Basic

Facts

What National Family and Medical Leave Insurance Can Do for Families and the American Economy

Heather Boushey, Washington Center for Equitable Growth

Enacted in 1993, the U.S. Family and Medical Leave Act celebrates its 21st birthday this year. The law addresses the needs of a changing workforce by allowing workers to take unpaid job-protected leave for up to 12 weeks to recover from an illness, care for an ill family member, or a newborn or newly adopted child, or for certain military purposes. However, many workers cannot take leave either because they or their employers are not covered by the law, or because they cannot afford to go without wages while they are away. Conflicts between family needs and work are common, and yet men and women are mostly left on their own to figure out how to balance these dual demands. In 2013, only 12 percent of workers had employer-provided paid family and medical leave.

Family and medical leave insurance – also known as paid leave – would fill an important gap, allowing American workers, including those living from paycheck to paycheck, to deal with pressing health issues and family needs. Nowadays, most American families do not have a stay-at-home parent to provide care for children, the sick, or the elderly. Seventy-one percent of children live in a family with either two working parents or a single working parent and, increasingly, workers are also caring for aging parents. The share of adult children providing care for a parent has tripled over the past 15 years.

Conflict between caring for one’s family and putting food on the table not only creates stress for families and harms children, the elderly, and the sick; it also poses significant costs to our economy. A recent study finds that one reason why the U.S. fell from having the sixth-highest female labor-force participation rate among developed countries in 1990 to having the 17th-highest rate in 2010 was because it failed to adopt family-friendly policies. Family and medical leave insurance would grow our labor force and economy in the long run. It increases the likelihood that workers will return to their original employer after taking leave, which ensures employment and earnings continuity for the employee, as well as unchanged business operations and reduced worker-turnover costs. Furthermore, it could help promote better gender equity in the workplace and the home.

What National Family and Medical Leave Insurance Should Include

To implement a national family and medical leave insurance program for all workers, U.S. policymakers can draw from a variety of international and state models. In the United States, family and medical leave programs have been implemented in three U.S. states: California in 2004, New Jersey in 2009, and Rhode Island in 2014. A fourth state, Washington, passed a family leave law in 2007 but has since delayed its implementation due to lack of agreed funding mechanisms. Looking to the states is consistent with past practice, and experience suggests that a new national program should be based on the following principles:

  • Adequate leave to meet needs. Financed by ongoing contributions from both employees and employers, paid leave should be guaranteed for up to 12 weeks, or 60 workdays, per year.

  • Wage benefits are generous enough to have a meaningful effect. The amount of wage replacement needs to be generous enough to make taking leave feasible for low-wage workers, men and women alike. Following the lead of New Jersey, federal policymakers could set benefit levels to equal two-thirds of a worker’s average weekly wage. They could also control costs by following California’s decision to cap wage compensation at about a thousand dollars per week. 

  • A broad definition of family. Covered families should include domestic partners, siblings, nieces and nephews, aunts and uncles, and grandchildren and grandparents. A national paid leave program should follow the lead of ten U.S. states and the District of Columbia that have already amended their unpaid family leave laws to fit these terms. A broad definition of family is likely to be especially important to low-wage workers, who often rely on extended kin to help with family needs.

  • A gender-neutral right to paid leave. Giving all workers the right to claim paid leave will encourage men as well as women workers to take leave for family care duties. Although the United States is the only advanced nation that does not already provide paid maternity leave, the original 1993 Family and Medical Leave Act did ensure the same unpaid leave rights to eligible workers of both sexes – a principle that should continue for paid leave.

  • Benefits are tied to work history, not particular employers. If a worker has an established work history and has paid into the family and medical leave insurance system, he or she should be able to take leave as needed. Eligibility should not be tied one’s current employer or tenure in a specific job. Rather, eligibility should be tied to a worker’s employment history and payment into the system – as is the case for Social Security disability insurance.

  • Include workers in firms of all sizes as well as the self-employed. Exempting small businesses and the self-employed would be unworkable. A worker could pay into the system for decades through a larger business and then suddenly lose eligibility if he or she moved to a small firm or became a self-employed entrepreneur. Economic efficiency and fairness alike explain why state paid family and medical leave programs extend eligibility to all employees as long as they have sufficient earnings histories with employers of any size. In California and New Jersey the self-employed can also opt-in to make contributions and gain coverage.

If a well-designed law is passed, who should administer the new national family and medical leave insurance program? Ideally, the job should be done by agencies that already have access to earnings records, are experienced at determining medical eligibility, and can deliver benefits in a timely manner. State unemployment insurance agencies and the U.S. Social Security Administration both fit the bill and have offices in every state. But the Social Security Administration is the better choice. It already tracks every worker’s employment history; administers benefits to retirees, disabled workers, and family survivors; and it could readily expand operations for leave determinations and distributing leave benefits. Unified administration would also save taxpayer resources. However it may be carried through, family and medical leave insurance would relieve the financial burden of taking unpaid time off for many families, and help them better balance the demands of the workplace and home.

www.scholarsstrategynetwork.org
March 2014