3 Reasons Why Card-Carrying Capitalists Should Support Paid Family Leave
In business school, we were taught that a solid strategy recognizes the exogenous (external) and endogenous (internal) challenges facing your business and addresses them. Employee child care and eldercare responsibilities are not only two major external business challenges, but they become internal issues the minute an employee walks in the door or signs onto his or her computer.
In the U.S., we pride ourselves on our capitalistic, profit-oriented savvy; therefore, given the growing magnitude of employee caregiving realities, you would assume that employers would support a clear, consistent uniform strategic response. One that minimized business disruption and kept employees engaged and productive over the long-term. Unfortunately, the reality is the exact opposite.
Status of Paid Family Leave in the U.S.
Out of 178 countries worldwide, the United States is one of three that does not guarantee new mothers paid leave. The other two countries are Papua New Guinea and Swaziland. Nationwide, in March 2011, only 11% of the private sector workers and 17% of public sector workers reported having access to paid leave through their employer.
Only two states in the country, California and New Jersey, offer six weeks of paid family leave to men and women who are caregivers. Even in the face of state budget challenges, both programs are healthy and successful. Unfortunately, the state leaves are not job-guaranteed which makes the time difficult to take. (New Jersey Paid Family Leave Fact Sheet / California Paid Family Leave Fact Sheet)
Yes, there are 12 weeks of job-guaranteed FMLA, but it is unpaid and employers with fewer than 50 employees are exempt which eliminates a large percentage of workers.
In terms of private paid leave offered directly to employees by employers, 58% of mothers who gave birth and were offered leave by their employer received some form of maternity disability pay, but only 14% of men on paternity leave received any replacement income (2012 National Study of Employers). That means 42% of mothers and 86% of fathers with employer supported leave received no income at all.
A Brief History
Historically, a coalition of labor, women’s, child and health advocates have promoted paid family leave. They’ve emphasized the well-documented public health benefits, the peace of mind of employees, benefits for children and eldercare cost savings. While valuable and important, these rationales haven’t withstood the “job killer and “anti-business” arguments used by groups like the Chamber of Commerce to fight approval. (Note: at the end of the post, you will find new information that could indicate the Chamber’s position on caregiving as an important business challenge is evolving, at least in their organization.)
There are workplace and public policies that plan for time off and income replacement in case of illness or injury. There are 401Ks and social security for when you retire and can no longer work. Why isn’t there a coordinated, uniform workplace and public policy that offers time off and at least partial income replacement when people, inevitably, have babies or an aging parent needs care? Why?
I wanted the question “why” answered when I attended last month’s Paid Family Leave Forum at the Ford Foundation sponsored by the National Center for Children in Poverty, New York State Paid Leave Coalition and A Better Balance. What I learned reinforced my long-held belief that every card-carrying capitalist should support paid family leave public policy because:
- Paid family leave acknowledges and addresses a reality that directly impacts every business and, therefore, should be planned for strategically, uniformly and deliberately;
- Paid family leave is NOT a tax, but income replacement insurance program funded by employees at minimal cost and
- We are paying for a cost for caregiving already, albeit indirectly and inefficiently.
But, First, Don’t Shoot the Messenger
Before we dig deeper into each of the reasons listed above, I have to establish my business credibility, or “cred.” Too often when someone tries to engage the business community on issues that they consider “soft” or societal in nature, the messenger is dismissed as “not understanding business.” This, in turn, dismisses the message. I’m a messenger who can’t be easily dismissed with that argument because I do “get” business.
I was a banker for seven years, specializing in lending to closely held companies and I graduated, with honors, from Columbia Business School. I can rock a balance sheet and cash flow statement with the best of them, and I’ve even been known to find a strange joy in deciphering the “story” within the notes at the back of an annual report. I am a flexible work strategy consultant who works inside of organizations regularly, and I believe that both people and the business must benefit if flexible work is going to succeed.
As advocates for paid family leave found in California, I am not alone. Many business people support a uniform, public policy to address this challenge, but their voices were drowned out by the groups lobbying against it.
3 Reasons Every Card-Carrying Capitalist Should Support Paid Family Leave
My knowledge of and respect for business is why I think every card-carrying, profit-oriented capitalist should support paid family leave policy (or at least not stand in its way):
Reason #1: Paid Family Leave acknowledges and addresses a reality that directly impacts every business and, therefore, should be planned for strategically and deliberately.
The truth is that we are all potential caregivers. We may not end up having children, but all of us have parents and aging relatives who will very likely at some point require care.
Most mothers and fathers have to work and will be in the workforce when they have children. According to studies by the Center for American Progress, “in 2010, among families with children, 49% were headed by two working parents and 26% by single parents.” In 2009, employed wives of dual-earner families contributed 47% of total family earnings. In most cases, the income of both parents is critical to a family’s financial well-being.
With regard to eldercare, in 2010, 45% of employees surveyed said they had eldercare responsibilities over the past five years, and 49% expect to have responsibilities in the next five years. As the population ages, the eldercare challenges are expected to grow and many of those caregivers—men and women–will be in the workforce.
Paid family leave as public policy acknowledges the reality of caregiving by creating a uniform, clear response. Disruption is minimized because everyone knows the rules of the road. Business can plan in advance how the work will get done should an employee take leave for the prescribed six week period of time. This is especially true for maternity leave where, usually, you have months to plan. For example, perhaps the business can use the wages not paid to the employee on leave to hire a temporary worker, or to pay exist staff to take on the extra work during the leave.
It’s worth noting that a follow-up study of employers in California found that a majority felt paid family leave had either a positive or neutral impact on their business.
Reason #2: In the case of California and New Jersey, Paid Family Leave is NOT a tax, but an income replacement insurance program funded by employees. In fact, some advocates feel a more accurate name is Family Leave Insurance.
Paid Family Leave has a bit of a branding problem. Contrary to popular belief, Paid Family Leave is not the new tax that the business pays. It is income replacement insurance that employees contribute to through a small deduction from their paycheck every month. In New Jersey, it averages about $33 per year. In California, the average payroll deduction was about $3 a month. And in California and New Jersey, PFL administered as part of the existing Temporary Disability Insurance system, so no additional corporate or government infrastructure had to be set up.
Reason #3: You are paying for it anyway, albeit indirectly and inefficiently.
Again, ignoring the external/internal business challenge of employee caregiving doesn’t make it go away. And it doesn’t mean you aren’t already paying for it.
My experience is that when faced with the choice between family and work, people will often choose family even if it means financial hardship. When someone quits without paid leave, especially a low wage worker, they are often forced to apply for public assistance which is paid by taxpayers. Wouldn’t it be better to contribute to universal paid leave that lasts six weeks, versus enrollment in public assistance that could go on much longer if the individual can’t find a new job?
Losing an employee is very expensive. Experts estimate it can cost anywhere from 50% of the wages of a low skilled employee to 200% of the salary of a professional staff person. Wouldn’t it be better to lose someone temporarily for six weeks, knowing they will come back, versus having a valuable employee quit because of caregiving pressures and replacing them? There is no guarantee the next person you hire—male or female—won’t experience caregiving challenges either.
It is estimated that family caregivers provide 80% of the long-term adult care in the United States. It costs three times as much to care for someone in a facility than it does at home. However, if family members can’t get a paid leave to provide the care at home, then the only choice is a costlier facility which someone has to cover. Again, that’s the taxpayer in many instances.
The U.S. Chamber—Best Practice in Eldercare
Finally, I discovered information that may indicate the position of the Chamber of Commerce on the issue of caregiving as a strategic imperative could be evolving, at least in its own organization: The National Alliance for Caregiving and ReACT recently released their Best Practices in Workplace Eldercare study (March 2012). The report includes case studies of the 17 employers considered to be “best in class” when it comes to supporting eldercare in the workplace. #17 is the U.S. Chamber of Commerce.
Clearly, the Chamber recognizes the need to acknowledge and plan for the realities of caregiving in its own business strategy. Maybe it will encourage its members around the country to do the same, and rethink its vocal opposition to a paid family leave public policy.
What do you think? Does it make business sense for a country that prides itself on its capitalistic, profit-making savvy to ignore the real and growing external/internal challenge of caregiving in its strategic planning? There are 175 other countries around the world that have acknowledged the need to at least guarantee mothers some level of paid leave as public policy. Does it make sense that we don’t especially when paid family leave isn’t a tax but a low cost employee-funded income replacement program?
Cali Williams Yost is the CEO and Founder of the Flex+Strategy Group / Work+Life Fit, Inc., flexible work and life strategy advisors to clients including BDO USA, LLP, Pearson, Inc., EMC, the U.S. Navy, and Novo Nordisk. Yost is the author of “Work+Life: Finding the Fit That’s Right for You” (Riverhead/Penguin Group, 2005). Connect with Cali at the award-winning Work+Life Fit blog and on Twitter @caliyost.
Cali Williams Yost