The Biden administration is proposing a massive expansion of federal benefits through a 10-year, $1.8 trillion package that includes new spending on child care, the continuation of the expanded child tax credit and more-robust nutrition programs. Notably, it would introduce a new federal paid family leave benefit costing an estimated $225 billion over the next decade. If phased in as proposed, workers could get up to $4,000 a month for a total of 12 weeks in paid leave to care for a newborn, another loved one or themselves.
How much of a change would this be? Federal law currently guarantees many employed Americans the right to take up to 12 weeks of unpaid job-protected leave to care for family members through the Family and Medical Leave Act. Because of eligibility restrictions, less than half of all U.S. workers can technically access this benefit.
The U.S. is truly exceptional in this regard.
Employed women get paid maternity leave in almost every nation in the world. Many countries also provide workers with paid leave to care for their ailing parents, partners or other relatives who need care.
Nine states, including Rhode Island and Connecticut, and the District of Columbia already offer some form of paid family leave. Their track records provide strong evidence regarding the advantages of paid – as opposed to unpaid – family leave.
How would Biden’s paid leave plan benefit workers? When workers need to care for a family member with an illness, or a new child, they often find themselves out of a job. Researchers have found that the lack of paid leave leads to at least $20.6 billion in lost wages per year. Paid family leave especially helps low-income workers stay employed when they need it most. In states that fund paid leave, women are 20% less likely to quit their jobs after having a baby.
It increases worker retention, productivity and loyalty.
In states with paid leave, evidence suggests that those policies make it easier for workers to financially weather a birth, an adoption or a short-term health crisis.
How would employers benefit? Researchers have found that paid leave is good for business.
It increases worker retention, productivity and loyalty, while also allowing smaller businesses to compete more fairly with big companies. Public opinion polls and surveys have long found that most Americans, including small-business owners, support paid family leave.
Nearly all businesses surveyed about the effects of the California paid leave program, adopted in 2004, said that the program had either a positive effect or no noticeable impact on productivity, profits and morale. Employee turnover fell in California once it enacted its paid leave policy.
Other states have seen similar results.
U.S. workforce participation has been decreasing for years, especially for women. Comparing the United States to Canada, some researchers estimate that with more access to paid leave and affordable child care, as many as 5 million more workers could enter the U.S. labor force.
Is the Biden administration’s estimate of the cost realistic? The Biden administration estimates that its proposed paid leave program will cost $225 billion over the next decade. I think that this is a reasonable expectation.
In most states, paid family leave has been funded through employee payroll taxes, though some states jointly fund the program between employees and employers. Funding through a payroll tax spreads the cost across millions of workers and employers.
However, Biden seeks to fund this program and others through taxes on people who earn more than $400,000 per year and corporations.
The nonprofit National Partnership for Women and Families estimates that someone earning the median income, currently around $36,000 per year, would pay about $1.48 per week, or $76.85 annually, to fund this program. In Massachusetts, workers pay no more than 38 cents per every $100 that they earn to fund the state’s paid leave program. Self-employed workers can opt into this system.
Joya Misra is a professor of sociology and public policy at the University of Massachusetts Amherst. Distributed by The Associated Press.