Paid Family & Medical Leave: Good for Business
FACT SHEET
December 2010
Business owners often say that offering paid family and medical leave promotes family values,
generates good will with employees, and is the compassionate thing to do. Yet the majority of workers
lack access to paid leave to address a serious health condition, care for an ill family member, or
welcome a new child.1 A paid family and medical leave (“paid leave”) standard would help
reduce costs for businesses while allowing workers to meet their health needs and
caregiving responsibilities without jeopardizing their economic security.
Paid Leave Policies Benefit Businesses’ Bottom Lines
At some point in their lives, nearly all workers will need to take time away from their jobs to deal with
a serious personal or family health condition, or to care of a new child. Businesses benefit when
workers have the time they need to care for themselves and their loved ones.
•
Paid leave improves worker retention, which saves employers money through
reduced turnover costs. Businesses are better able to retain employees when workers have
paid leave. First-time mothers who have paid maternity leave, for example, are more likely to
return to work after the birth of their first child than those without it.2 Even the security
provided by job-protected unpaid leave promotes worker retention. Ninety-eight percent of
employees who took unpaid leave under the Family and Medical Leave Act (FMLA) returned
to work for the same employer.3 Conversely, replacing workers is expensive. Average turnover
costs—including recruitment, interviewing, hiring, and training—can amount to anywhere
from 25 to 200 percent of annual compensation.4 And research suggests that the turnover rate
for employees who lack workplace flexibility like paid leave is twice that of those who have it.5
•
Paid leave increases worker loyalty and productivity. Workplace flexibility, including
policies like paid leave, correlate with heightened employee commitment—something all
businesses strive for. Improvements in worker commitment and engagement lead to increases
in effort and performance—and thus to increased profits.6
•
Paid leave improves the competitive advantage of smaller businesses. Small
businesses often have trouble matching the more generous leave benefits offered by larger
employers—resulting in a hiring disadvantage.7 A government-administered paid leave
insurance program levels the playing field for all businesses by spreading the cost of leave.8
•
Paid leave heightens American businesses’ competitiveness in the global
economy. The United States is not among the 163 countries that guarantee maternity leave
or the 145 countries that guarantee sick leave. Other countries have recognized that providing
leave is a matter of economic competitiveness. It’s time for the U.S. to catch up.9
Proven Results for Businesses and Workers
Paid family leave insurance programs are already working well in California and New Jersey, where
businesses are seeing the benefits of increased employee retention, morale, and productivity. These
state programs provide workers with a share of their wages while they care for a family member with
a serious health condition or bond with a new child. The result has been positive for both employers
and workers:
•
An average of 168,000 family leave claims
have been authorized annually in California
since the program’s implementation in 2004.
And nearly 26,000 people have been able to
take paid family leave in New Jersey since the
program’s implementation in 2009.
•
In New Jersey, the program costs are
significantly lower than expected, leading to a
rare payroll tax cut for workers.10
•
“I believe a worker distracted by a
family emergency is not likely to do his
or her best work. I’d rather they stay
home, with compensation… [In New
Jersey, we have chosen to] enact laws
that attract the quality of workers small
businesses need.”
Kelly Conklin, New Jersey
Owner, Foley-Waite Associates
California and New Jersey’s experiences
demonstrate that workers take only the time
they need and no more. During the first five years of California’s program, for instance, the
average worker took a shorter leave than what he or she could take under the law.11
National or statewide paid family and medical leave would provide income to workers
who need to take a limited number of weeks away from work while providing
significant benefits to employers.
The evidence shows that paid family and medical leave can help meet the needs of both employers
and employees. It’s time for our public policies to reflect this reality. A paid leave movement is
building. Learn more at www.nationalpartnership.org.
1
U.S. Department of Labor, Bureau of Labor Statistics. (2010, March). Employee Benefits in the United States National
Compensation Survey: Employee Benefits in the United States, March 2010 (Table 32). Retrieved 13 December 2010,
from http://www.bls.gov/ncs/ebs/benefits/2010/ebbl0046.pdf
2
Boushey, H. (2008). Family Friendly Policies: Helping Mothers Make Ends Meet. Review of Social Economy, 66(1), 67.
Available from http://ideas.repec.org/a/taf/rsocec/v66y2008i1p51-70.html
3
Waldfogel, J. (2001, September). Family and Medical Leave: Evidence from the 2000 Surveys. Monthly Labor Review,
17-23. Retrieved 14 December 2010, from http://www.bls.gov/opub/mlr/2001/09/art2full.pdf
4
Sasha Corporation. (2007, January). Compilation of Turnover Cost Studies. Retrieved 13 December 2010, from
http://www.sashacorp.com/turnframe.html
5
Richman, A., Burns, D., & Buxbaum, L. (2009, May). Innovative Workplace Flexibility Options for Hourly Workers (May
2009). Corporate Voices for Working Families Publication. Retrieved 14 December 2010, from
http://www.cvworkingfamilies.org/system/files/CVWFflexreport-FINAL.pdf
6
Ibid.
7
Appelbaum, E., & Milkman, R. (2006). Achieving a Workable Balance: New Jersey Employers’ Experiences Managing
Employee Leaves and Turnover. Rutgers University’s Center for Women and Work Publication. Retrieved 14 December
2010, from http://www.njtimetocare.com/images/stories/Achieving_Workable_Balance.pdf
8
Ibid.
9
Heymann, J., Earle, A., & Hayes, J. (2007). The Work, Family, and Equity Index: How Does the United States Measure
Up?. The Project on Global Working Families Publication. Retrieved 14 December 2010, from
http://www.hsph.harvard.edu/globalworkingfamilies/images/report.pdf
10
Press of Atlantic City. (2010, November 15). Paid Family Leave / Working well. Retrieved 14 December 2010, from
http://www.pressofatlanticcity.com/opinion/editorials/article_0d6ba980-3a1d-56f7-9101-258999b5d9d0.html.
11
State of California, Employment Development Department. (2009). State Disability Insurance (SDI) Statistical
Information: Paid Family Leave (PFL) Program Statistics. Retrieved 14 December 2010, from
http://www.edd.ca.gov/Disability/pdf/PFL_Program_Statistics.pdf
The National Partnership for Women & Families is a non-profit, non-partisan advocacy group dedicated to promoting fairness in
the workplace, access to quality health care and policies that help women and men meet the dual demands of work and family.
More information is available at www.nationalpartnership.org.
© 2010 National Partnership for Women & Families
All rights reserved.
2