By Shriya Chitale
As of 2020, the United States is the only developed country to not guarantee paid maternity and paternity leave. Despite the proven social and economic benefits of paid family leave, comprehensive federal legislation regarding paid family leave has yet to be passed. For parents, this creates a complicated situation — many are forced to choose between risking economic hardship to stay at home for a short period with children, or returning to work and losing that time with their children. In a country where dual-income households are a norm, it’s imperative to consider the economic benefits of guaranteed paid family leave.
Currently, the only federal legislation concerning family leave is the Family and Medical Leave Act. The act provides eligible workers with 12 weeks of unpaid leave for serious illness, to care for a newborn or newly adopted child or fostered child, to care for an ill family member, or for specific military purposes. While after its passage, employee-retention rates slightly improved, the acts’ inadequacies created several issues. The primary concern is the fact that the act only accounts for unpaid leave. While 59% of American workers were covered by the act, those that were actually able to make use of the act are far less. Reports from the Obama administration detail that though educated women were more likely to take leave, women from lower-income communities could not take the financial burden of unpaid leave. Others may be pressurized by employers to not take leave. The cumulative effect of such failures outweighs the benefits associated with unpaid leave.
Still, debate concerning paid family leave is contentious; politicians, businesses, and citizens alike may be concerned about the prospect of tax increases and labor market re-entry difficulties. Analyzing the economic consequences of paid family leave across nations that have already implemented such legislation can provide insight into potential consequences in the United States.
Sweden’s paid family leave program has been largely regarded as successful and a model for other countries. Sweden’s legislation provides for 480 days of paid parental leave, at 80% of each parent’s salary. Both fathers and mothers must take at least some of those 480 days. In Sweden, such actions have improved both business outcomes and economic conditions. According to reports from Sweden’s labor departments, paid leave has increased the female workforce, in turn increasing economic growth. There is less of a disincentive to hire women, as both men and women are likely to take time off to care for children. Additionally, it addresses concerns regarding a woman’s re-entry into the labor market — in Denmark, though paid leave is provided for, fathers aren’t required to take some of the days. Thus, for women in Denmark, integration back into the labor market, and career trajectories are in part, impacted. In Sweden, this isn’t as severe of an issue, with women consistently following the same career trajectory as men.
Sweden’s welfare system in general is far more extensive than the United State’s — Japan, a mixed economic model, has other similar systems to the United States. In Japan, paid family leave is both guaranteed for fathers and mothers. The legislation was passed in order to incentivize family planning in the country, where population rates are in steep decline. In Japan, similarly to Sweden, paid family leave programs have boosted economic growth.
In the United States, there are far more businesses/a larger entrepreneurial presence. Thus, for many corporations, paid family leave is offered as a benefit. However, only 17% of businesses in the United States provide this service. Thus, in the United States, funding paid family leave through payroll taxes may be the best option. In California, a state that has taken measures to provide paid family leave, the tax is approximately 0.5%. Further, in the United States, paid family leave is likely to save business costs concerning turnover. Large-scale data indicates that there are no negative impacts on long-term employment and wages associated with paid family leave. Moreover, it’s likely to bridge the gap between lower-income families and wealthier families.
In today’s evolving economy, adjustment is more necessary than ever. Increasing amounts of families are dual-income, both out of choice and necessity. For women, paid family leave provides for better integration back into the workforce. It’s imperative that the United States takes action to provide a desperately needed benefit to the people. □
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- Scott, Elfy. “Why Is the U.S. the Only Developed Country Without Paid Maternity Leave?” Buzzworthy, 4 Oct. 2017, www.buzzworthy.com/why-is-the-us-so-behind-regarding-maternity-leave-policy/.
- Furman, Jason, and Betsey Stevenson. “Why Our Economy Needs Paid Leave.” National Archives and Records Administration, National Archives and Records Administration, 2015, obamawhitehouse.archives.gov/blog/2015/01/15/heres-what-president-announced-today-about-paid-leave.
- Ismiris, Bodil. “Denmark Has Great Maternity Leave and Child Care Policies. So Why Aren’t More Women Advancing?” Harvard Business Review, 11 May 2018, hbr.org/2018/05/denmark-has-great-maternity-leave-and-child-care-policies-so-why-arent-more-women-advancing.
- Kane, Libby. “Sweden Is Apparently Full of ‘Latte Dads’ Carrying Toddlers – and It’s a Sign of Critical Social Change.” Business Insider, Business Insider, 4 Apr. 2018, www.businessinsider.com/sweden-maternity-leave-paternity-leave-policies-latte-dads-2018-4.
- Rossin-Slater, Maya, et al. “The Effects of California’s Paid Family Leave Program on Mothers’ Leave-Taking and Subsequent Labor Market Outcomes.” Journal of Policy Analysis and Management : [the Journal of the Association for Public Policy Analysis and Management], U.S. National Library of Medicine, 2013, www.ncbi.nlm.nih.gov/pmc/articles/PMC3701456/.