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Home Publications Blogs CEPR Blog When Will It Pay to Take Family and Medical Leave?

When Will It Pay to Take Family and Medical Leave?

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Written by Helene Jorgensen   
Thursday, 19 June 2014 00:00

What does the United States have in common with the countries of Liberia, Sierra Leone, Swaziland, Samoa, and Papua New Guinea? Not much, other than being the only six countries in the world that do not mandate paid maternity leave. In fact, the Unites States does not provide for paid leave to employees who become sick with a serious illness either, nor to parents to care for a sick child or adult children tending to an ailing parent.

In 2012, 2.5 million private-sector workers did not take needed leave for family and medical reasons because they did not have access to paid leave and therefore could not afford to do so. Employees who do take unpaid leave can experience serious financial hardship as result of their leave, and about one in three workers incur debt as result of taking leave without receiving any pay.

The United States lags far behind other high-income countries in terms of workers’ access to leave, duration of leave and pay during leave. After a decade of political wrangling, Congress passed the Family and Medical Leave Act (FMLA) in 1993 to provide job-protected leave for up to 12 weeks. However, the law does not require leave to be paid, and fully 44 percent of all private-sector employees are not even eligible for FMLA leave because they work for a firm with less than 50 employees, have been with their current employer for less than a year, or did not work a sufficient number of hours over the past year.

Small firms with less than 50 employees were exempt from the law because of concerns that family and medical leave events would create a heavy burden on these firms. However, our analysis of the Department of Labor’s Family and Medical Leave in 2012 Survey of worksites found little evidence in support of the “heavy burden” argument. Of worksites of small firms that stated they provided family and medical leave in compliance with the FMLA, only one percent reported a negative effect. On the other hand, the exemption of small firms has created an unjustifiable discrepancy in access to leave for the 35 million workers in these firms, who risk losing their job in an event of a new child or the misfortune of serious illness of self or a close family member.

While some employers choose to provide some paid family and medical leave for their employees, because it makes good business sense, many others do not. It turns out that the kind of job one works in is a good predictor of the leave policy in place, or not in place as the case may be. The majority of college graduates have access to employer-provided paid family leave, but less than one-third of workers with no college experience do. To make matters worse, workers with lower educational attainment typically have lower family incomes and savings, and thus have fewer financial resources to draw upon during an unpaid leave event. This, combined with a higher rate of unmet leave needs, creates a highly unequal access to family and medical leave that is further exacerbated by economic status.

To remedy the lack of access to paid leave, the Family and Medical Insurance Leave (FAMILY) Act, was introduced in the U.S. Congress in 2013. The FAMILY Act would establish a federal insurance fund to be funded by a combined employer-employee contribution, and provide for up to two-thirds wage replacement during a leave event. Because pay during leave is paid out of a trust fund, employers would not incur any direct costs when an employee takes leave. As the richest country in the world, the United States can surely afford to provide paid leave, a right taken for granted in many other countries.

Tags: FMLA | medical leave | paid family leave | private-sector workers

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