With New Jersey taking the lead, a recent study makes a strong case for paid family leave, but the issue is not without its detractors and its proponents who try to score political points using someone else’s money.
New Jersey’s Paid Leave Law
In 2010, New Jersey became the third state in the country to require employers to offer paid leave to employees wishing to care for a new child or sick relative. The law allows workers to take up to six weeks of paid leave during any twelve-month period in the form of state temporary disability insurance benefits. The benefit is funded via a mandatory employee payroll tax and not by the employer directly.
Efforts are currently underway to expand the state’s paid family leave law. Senate President Stephen Sweeney has stated he will introduce legislation to expand the program by increasing the amount of leave workers can take and the amount of pay they can collect. Eligible leave time would increase from six to twelve weeks, and workers would receive 80 percent of their salary rather than two-thirds.
Federal Paid Family Leave Legislation
New Jersey is an outlier when it comes to paid family leave. In the absence of a federal law requiring it, only 14 percent of U.S. workers have access to paid family leave through their employers. In addition, less than 40 percent have access to personal medical leave through employer-provided short-term disability insurance, according to the National Partnership for Women and Families.
To date, efforts to establish a national paid leave program have fallen short. Last month, Rep. Rosa DeLauro (D – Conn.) and Sen. Kirsten Gillibrand (D – N.Y.) reintroduced the Family and Medical Insurance Leave (FAMILY) Act. The federal legislation would Provide workers with up to 12 weeks of partial income when they take time for their own serious health conditions, including pregnancy and childbirth recovery; the serious health condition of a child, parent, spouse or domestic partner; the birth or adoption of a child; and/or for particular military caregiving and leave purposes.
Like New Jersey’s current paid leave law, workers would earn 66 percent of their monthly wages, up to a capped amount. It would be funded by small employee and employer payroll contributions of two-tenths of one percent each.
On the campaign trail, President Donald Trump pledged to enact a law guaranteeing six weeks paid maternity leave. In his recent speech to Congress, he expanded his pledge to paid “family” leave. The President has yet to unveil a formal proposal, and it is also unclear whether he will be able to convince the rest of the Republican party to get behind it.
Businesses Should Embrace Paid Family Leave
The business community has traditionally pushed back against laws requiring paid family leave. However, studies increasingly confirm that such policies are actually good for business. Most recently, Boston Consulting Group published a new report, “Why Paid Family Leave Is Good Business.” Its analysis of 250 companies with recently introduced or expanded paid family leave policies found that the benefits of offering paid family leave far outweigh the burdens, including cost.
The companies reported a range of benefits of paid family leave, including a greater ability to attract and retain talent; improved employee morale, engagement, and productivity; diversification of company leadership teams; and reinforcement of company values. Most also reported that the program cost much less than they anticipated. In fact, most companies found that paid family leave generally helped or had no effect on their bottom line.
Unfortunately, the NJ legislation to expand family leave appears to be more about politics than about good public policy. It is not even good politics at that. In a state that has become the county’s top exporter of businesses and jobs over the last decade, expanding family leave right now will just exacerbate the flight. Employees who get the benefit will never remember the politicians who voted to give it to them, but the employees who lose their jobs because their company left NJ will not forget them.