Paid Family Leave Laws Aren't Crushing Business, Despite What Ted Cruz Says

Another conservative talking point is falling apart.
Research shows paid leave is good for new dads and moms -- and not bad for their employers.
Research shows paid leave is good for new dads and moms -- and not bad for their employers.
Steve Dunwell via Getty Images

Paid family leave is finally getting serious attention in Washington and on the campaign trail, as politicians are waking up to the financial struggles of people who need time away from work to care for newborns, newly adopted children or sick relatives. But efforts to create laws guaranteeing paid leave are running into opposition from conservatives and business groups who say, among other things, that such programs will burden business and drag down the economy.

Now a new report has come to the exact same conclusion that past research has: The fears of conservatives and business owners are misplaced.

The report focuses on Rhode Island, which in 2013 became the third state to approve a paid leave law. Its program allows all private sector and some public sector workers up to four weeks of leave and pays out about 60 percent of salary during that time, with a cap of $790 in replacement wages a week. To qualify for the program, employees must have worked previously in Rhode Island and earned at least $11,520 there. To finance the benefits, the state imposed a small payroll tax, which officials calculated would cost just 64 cents a week for the typical employee making $40,000 a year.

Rhode Island’s program took effect one year ago, and the timing of the report, one of the first to assess aspects of the law’s impact, is perfect. Paid family leave has come up repeatedly in the presidential campaign, with both former secretary of state Hillary Clinton and Sen. Bernie Sanders (I-Vt.) calling for legislation that would guarantee leave to all workers in all states -- and several Republicans coming out against such proposals. “I think maternity leave and paternity leave are wonderful things. I support them personally,” Sen. Ted Cruz (R-Texas) said in the fall. “But I don’t think the federal government should be in the business of mandating them.”

Proponents argue that paid leave laws have multiple beneficial effects, and they have a lot of evidence on their side. Studies have shown that paid leave laws increase the likelihood that new parents who want to work, particularly women, can stay in the workforce over the long run. Other studies have found that access to paid leave leads to better child health, possibly because it increases the likelihood that new mothers will breastfeed -- or because paid leave allows new parents, fathers as well as mothers, to be more attentive to their newborns’ health and medical needs.

In every other developed country, paid leave is a universal right. In most of the U.S., paid leave is at the discretion of the employer, which is why just 13 percent of employees have access to it right now, according to the National Partnership for Women and Families. Low- and middle-income workers are the least likely to have paid leave, since their employers are the least likely to offer the benefit. Of course, those workers are also the ones who need it the most. They’re the ones living paycheck to paycheck, using every dollar just to cover rent, food and other basic necessities. Without some kind of income, they can’t take extended time away from work.

The conservatives and business leaders who oppose paid leave laws don’t generally dispute the benefits for workers and their families. They warn, instead, about the new taxes and -- especially -- the burden paid leave laws put on employers, who must fill lengthy vacancies whenever workers take time off. Such arguments came up repeatedly in 2013 in Rhode Island, when legislators there were debating about their paid leave bill. "I think it will raise holy hell for small businesses," David Bates, a Republican state senator, told the Associated Press at the time. "There is just no way this is good for the employer."

The new report, which the U.S. Department of Labor helped to finance, represents an attempt to see whether such dire predictions came true. From the looks of things, they haven’t, at least not so far.

The study actually has two parts. One compared small- and medium-size businesses in Rhode Island to counterparts in two neighboring states, Connecticut and Massachusetts. It focused on the food and manufacturing industries and found no signs that the law had affected Rhode Island’s firms adversely -- although, as the authors concede, the small data size meant that they couldn’t say so definitively.

HuffPost Infographic by Alissa Scheller.

The other, more significant finding came from a survey of Rhode Island employers that the researchers conducted. The poll asked respondents what they thought of the new law. Sixty-one percent said they strongly supported or were somewhat in favor of the law, while another 15 percent said they had no strong feelings either way. Twenty-four percent said they opposed the program, somewhat or strongly -- a significant portion, to be sure, but still a clear minority. And the survey doesn't even include large employers who, because they have such vast workforces, can most easily accommodate extended absences from individual employees.

It's just one survey. But the findings echo media reports from Rhode Island over the last few months. Based on those accounts, the program has been a hit with employees and hasn’t bothered most employers. Even some state legislators who voted against the law say they are rethinking their opposition. “I’ve had a chance to see it in effect,” Christopher Ottiano, a Republican state senator, told The New Republic’s Rebecca Leber. Ottiano, a physician who specializes in spinal problems, said he has noticed relatives of his elderly patients using the program to take time off. Had he been considering the policy today, Ottiano said, “I’d probably vote for it.”

The new study is also consistent with other research and media accounts, including studies of California’s program, which offers up to six weeks of paid leave and has been in place for more than a decade. The debate leading up to the enactment of that program also featured predictions of economic problems that never materialized.

Jane Waldfogel, a Columbia University professor of social work and co-author of the report on Rhode Island, told The Huffington Post, “I think our findings -- consistent with those from California -- suggest that these state laws are not having a negative impact on employers. So that’s good news. And we find that a majority of employers -- even small ones -- support the law. That’s good news too.”

One key difference between the existing state laws and the national proposals from Democrats is the maximum duration of leave. The leading proposal in Congress would allow workers to stay away from work for as many as 12 weeks. The Democratic presidential candidates say 12 weeks of leave is their goal as well.

But the data shows that most workers in the U.S. take only a portion of allowed time, and in other countries, governments guarantee paid leave that can last for months -- or even more than a year. Research on those programs showed that the result was higher productivity and workforce participation for women, and their economies don’t appear to be suffering as a result.

Betsey Stevenson, a University of Michigan economist who focused on work-family policy while serving in the Obama White House, says the evidence on paid family leave points in one clear direction. "The Rhode Island study confirms what many other research studies have found -- paid family leave offers families needed support without harming employers," she said. "Just like every other developed country has been able to provide this kind of security to their citizens without harming their businesses, California and Rhode Island have learned that American businesses can thrive while still supporting families."

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