Family-Friendly Policies and the Fight For Wage Equality

Intellectual mother studying
Intellectual mother studying

Patricia Arquette's brief segue on gender wage equality during her acceptance speech at the 2015 Oscars brought into the forefront of international conversation a battle that women have been fighting for decades. The discussions on gender wage gaps had been consistently bookended, but the struggle has remained constant: at similar education and competence, women tend to receive a lower compensation for their work and less opportunities for career advancement. There are several determinants to this problem, but there are also clear and proven solutions to address the issues of gender wage and employment inequality.

In the U.S., the female labor force participation rate hit a plateau in the past two decades. In the 1990's, women's employment rate in the US was the 6th highest among the 22 countries of the Organization for Economic Cooperation and Development; by 2010, the US was 17th. What countries ahead of the U.S. in this ranking have in common are strong parental leave policies. In fact, "family-friendly" policies explain a third of female employment trends according to a study conducted by Cornell professors Francine Blau and Lawrence Kahn, "Female Labor Supply: Why is the U.S. Falling Behind."

Until recently, only two states in the U.S. provided wage replacement for qualifying family leave (California and New Jersey). In July 2013, Rhode Island became the third state after passing the Temporary Caregiver Insurance (TCI) law to provide employees with caregiver leave and wage replacement benefits through employee payroll deductions. Under TCI, employers are required to provide four weeks of job-protected paid leave per year to employees with newborns, or newly adopted children.

An array of benefits can result from this type of legislation. On the firm's side, more generous maternity leave policies improve employee retention. From the employee's perspective, job certainty provides positive incentives to invest in firm-specific human capital, creating stronger labor force attachments, and sending positive signals to employers on job commitment.

Studies have shown that raising women's employment retention over the childbirth period increases women's levels of work experience and job tenure, having a positive effect on their long-term wages and allowing them to maintain good job matches. Supportive maternity leave policies allow women to take time off from work after childbirth without opting-out of the labor force permanently. Thus, policies that facilitate combining motherhood and careers can boost female employment, and can get us one step closer towards wage equality.