Earlier this week, I wrote about the differences between academics and policy analysts and how policy analysis needs to be more comprehensive than research to be relevant to policymaking decisions. I used the example of the papers I heard presented at the APPAM Fall Research Conference about paid family leave and how those were narrowly focused on labor market outcomes. I may have left that session wanting to hear more about the whole range of benefits and costs associated with paid family leave, but there are people out there who are doing the kind of work I find most interesting.
In February of this year, Prenatal-to-3 Policy Impact Center released a cost-benefit analysis of a paid family leave proposal in Pennsylvania. They looked at all the different ways this program could impact people’s wellbeing, and condensed it into an incredibly readable report. Here are some of the key takeaways they found:
Positive Net Benefits
The Pennsylvania proposal would offer a 20-week paid family leave program funded by a 1% payroll premium split between employers and employees. These researchers found that it would generate an estimated $379 million in annual net benefits. Over a lifetime, the net benefits per birth year reach $1.7 billion. When compared to the costs of this program, this represents a benefit-cost ratio of $18 of benefits for every $1 of costs.
Positive Economic Impact
The program is projected to increase maternal employment, boost earnings for families with infants, and reduce infant care costs. Additionally, businesses would benefit from decreased job turnover, increased productivity, and more female leadership. This reinforces the idea that paid family leave is beneficial not just for families but for the broader economy as well.
Public Health Benefits
The analysis links paid leave to improved food security, reduced infant hospitalizations and mortality, increased breastfeeding rates, better postpartum health for mothers, and a decrease in severe child maltreatment. These public health benefits underscore the policy's potential to promote public health and reduce long-term healthcare costs.
Reduced Societal Costs
The program is expected to lead to significant cost savings in healthcare, special education, criminal justice, and subsidized child care. By supporting families during critical periods, paid family leave can help mitigate long-term societal costs. We’ve seen in other contexts how this kind of short-term assistance can help bridge the gap for some people and enable them to achieve better long-term economic stability.
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Any policy that can return hundreds of million dollars in annual net benefits is worth considering for policymakers. This is not to say that paid family leave is a silver bullet that will solve all our problems by any means, but it does seem to make things better for a lot of people.
Some people may still be negatively affected by a paid family leave program. I’ve written before about how different firms feel the costs and benefits of these programs differently. Policymakers who are excited about the topline benefit number should also be thinking about how they can use these social dividends to help support the people and businesses that might be individually worse off as a result of this policy.
This type of comprehensive policy analysis provides the most useful information to policymakers. Doing this type of analysis, however, would be impossible without the contributions of academic research. Analysts need academics to create this rich literature so we can understand all the impacts a policy might have, and policymakers need analysts to wade through all that research and pull out these comprehensive insights to guide their decisionmaking process.