After 25 years, it’s time for paid leave

Twenty-five years ago, barely two weeks after Bill Clinton was sworn in as president, he signed his first piece of legislation: The Family and Medical Leave Act. The law provides most workers with the job-protected right to take unpaid time off from work to care for a new child, a sick family member, or one’s own health. Now, it’s time to update the law to include paid leave.

Since its passage, the Family and Medical Leave Act of 1993 has served as a lifeline for workers, having been used more than 200 million times. But the law alone is not enough to address the needs of families in today’s economy: It only covers 60 percent of workers. Those who are excluded are disproportionately low-income and less educated. And even those who are eligible for unpaid time off do not take it, primarily because of financial reasons. Lack of access to paid leave has long-term economic effects as well, such as lower labor-force participation and reduced lifetime earnings.

That is why Congress needs to pass a comprehensive federal paid family and medical leave policy and the president needs to sign it. Federal policymakers can learn from the experience of the states such as California, New Jersey, and Rhode Island, all of which boast successful state paid leave laws, to craft a policy that is based on evidence garnered in our own backyard.

Last fall, we wrote a paper for The Hamilton Project at The Brookings Institution on the updates to U.S. labor policies that are necessary to address the concerns of 21st century families. In our report, we dug into the research to outline what must be included in a federal paid leave policy that benefits workers and their families while improving broad-based economic growth. Based on the evidence, we proposed that a successful paid leave policy must include the following:

1. Cover the range of family and medical needs that require time away from work. Much of the discussion today around paid leave centers on parental leave to care for newborn children, but an effective paid leave program must include leave for workers to address their own illness or that of a family member. As the population ages, an increasing number of workers need time off to care for an aging parent or relative. And over half of those who used unpaid leave last year did so to address a personal medical concern.
2. Be available to all workers, men and women, equally. An effective paid leave program should cover all workers regardless of employer identity or size, or the worker’s full-time or part-time status. It should also use an inclusive definition of family. Furthermore, paid leave should be gender neutral, following the example of the Family Medical Leave Act in providing eligible men and women with the same amount of leave.
3. Provide adequate length of leave to address care needs. Paid leave should entail at least 12 weeks of leave, allowing families enough time to deal with a serious illness or to care for a new child.
4. Have a sufficiently high replacement rate to make a difference in people’s lives. Wages should be replaced at a level sufficient to protect families at a time when household expenses rise. We suggest that, at the minimum, a national policy mimics New Jersey’s 66 percent wage replacement with a cap that prevents benefits from being overly generous to high-income families.

Each of these principles is based on evidence from the states, as we detail in our paper. In order to avoid burdening employers, all of the state programs are based on a social insurance system. That means the state governments collect a small payroll tax from employees (and in certain states, employers as well) and then pays out benefits directly to workers. A version of these models could be easily replicated at the federal level.

These policies have been overwhelmingly successful, with these states seeing, for example, increased labor-force participation, hours worked after the birth of a child, and a decline in the use of public assistance to cope with family medical emergencies. To date, there is no evidence that firms experience higher employee turnover or rising wage costs. In fact, a study done by Pew Research Center found that paid leave makes it more likely that workers return to their original employer compared to unpaid leave.

The 25-year-old Family and Medical Leave Act is not enough for workers or the U.S. economy today. A well-designed federal paid leave program based on a social insurance model would benefit U.S. workers and the U.S. economy alike.