Policy Points: How to Make Businesses Family-Friendly, One State at a Time

The U.S. remains the only developed nation not to guarantee paid time off for new parents or employees facing family emergencies.

By Zach Bernstein

With the presidential election only months away, Congress is expected to slow down even more than usual. And states may step up to fill the gap. That seems to be happening with the minimum wage, which picked up two state wins recently, and family-friendly policies such as paid time off to care for family members.

New York recently became the latest state to pass paid family and medical leave insurance. It follows Rhode Island, New Jersey and California, which already have paid leave policies in place. And New York’s law is much stronger, providing up to 12 weeks, while California and New Jersey provide six weeks paid time off and Rhode Island provides only four weeks.

In addition, 18 more states are at various stages of considering paid leave, including Washington state, where a program is merely waiting for funding.

The landscape on good workplace issues like these is changing rapidly. And now with New York, progress on the national level has a potential boost.

If it can make it there…

For New York Gov. Andrew Cuomo, the issue of paid leave is personal. He had to care for his father, former New York Gov. Mario Cuomo, before his passing last year. “I have kicked myself every day that I didn’t spend more time with my father at that end period,” he explained. “I could have – I’m lucky, I could have taken off of work.” At the same time, he noted, a lot of people in the Empire State do not have that choice.

That’s because the United States remains the only developed nation, and one of only a handful worldwide, not to guarantee paid time off for new parents or employees facing family emergencies. Federal law, the Family Medical Leave Act, guarantees leave in some cases – but it’s unpaid, and only covers part of the workforce.

That’s what New York’s plan fixes. It allows workers to take paid time off to care for family members or following childbirth, and be paid up to $633 a week when fully phased in. This leave would be funded entirely through employee payroll contributions – think: deductions for Social Security and Medicare – starting at 45 cents a week in the first year. So, no costs to employers. And while the bill would only cover about 35 percent of a worker’s salary at first, once the fund is built up more over time, that amount is slated to rise.

In some ways, New York was already ahead of the curve. It’s one of only five states – including the three with full paid family leave programs – to offer Temporary Disability Insurance (TDI), which offers partial wage replacement and which Gov. Cuomo’s paid leave program builds on. But TDI does not cover family leave, and the benefits are smaller – too small to meet the cost of living in the state. The new paid leave system is designed to change that.

Mind your business

Despite all of this, some elements in the business community are claiming paid leave is going to burden businesses.

As is often the case, groups that claim to represent business are taking the exact opposite position from more and more companies.

Two of the states that have already paid leave – California and New York’s neighbors in New Jersey – have heard mostly good things from businesses. The vast majority of California businesses reported that, when it comes to issues like productivity, profitability and employee morale, their paid leave law either helped or had no meaningful effect either way. And small businesses were the least likely of all to report ill effects.

Next door in the Garden State, meanwhile, a smaller-scale survey found that the paid leave law didn’t affect most companies’ finances at all – but even in two cases where it did, the companies said it was still worth it.

There’s a reason for that. Offering paid leave helps businesses attract and retain good talent – and as any business owner can tell you, one of the biggest costs they can face is when employees leave looking for work at places with better benefits. By some estimates, those costs can range from $3,328 to replace a retail worker earning $10 an hour to a staggering $213,000 to replace an executive earning $100,000 — a 213 percent increase.

And that’s before you look at some of the more intangible benefits, like a worker who comes back refreshed and happy after having several weeks to bond with a newborn, or an employee who doesn’t have to worry about an ill family member while they’re supposed to be focused on work. Having people who can focus on their work instead of their home lives is nothing but good news for businesses concerned about the bottom line.

Frank Garcia, chair of the National Association of Latino State Chambers of Commerce, said in response to Gov. Cuomo’s plan: “Many of our businesses already provide paid leave programs because they understand the importance and value of taking care of their employees.”

Making it national

Gov. Cuomo isn’t the only New York policymaker to take a strong stand on paid leave: Last year in the U.S. Congress, Sen. Kirsten Gillibrand of New York re-introduced the FAMILY Act, a bill which is based on California and New Jersey’s programs and which would bring the United States in line with the rest of the world. It’s already received strong support from groups like the American Sustainable Business Council, and businesses like Eileen Fisher. Business people can show their support here.

But with Congress looking set to all but close up shop for the year, it’s in the states that the business voice is most crucial now. Family Values @ Work has a good list of active campaigns to support.

With any luck, the next Congress will come to Washington next year and find that more states are asking, “What’s taking you so long?”

Image credit: Pixabay

Zach Bernstein is Manager of Research and Social Media for the American Sustainable Business Council.