Paid family leave is one of the most commonly discussed topics among policy wonks in the US, which is why at the Association for Public Policy Analysis and Management conference there were six unique sessions on the topic. One of the reasons there is such a staggering amount of research on this topic is because access to leave after birth of a child or adoption can have such a wide range of outcomes for parents and children.
In our research, we’ve almost exclusively focused on paid family leave as an anti-poverty policy. However, at this conference few researchers were focused on the poverty implications. Although I was slightly disappointed I couldn’t learn more about the impact that was most relevant to our work, this was a great opportunity to better understand some of the other most important outcomes paid family leave has.
Who actually takes leave
One interesting finding from multiple researchers was that paid leave was taken by high-income families more than low-income families. This was initially surprising to me because I assumed that these families with additional resources would choose to pay for child care and remain in the workforce to presumably increase their odds of career advancement.
What I overlooked and what these researchers uncovered was the fact that paid leave almost never fully replaces an individual’s wage. A paid leave policy might cover 50% - 80% of someone’s salary for a few weeks. The result of this is that low income workers who are eligible for paid leave actually can’t afford to take it. High-income households have more capacity to absorb this short-term reduction to their income than low-income households. The partial loss of income is too severe for low-income mothers to maintain and they are forced to go back to work much sooner than upper-income mothers.
The gender wage gap
Another gap between intuition and reality, I expected paid leave policies to help shrink the gender wage gap, the logic being that women are better able to stay attached to the work force and earn higher wages as a result. In reality, multiple researchers found that family leave policies were associated with a stagnation in the gender wage gap.
In short, the gender wage gap was shrinking during the 70’s and 80’s as more women entered the workforce, but this effect stalled once states began introducing family leave policies (these were largely unpaid leave policies). The researchers concluded that this stagnation was not because these policies could be thought of as benefits that only women received. While I don’t think the correct conclusion from this result is that paid leave policies are actually sexist, it is important to remember that paid leave isn’t a silver bullet when it comes to equity in the workplace.
Firm effects
One paper presented at the conference was focused on the way that firms responded to paid leave policies. Specifically in the context where firms were faced with a new payroll tax that the government would use to subsidize family leave when it was taken.
They found that firms largely fell into three categories. First, large employers were essentially unaffected. For these companies with hundreds or even thousands of employees, neither the additional tax nor the temporary loss of an employee were particularly harmful.
Second, small businesses were actually hurt by these policies. They were sometimes unable to deal with either the tax or the temporary loss of an employee. This is an important reminder that policymakers should be thinking of ways to balance out the potential downsides of policies like this.
Finally, firms that have large percentages of female employees actually felt this policy as a subsidy. The payroll taxes were offset by the additional benefit their employees were receiving.
We all hope paid family leave can be a way to level the playing field for families. But effects can go different ways in the short-term. Good public policy will help ameliorate these problems to ensure that young children can spend time with parents, furthering their development and helping them escape cycles of intergenerational poverty.