit amount ranges from $667 to $1,300 per week. PFL benefit duration also varies substantially-- from four to 12 weeks, depending on the state. And while some states explicitly require that employers allow workers to return to the same jobs after their leave has ended, California, New Jersey, and the District of Columbia do not. Workers in these places can rely on job protection through the FMLA, but only if they're eligible for it.

All state PFL programs provide leave for the arrival of a new child through birth, adoption, or foster care, as well as leave to care for close family members with serious health conditions. The programs in Massachusetts and Washington also cover leaves related to the military deployment of a family member, and New Jersey and Oregon include provisions to cover victims of domestic violence and their caregivers. In this article, however, we focus specifically on parental leave.

Finally, most PFL programs are funded entirely through employee payroll taxes, though the District of Columbia imposes a payroll tax on employers, and the programs in Oregon and Washington are jointly financed by employers and employees. The payroll tax rate is between 0.1 and 1 percent of wages (up to an annual cap) across states.

Despite state differences in program design, most PFL policies are too recent to study, so we don't yet have compelling evidence on the causal effects of policy variations such as the wage replacement rate or leave duration. Most of the evidence on the effects of PFL comes from California, whose first-in-thenation PFL policy took effect 15 years ago,

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Maya Rossin-Slater and Jenna Stearns

Table 1. State Paid Family Leave Policies

State California

Effective Date

2004

2020 Maxium Weekly Benefit

$1,300

2020 Wage Replacement Rate

60%?70%

2020 Maximum Weeks of Leave

8

New Jersey 2009

$881

85%

12

Rhode Island 2014

$867

60%

4

New York

2018

$840.70

60%

10

Washington 2020

$1,000

90%

12

District of

July 2020 $1,000

90%

8

Massachusetts 2021 Connecticut 2022

$850 $780

80% of

12

earnings

equal to or

less than 50%

of the state

average weekly

wage and 50%

of earnings in

excess of 50%.

95% of up to 12 40 times the minimum hourly wage and 60% of earnings above this amount

Job

Eligibility

Protection Criterion

No

Earned at least

$300 in taxable

income over the

base period.

No

Earned at least

$200 weekly for

20 weeks or

$10,000 in the

year before

taking leave.

Yes

Earned at least

$12,000 in base

period wages.

Yes

Employed full-

time for 26

weeks or part-

time for 175 days.

Yes

Worked at least

820 hours in the

year before

taking a leave.

No

Has been a

covered employee

(spending more

than 50% of

work time in DC)

for at least one

week in the year

preceding the

qualifying event.

Yes

Received wages

during the base

period that total

30 times the

weekly

unemployment

insurance

benefit rate.

Yes

Worked for same

employer for at

least 12 weeks

and earned

$2,325 during the

base period.

38 THE FUTURE OF CHILDREN

Table 1 continued

State

Effective Date

Oregon

2023

2020 Maxium Weekly Benefit

$1,254

Time On with Baby and Time Off from Work

2020 Wage Replacement Rate

2020 Maximum Weeks of Leave

100% of

12

earnings for

those earning

less than 65%

of the state

average

weekly wage;

for those

earning more,

65% of the state average weekly wage plus 50% of the amount by which the employee's average weekly wage exceeds the state average weekly wage.

Job

Eligibility

Protection Criterion

Yes

Received $1,000

in wages during

the base year.

allowing us ample time to study its short- and medium-term effects.

Theoretical Effects of Paid Family Leave

How might PFL policies affect health and employment? Paid leave can benefit families in two ways: by changing the amount of income available in the household, and by increasing the amount of time parents spend with their children. For some parents who would take unpaid time off in the absence of a paid leave policy, PFL's main benefit is the increase in income. Additional income can translate into additional resources for the child, which may improve health as well as cognitive and socioemotional outcomes.

For families who either couldn't afford unpaid time off or would otherwise choose not to take it, PFL increases the amount of

time parents can spend with new children. Additional time spent with an infant may affect health through several channels. First, if mothers don't return to work immediately, they can breastfeed longer. Breastfeeding is correlated with reduced risk of health problems in children, including sudden infant death syndrome, obesity, diabetes, and asthma; it's also associated with a lower risk of breast and ovarian cancer in mothers.4 More time to spend with infants during PFL may affect health in other ways as well. For example, if parents have more time to visit the doctor, they may be more likely to stick to recommended immunization schedules and seek more timely or consistent medical care.

By increasing financial or job security, PFL may lower mothers' stress during pregnancy; such stress can lead to child health problems

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