Eileen Appelbaum is a senior economist at the Center for Economic and Policy Research.
February 5 marks the 20th anniversary of the Family and Medical Leave Act, passed with bipartisan support in Congress and signed into law by President Bill Clinton. The the law guarantees up to 12 weeks of unpaid job-protected leave for eligible workers in case of their own serious health problem, to care for a seriously ill family member, or to bond with a new child.
The law has been a great success. Since 1993, the Family and Medical Leave Act has been used more than 100 million times by women and men and has been a boon for those who have had to provide much needed care for themselves or their families.
And it turned out to be a non-event for employers. Newly released results from the Department of Labor's 2012 Family and Medical Leave Act employer survey found that more than nine out of 10 employers reported no noticeable or a positive effect on "employee productivity, absenteeism, turnover, career advancement, and morale" or on "business profitability." Intermittent leaves are rare and have similar effects. Less than 3 percent of employers report suspicions of misuse and less than 2 percent report confirmed cases.
Yet, as we celebrate what the Family and Medical Leave Act has achieved, we note it was always intended as an important first step in making it possible for U.S. workers to be responsible employees and good parents and family members. Much unfinished business must still be addressed if the law is to live up to its promise.
The reality is that only a little more than half the U.S. workforce, and less than one fifth of new mothers, are covered by the Family and Medical Leave Act, and even they often cannot afford to take unpaid leave. A handful of states—California, New Jersey, Rhode Island, New York and Hawaii—have temporary disability programs that let workers collect income when they experience serious health problems or have a baby. Apart from this, however, paid leave is available only to workers whose employers provide it as part of a package of fringe benefits. With the exception of union members, non-college educated workers and others in jobs with low pay and status very often lack access to paid leave. The result is that millions of American workers are forced to sacrifice economic security to provide vital care for their families.
Against this background, the establishment of paid family leave programs in California in 2002 and in New Jersey in 2008 was a major breakthrough. In conjunction with temporary disability programs, these states' workers, who since the 1940s have been able to collect partial wage replacement for up to a year for their own serious health problem, are now able to receive income for up to six weeks when they need family leave.
In Unfinished Business, a forthcoming book I coauthored with City University of New York professor Ruth Milkman, we examine California's paid family leave program. Despite the fact that it is fully funded by workers' payroll contributions with no direct costs to employers, business groups feared that the program would be a financial burden and vulnerable to fraud and abuse. These fears proved to be unwarranted. We found that 87 percent of employers reported that the program had not resulted in any cost increases; some employers reported cost savings via reductions in employee turnover and/or their own benefit costs, when they coordinated generous company benefits with the state program. Nine out of 10 employers, notably including small businesses, reported either positive effects or no effect on business operations—on productivity, profitability/performance, turnover, and morale. As for abuse, 91 percent of employers were aware of no abuse by their employees, and among the other 9 percent it was a relatively rare occurrence.
California's paid family program has led to better economic, social, and health outcomes for those who have used it. Wage replacement levels were significantly higher for workers who used paid family leave than for those who did not, especially for workers in low-quality jobs. Among these workers who used the program, 84 percent received half or more of their usual earnings while on leave, compared with only 49 percent who did not use paid family leave . Moreover, workers in low-quality jobs who used the program were more likely to return to the same employer after a family leave, more satisfied with the length of their leave, and better able to care for newborns and make child care arrangements.
Our findings suggest that programs that support workers when they need to care for their families can make a positive difference in their lives without imposing undue costs on employers, many of whom may actually benefit. The paid family leave and temporary disability insurance programs in California and New Jersey provide path-breaking and positive examples that can be replicated in other states and nationally.