Microsoft recently announced it will require its vendors to provide up to 12 weeks of paid leave for new parents. Nice thought, but the tech giant missed an important opportunity. By limiting the required benefit only to new parents, it is ignoring the needs of workers caring for spouses, siblings, or aging parents.
In some respects that’s not surprising. A new study by Lynn Feinberg at the AARP Public Policy Institute finds that of the roughly 100 major US firms that have adopted or expanded paid family leave over the past three years, only about 20 percent made the benefit available to family caregivers. The rest limit it only to new parents.
Expanding leave in the states
However, Lynn reports that the District of Columbia and a half dozen states, including California, New York, and Washington State (home of Microsoft) have done much more. Just since 2016, three states and DC have adopted paid leave. Another 13 jurisdictions have expanded the federal unpaid family leave law to include care for additional classes of relatives. While the federal law applies only to children, spouses, and parents, these states have added grandparents and in-laws.
Every major developed country in the world, except for the US, requires some form of paid family leave. However, time off to care for children is more common and more generous than for other relatives such as aging parents.
Waiting for Trump
In the US, there has been much talk, but no action, on a federal paid leave bill. President Trump endorsed the idea in his 2016 campaign but never come up with a plan. The concept reportedly is a top priority of his daughter Ivanka but it is unclear whether she’d include leave for family caregivers, or just parents.
Some congressional Republicans also support the concept of paid leave, though they disagree widely on the specifics. Senator Marco Rubio (R-FL) introduced a bill that would effectively allow new parents to borrow against future Social Security benefits and use the funds to supplement their income while caring for a new-born. By contrast, many congressional Democrats favor more expansive paid leave funded through a higher payroll tax.
Sen. Bill Cassidy (R-LA) backs broad paid leave that would include caregivers of aging parents and even thinks Congress could pass such a measure this year.
That seems a stretch. So, for now, businesses and the states are the name of the game. All state paid leave laws apply to parents as well as children and most also cover grandparents and in-laws. The length of paid leave varies from four weeks in Rhode Island to 12 weeks in Washington State and Massachusetts. Some states guaranty workers can return to their jobs after their leave and others do not.
The laws also vary in how much of a worker’s wage is paid during leave and, crucially, how the benefit is financed. Most of the paid family leave states fund the program through an employee payroll deduction (or payroll tax, if you prefer). But DC will tax employers while Washington and Massachusetts tax both employers and employees. The rate varies from 0.09 percent of wages in New Jersey to 1.1 percent in Rhode Island.
A growing need
As Lynn reports, the need for a paid leave program is clear and will increase as the Baby Boomers age. About 60 percent of family caregivers work at a paying job and many are trying to juggle full-time careers with time-consuming caregiving responsibilities. About 13 percent who have no access to paid time off say they’ve had to reduce their work hours and 14 percent reported quitting their jobs. Half of employed caregivers are themselves age 50 or older.
More than half of workers who take paid leave do so to deal with their own health issues, while 21 percent are caring for a baby or adoptee. Eighteen percent are caring for a sick child, parent, or spouse. Similarly, about 80 percent of claims are for parents with newborns or adopted children.
Why do so few workers use paid leave to care for sick or aging relatives? In part, Lynn says, it is because they are unaware they are eligible for benefits. In part, it is because caring for parents carries a workforce stigma that bonding with children does not.
Can employers benefit?
If the need is clear, the funding is uncertain. Convincing states to raise payroll taxes to finance paid leave is not easy. Getting most employers to pay for it, either directly or indirectly, isn’t in the cards.
However, Lynn finds evidence that paid leave program may benefit employers. Some studies show paid leave has had slightly positive effects on worker turnover, productivity, and morale. No doubt employers have to hire new workers to cover for those on leave, or convince current employees to pick up the slack. On the other hand, workers taking paid leave are more likely to return to their jobs, lowering the costs of employee turnover.
We are at a moment in the US economy when a benefit such as paid leave has real traction. The unemployment rate is at historic lows and employers are scrambling to hire—and keep—good workers. If there was ever a time for this idea to take off, this is it.