Executive Summary

Paid Parental Leave programs allow expecting and new parents to take time from work while maintaining a paycheck, with the guarantee/expectation that they can/will return to work after leave expires. Amid the ongoing push for expanded PPL, this brief aims to analyze the past and future outlook for such initiatives. 

‍

Discussion & Historical Context

First, the distinction between maternity leave and parental leave must be made. Maternity leave, specifically granted to mothers, grants time off from work, either paid or unpaid, whereas parental leave provides both parents time off to care for their children. The funding for PPL varies by country and can involve different mechanisms. In many countries, the government funds PPL through social insurance programs or general taxation, providing a certain percentage of the employee's salary during the leave period. In other cases, employers may be required or choose to provide PPL benefits, either fully funded by the company or as a top-up to government benefits.  Paid Parental Leave ¹ Some models involve cost-sharing between the government, employers, and employees, often through payroll taxes or contributions to a social insurance fund.

While the concept of PPL began gaining attention in the early 20th century, primarily in Europe as part of broader social welfare policies, Sweden had become one of the first countries to introduce a form of paid maternity leave in 1901. After World War II, many European countries expanded their social safety nets, including PPL, to support families and promote population growth. In 1969, Sweden introduced the first paid parental leave program that included both mothers and fathers. Swedish parental leave and gender equality ²In the United States, the debate over paid parental leave (PPL) has led to the Family and Medical Leave Act (FMLA) of 1993, which grants unpaid leave.

Meanwhile, countries such as Canada and Australia began adopting more comprehensive PPL policies in the late 20th century. In the 21st century, many countries continue to enhance their PPL policies to reflect evolving family dynamics and labor market needs, with gender-neutral parental leave policies promoting equal child-rearing responsibilities between parents. Paid Parental Leave (PPL) Quick Reference Guide | Office of Human Resources ³The multifaceted issue with paid parental leave creates significant implications for families, employers, and society at large. It involves balancing the needs of parents for time off and income support with the practicalities of funding and administering such programs. Historical developments show a trend towards recognizing the importance of PPL in promoting family well-being and gender equality, leading to diverse approaches in its implementation globally.

Current Plans

As paid parental leave (PPL) programs gain prevalence across the United States, it is critical to analyze the effectiveness of the various PPL implementation strategies. PPL under FMLA only guaranteed certain groups of men and women 12 weeks of protected, unpaid leave to care for any member of their family who may need temporary assistance. This significantly lags behind the rest of the world, as the US is one of only eight countries that does not universally guarantee family leave. 

‍While the global average hovers around 14 weeks of paid leave, many European countries provide a full year of maternity leave, far more extensive than current US policy. Paid parental leave includes maternity, paternity, and/or adoption leave, reserved for families needing extra time to care for a newborn or young child. Across the country, PPL is mandated in 13 states (California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island, Washington, Colorado, Delaware, Maine, Maryland, Minnesota, and Oregon) and DC. A further 8 have established voluntary programs allowing users to enroll in private insurance. Funding mechanisms poses as the most significant difference between PPL programs. All of the mandated systems (except for New York) utilize a “social insurance program” funded by payroll taxes, very similar to programs including Social Security. The size of the tax is largely dependent on the length of time off given by the state. Researchers estimate that a national paid leave program funded by this system would require a 0.62% payroll tax increase. 

On the other hand, the remaining states necessitate that employees seek private insurance to grant them their leave. However, this process is not homogenous across the country. For example, New York has established the state-run New York Insurance Fund to offer coverage, New Hampshire and Vermont have created a base plan, and states including Virginia and Texas are completely reliant on the private market. These dissimilarities are reflected in the differing lengths of paid time off. Many states offer a paid 6-12 weeks, others simply set a minimum at 2+ weeks, and the remainder allows the private insurer to dictate terms. Altogether, there is a distinct variation in the current implementation of PPL programs, largely based on guaranteed vs voluntary systems, relying on payroll taxes vs private insurance. 

Public Appreciation

Paid parental leave has progressively become a central point in discussions about employee benefits, economic policies, and public health. Its significance is multiplex, impacting individuals, businesses, and states alike. PPL is valued across these sectors. 

‍Paid parental leave provides individuals with financial stability. Raising a child for one year ranges from $16,000 to $19,000. Without support, managing this costly responsibility may not be unattainable for many families. PPL mitigates this financial burden by providing necessary assistance in a transitional time when parents are acclimating to elevated expenses and possibly a lowered income. In addition to financial relief, PPL allows parents to spend extended time with their newborn, which supports improved breastfeeding rates and enables them to adjust to their roles. This time is crucial not only for parental bonding but also for child development. Prolonged parental leave directly correlates with better cognitive and psychological growth in children. Specifically, for every extra month of leave, children exhibit a 4.7% increase in welfare, a 3.5% boost in concentration, and a 2.8% rise in emotional resilience. Paid parental leave also plays a vital role in health and recovery. New mothers typically require 6-8 weeks to recover from childbirth. This time off facilitates this recovery, which helps in mitigating postpartum depression–a condition affecting 1 in 7 new mothers. 

From a business perspective, paid parental leave is advantageous. It enhances employee retention. The expense of replacing an employee can reach up to 20% of their annual salary. By reducing turnover, paid parental leave extenuates these costs, with companies that offer such benefits seeing up to a 70% reduction in employee attrition.  PPL also attracts highly qualified candidates. 83% of millennials indicated they would be more likely to accept a job with a company that offers paid parental leave in comparison to businesses that don’t. This suggests that offering PPL is a critical factor in embellishing a company’s appeal to top talent, potentially leading to a more competitive workforce and improved recruitment outcomes.

On a broader scale, paid parental leave has significant implications for states and their economies. The improvement in public health outcomes poses as one of the major benefits. Leave is associated with an increase in the likelihood of infants being fully vaccinated. This greater vaccination rate not only protects individual children from preventable diseases but also contributes to broader public health by reducing incidences of outbreaks and lowering healthcare costs. PPL contributes to substantial state economy benefits by enhancing consumer spending, as families maintain their income during leave periods. This financial stability supports local businesses and stimulates economic activity. Together, these factors promote a healthier, more productive workforce and contribute to long-term economic growth, benefiting the broader state economy.

Public Disapproval

Numerous reasons, both in state legislatures and the corporate community, contribute to the absence of widespread support for paid parental leave in the United States. The financial strain that paid parental leave places on employers is one of the main arguments against it. Payroll costs might go up when paid leave is offered, which is a major worry for small and medium-sized enterprises. Employer and employee payments are frequently used to fund paid leave programs, which raises the possibility that enterprises are paying an additional tax.  

The implementation of paid leave presents significant operational obstacles, particularly for small enterprises. When workers take long absences, they could struggle to keep up productivity and manage tasks. Further, research indicates that paid leave programs may lead to hiring biases, especially for younger women, as they are statistically most likely to take leave. This is because profit-oriented businesses would rather avoid the costs PPL brings, a form of hiring discrimination difficult to legislate against. That is why Dutch researchers conclude that “women suffer wage penalties of 0.4 percent per month of parental leave and 1.3 percent per year beyond the initial year of parental leave…each year of parental leave decreases wages by 18 percent.”

Attitudes regarding government action and the political climate both have a big impact. Policies that are seen as assistance programs are frequently met with resistance in states that place a high priority on individuality and minimal government. Minimal government intervention in private and economic affairs is a top priority in these states.When there is no federal mandate, state policies are disjointed. While some states rely on voluntary measures or have no provisions, others have comprehensive paid leave schemes. The efforts to develop a national standard are complicated and this inconsistency creates a competitive imbalance.

In conclusion, political beliefs, operational difficulties, financial implications, and operational concerns are the main reasons for the opposition to paid parental leave in the United States. The approach is nevertheless fragmented and uneven nationwide, despite the fact that some states have passed their own laws to fill the void left by the absence of a federal mandate.

‍Policies limiting paid parental leave have had a big impact. Due to the lack of a legislative mandate, paid leave is not universally available, which frequently disadvantages low-income and part-time employees who are less likely to have their employers provide this benefit. This adds to the larger problems of gender inequality in the workforce and economic inequality.​ At the state level, attempts to resolve these problems have yielded differing degrees of success. Some states have passed paid family leave legislation, such as California, New York, and Washington; these laws have been warmly accepted and have produced benefits for both companies and employees. The federal debate over a national paid parental leave policy has continued as a result of these state-level achievements.

Policy Options

In many cases, the issue of paid parental leave in the United States is essential, yet it  is characterized by a lack of federal legislation guaranteeing such benefits. Currently, the U.S. stands among a handful of nations worldwide without a national paid leave policy. In fact, there is no federal law that guarantees paid parental leave in the United States.The Biden-Harris Administration pushed forward with efforts to address this gap, albeit with limitations and challenges. Notably, in a 2023 memorandumThe administration supported initiatives such as extending 12 weeks of paid parental leave to military personnel, which aimed to improve support for service members and their families. This expansion, under the Military Parental Leave Program, would signify a huge step towards equity, especially in caregiving responsibilities, allowing both primary and secondary caregivers to take time off without compromising on their jobs.

Furthermore, the Administration collaborates with state legislators to bolster these kinds of initiatives at the local level. Currently, 11 states and the District of Columbia have enacted their own paid leave laws, demonstrating a patchwork approach to fill the federal void, which the FMLA may not be adequate to cover alone. Particularly since the NPWF’s study estimates that 44% of U.S. workers are not even eligible for FMLA leave.President Biden's proposed budget for fiscal year 2025 describes a broader vision for national paid family and medical leave. The proposed $325 billion program, administered through the Social Security Administration, aims to provide up to 12 weeks of paid leave for various caregiving purposes, including bonding with a new child or addressing personal health needs. Despite these ambitious plans, challenges loom large in Congress, where budget constraints and political negotiations threaten the scope and longevity of such initiatives. Despite a brief moment of bipartisan support for PPL in 2023 in the wake of the overturning of Roe v.s. Wade,  the biggest challenge today remains garnering support from both sides of the aisle towards equitable policy actions in the sphere of Paid Parental Leave. 

Options on the table include altering the duration of leave, means testing eligibility based on income levels, or imposing time limits to mitigate costs.

However, some critics do argue that such compromises will risk diluting the impact of paid leave policies, potentially undermining their effectiveness in supporting families and promoting workforce participation, particularly among women. The intersection of economic security, gender equality, and healthcare access underscores the stakes involved in shaping a comprehensive paid leave framework in the U.S. While strides have been made, particularly through recent legislative victories such as the Pregnant Workers Fairness Act and the PUMP for Nursing Mothers Act, the road to universal paid parental leave remains uncertain.The call for equitable access to paid leave continues to be of incredible importance across the nation. Advocates emphasize the social benefits of such policies, citing enhanced job retention, improved child health outcomes, and greater gender equity in the workplace will ultimately “domino effect”  into economic advances for the nation.While progress has been made through targeted policies and state-level initiatives, the quest for federal paid parental leave in the U.S. remains somewhat of a work in progress. 

Looking to other countries for improvement on the efficacy of policies in the U.S. provides a key strategy to refine the quality of PPL. For instance, Bulgaria allows for a transfer of Paid Parental Leave from one parent to the other, an important step oriented in the direction of equal parenting. Even looking to states such as New Jersey and California which have opted to create their own laws on the issue could provide a framework for stronger future federal action. Additionally, by targeting resources where they are most the most crucial–such as low-income areas– sharing the potential financial burden of PPL jointly between the state and private companies, and allowing flexibility, transparency and accessibility in the implementation of any further plans will help to ensure that the benefits of paid parental leave reach a broadest possible spectrum of American families.

Acknowledgment

The Institute for Youth in Policy wishes to acknowledge Eli Solomon, Anagha Nagesh, Nolan Ezzet and other contributors for developing and maintaining the Policy Department within the Institute.

References

1. S. M. Metev and V. P. Veiko, Laser Assisted Microtechnology, 2nd ed., R. M. Osgood, Jr., Ed.  Berlin, Germany: Springer-Verlag, 1998.
2. J. Breckling, Ed., The Analysis of Directional Time Series: Applications to Wind Speed and Direction, ser. Lecture Notes in Statistics.  Berlin, Germany: Springer, 1989, vol. 61.
3. S. Zhang, C. Zhu, J. K. O. Sin, and P. K. T. Mok, “A novel ultrathin elevated channel low-temperature poly-Si TFT,” IEEE Electron Device Lett., vol. 20, pp. 569–571, Nov. 1999.
4. M. Wegmuller, J. P. von der Weid, P. Oberson, and N. Gisin, “High resolution fiber distributed measurements with coherent OFDR,” in Proc. ECOC’00, 2000, paper 11.3.4, p. 109.
5.  Megan A. Sholar, "The History of Family Leave Policies in the United States," Organization of American Historians, accessed July 21, 2024, https://www.oah.org/tah/november-3/the-history-of-family-leave-policies-in-the-united-states/.
6.  U.S. Department of Labor, "Paid Leave," Women's Bureau, accessed July 21, 2024, https://www.dol.gov/agencies/wb/featured-paid-leave#:~:text=Thirteen%20states%20and%20the%20District,leave%20programs%20for%20eligible%20workers.
7.  "State Paid Family Leave Laws Across the U.S.," Bipartisan Policy Center, last modified January 16, 2024, accessed July 21, 2024, https://bipartisanpolicy.org/explainer/state-paid-family-leave-laws-across-the-u-s/.
8.  "State Paid," Bipartisan Policy Center.
9.  Kathleen Romig and Kathleen Bryant, "A National Paid Leave Program Would Help Workers, Families," Center on Budget and Policy Priorities, accessed July 21, 2024, https://www.cbpp.org/research/economy/a-national-paid-leave-program-would-help-workers-families.
10.  Lino, Mark, et al. “Expenditures on Children by Families, 2015.” United States Department of Agriculture, Mar. 2017, fns-prod.azureedge.us/sites/default/files/resource-files/crc2015-march2017.pdf. 
11.   Kristin Samuelson, "Paid family leave boosted postpartum wellbeing, breastfeeding rates," Northwestern Now, last modified November 2, 2023, accessed July 24, 2024, https://news.northwestern.edu/stories/2023/11/paid-family-leave-boosted-postpartum-wellbeing-breastfeeding-rates/#:~:text=Newly%20postpartum%20women%20living%20in,PFML%20legislation%2C%20the%20study%20found. 
12.  IZA Institute of Labor Economics, IZA Newsroom, last modified July 25, 2022, accessed July 24, 2024, https://newsroom.iza.org/en/archive/research/children-benefit-from-longer-parental-leave/#:~:text=For%20each%20additional%20month%20of,fewer%20days%20of%20school%20absence.
13.  Family Doctor Editorial Staff, "Recovering from Delivery (Postpartum Recovery)," ed. Kyle Braadford Jones, Family Doctor, last modified January 2024, accessed July 25, 2024, https://familydoctor.org/recovering-from-delivery/#:~:text=Your%20postpartum%20recovery%20won%27t,to%20feel%20like%20yourself%20again.
14.  March of Dimes Foundation, "Postpartum depression," March of Dimes, accessed July 25, 2024, https://www.marchofdimes.org/find-support/topics/postpartum/postpartum-depression#:~:text=This%20is%20depression%20that%20happens,women%20(about%2015%20percent).
15.  OrgVitality, "Replacing an Employee Cost 213% More Than Previous Employee's Salary," OrgVitality, https://orgvitality.com/blog/business-costs-to-replacing-employees#:~:text=For%20workers%20earning%20less%20than,9%20in%2010%20U.S.%20workers.
16.  "The State of Paid Parental Leave: Facts and Statistics from 2023," Parento, last modified November 9, 2023, accessed July 25, 2024, https://www.parentoleave.com/blog/the-state-of-paid-parental-leave-facts-and-statistics-from-2023.
17.  Maven Team, "Why paid maternity leave is a win-win for employers: Unveiling the hidden benefits," Maven, last modified January 22, 2024, accessed July 25, 2024, https://www.google.com/url?q=https://www.mavenclinic.com/post/benefits-of-paid-maternity-leave-for-employers%23:~:text%3DAnd%2520for%2520employers%252C%2520paid%2520parental,ability%2520to%2520attract%2520top%2520talent&sa=D&source=docs&ust=1721920196285246&usg=AOvVaw1kMNWuR6gsq2DxOX73Ks-d.
18.  Agnitra Roy Choudhury and Solomon W. Polachek, "The Impact of Paid Family Leave on the Timing of Infant Vaccinations," IZA Institute of Labor Economics, last modified July 2019, accessed July 25, 2024, https://docs.iza.org/dp12483.pdf.
19.  World Economic Forum. “Employers in the US are cutting back on parental leave, survey shows.” Last modified October 3, 2022. Accessed: July 30, 2024. https://www.weforum.org/agenda/2022/10/maternity-paternity-parental-leave-employers/
20.  Gayle Kaufman, Fixing Parental Leave the Six Month Solution Gayle Kaufman [aut] (New York, N.Y: New York University Press, 2022), accessed July 21, 2024.
21.   Kaiser Family Foundation. “Paid Leave in the U.S.” Last modified: December 17.2021. Accessed: July 30, 2024.  https://www.kff.org/womens-health-policy/fact-sheet/paid-leave-in-u-s/
22.  Carlson, Falletta, et al. “ Recommendations for Creating Equitable and Inclusive Paid Family Leave Policies.” Child Trends. Last modified: September 7. 2023. Accessed: July 30, 2024.  https://www.childtrends.org/publications/recommendations-for-creating-equitable-and-inclusive-paid-family-leave-policies
23.  Brookings. “It’s time to make paid parental leave happen nationally, and here’s how to do it.” Last modified: June 16, 2017. Accessed: July 30, 2024. https://www.brookings.edu/articles/its-time-to-make-paid-parental-leave-happen-nationally-and-heres-how-to-do-it/
24.  Davis, D.L. “It’s true: The US is an outlier on paid parental leave.”Politifact. Last modified: April 16, 2024. Accessed: July 30, 2024. https://www.politifact.com/factchecks/2024/apr/16/lisa-subeck/its-true-the-us-is-an-outlier-on-paid-parental-lea/
25.  Crawford, K. “Study finds that paid family leave does not hurt employers.” Stanford Institute for Economic Policy and Research. Last modified: April 12, 2021. Accessed: July 30, 2024.
26. https://siepr.stanford.edu/news/study-finds-paid-family-leave-does-not-hurt-employers  
27.  https://www.nytimes.com/2021/10/25/upshot/paid-leave-democrats.html
28.  https://www.dol.gov/agencies/wb/featured-paid-leave#:~:text=While%20many%20workers%20are%20entitled,workers%20in%20the%20private%20sector.
29.  https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/02/fact-sheet-biden-harris-administration-announces-new-actions-to-support-and-advance-womens-economic-security/
30.  https://www.hrdive.com/news/fmla-30th-anniversary-history-paid-leave/641972/#:~:text=Employees%20are%20not%20covered%20by,not%20eligible%20for%20FMLA%20leave.
31.  https://www.washingtonpost.com/politics/2023/12/13/paid-family-leave-congress/
32.  https://www.eeoc.gov/statutes/pregnant-workers-fairness-act
33.  https://www.usbreastfeeding.org/the-pump-act-explained.html#:~:text=%E2%80%8BThe%20PUMP%20for%20Nursing,pump%20milk%20during%20the%20workday.
34. ‍

‍