FAMILY Act, not Vodafone, points way forward on paid family and medical leave

Vodafone made headlines in early March when it introduced a minimum level of paid maternity leave for the full-time employees in its worldwide workforce of 100,000 employees, 500 of them in the U.S. The company clarified that the policy of 16 weeks of paid maternity leave and allowing new mothers six months of return to work on a 30-hour schedule for 40-hours’ pay is a minimum benefit, rather than a company-wide standard. That’s because some countries in which Vodafone operates mandate more generous leave policies. New mothers in the U.K., for example, have a statutory right to paid maternity leave for 40 weeks, and in Italy, new mothers are able to return to work on a 30-hour schedule and receive full pay for a year.

{mosads}In the U.S., where new mothers still have no statutory right to paid maternity leave, the Vodafone announcement was greeted as a bold and exciting move — a small hope for the future of maternity leave. But is it?

Leave benefits in the U.S. are very unequal, with managers, professionals and other highly paid workers far more likely than middle- or low-wage workers to have access to paid leave. According to a government survey of employers, businesses provide short-term disability insurance to workers for a serious illness or maternity leave to three in five business and financial managers and to employees in the top tenth of the earnings distribution. For workers in the middle two quartiles, this falls to 47 and 37 percent respectively, while just 17 percent of low-wage workers — and even fewer part-time workers — have paid medical or maternity leave. The record of employers on family leave is even more dismal. Only a quarter of business and financial managers and 22 percent of employees in the top tenth of the income distribution have access to paid family leave. For middle-wage workers, this figure falls to 15 to 11 percent, and for low-wage workers and those who work part-time, to just 5 percent.

So, should we demand that employers step up and follow Vodafone’s lead? Surprisingly, perhaps, the answer is “no.”

While employers who are able to offer paid family and medical leave benefits are to be commended for doing so, it would be a mistake to require this of all employers. The reason is simple: While every worker is at risk of needing a family or medical leave at some point in their lifetime, just a small fraction of the workforce has a baby, falls ill or needs to care for an ill family member in any given year. Spreading these costs over the entire workforce means that the annual cost of providing this benefit is very low. These benefits can be very expensive, however, for an employer to provide depending on the number of employees that have older parents, are older workers or are women of childbearing age.

This is where insurance comes in. A national insurance program spreads the cost of paid family and medical leave over the entire civilian workforce, keeping the cost low for employers and employees.

This week, Sen. Kirsten Gillibrand (D-N.Y.) and Rep. Rosa DeLauro (D-Conn.) are taking the lead and introducing the Family and Medical Insurance Leave (FAMILY) Act to create a national insurance program to provide partial wage replacement for up to 12 weeks for pregnancy, childbirth or a serious health problem; to care for a new child; to cope with the serious health problem of a family member; or for specific military caregiving. Because the costs are spread out over the entire workforce, the program would require only a small contribution from employers and employees.

Unlike Vodafone, employers would not be expected to cover the costs of employees’ leaves and would not suddenly find themselves with expenses they might not be able to afford. And no worker would be denied access to paid leave because he or she worked part-time or was employed by a business too small or too economically fragile to afford to provide paid family and medical leave. Moreover, with a national paid family and medical insurance program, fathers and adoptive parents would be able to take paid time off to bond with a new child. Workers could take time off to care for a parent who had a stroke or was going through chemotherapy.

Such policies, as Vodafone reported — and as my research with Ruth Milkman on California’s Paid Family Leave program shows — reduce turnover and provide a cost saving to employers compared with the costs of recruiting, training and getting a new employee up-to-speed on a job. Our research also found that workers understand that this is an insurance program: Ninety-one percent of employers reported no instances of abuse of the program, and the small percentage who did see abuse reported very few such incidents.

Three states — California, New Jersey and Rhode Island — now have insurance programs to provide paid family and medical leave to their states’ workforces. The FAMILY Act will guarantee that all workers in the U.S. have access to paid leave when they need it most to care for themselves and their loved ones.

Appelbaum is senior economist at the Center for Economic and Policy Research and co-author of “Unfinished Business: Paid Family Leave in California and the Future of U.S. Work-Family Policy.”