The Effect of Paid Family Leave Hanxiao Wang
MEETING NAME| DATE
Baby on (the) Board: naviga3ng the impact of family leave policy on the corporate world. What are the pros and cons of implemen3ng more substan3al leave? What are the merits of substan3al leave, including the impact on women’s career development, families as a whole and the iner3a within the corporate marketplace? How Spo3fy’s recent extension of its generous 6-‐month, global, paid-‐ parental policy has sparked a major cultural debate
The Mechanics of implemen3ng family leave policies and the posi3ve impact this can have on business, culture and morale.
Why America Must Catch Up With Global Standards for Paid Family Leave The U.S. is the only developed country without a paid leave policy (though CA, HI, NY and NJ have state policies). Only 11% of employees in the U.S. were provided with any kind of paid family leave by their employers in 2012 (U.S. Bureau of Labor Sta3s3cs, 2012). The birthrate needed in America to keep the popula3on stable is 2.1 live births per woman. In America today, we are at 1.86. We need women to have babies, and we are ac3vely deterring working women from doing that. Today in America, women make up 47% of the workforce, and in 40% of American households a woman is the sole or primary breadwinner. A recent survey by the New York Times/CBS News/Kaiser Family Founda3on found that more than half of nonworking Americans say family responsibili3es are a reason they are not working.
Paid Family Leave Benefits the Economy According to Paid Parental Leave in the United States-‐that increasing women’s labor force par3cipa3on rates to equal that of their male counterparts would increase GDP substan3ally in many countries. In the United States, GDP could be increased by 5%, but in other countries this percentage can be more than 30%. Paid family leave may also affect economic growth in various ways, such as through increased labor force par3cipa3on, increased fer3lity rates and reduced spending on public assistance. Higher labor force par3cipa3on, either by men or women (or both), affects growth by increasing inputs to produc3on. Leave may contribute to increased produc3vity by reducing turnover, increasing the length of 3me workers stay at firms or in the labor market, thus helping workers accumulate increased human capital, which enhances their produc3vity at work. Every one-‐week increase in available family leave is associated with an increase in aggregate labor produc?vity and mul?factor produc?vity (Bassanini and Venn, 2008). While both paid and unpaid leave are shown to increase produc?vity, paid leave has a larger effect; unpaid leave is only linked to higher produc?vity when paid maternity leave is short or not available.
Paid Family Leave Benefits Can Reduce The US Gap in Educa3on and Income
Research from The Institute for the Study of Labor (IZA) in Bonn indicates that higher education, IQ and income levels in adulthood for children of mothers who used maternity leave creates the biggest effect for children from lower-education households. Paid maternity leave led to reductions in the high school dropout rate.
And Americans Support Expanded Paid Family Leave According to the National Partnership for Women and Families, 86% of Americans support paid maternity leave (96% Democrats and 73% Republicans) A recent survey found that “Millennials around the world are more likely than other generations to cite paid parental leave as an important benefit.”
Global government policies vary drama3cally, with the U.S. perhaps having the least beneficial while Sweden, the U.K. and Australia have a long-‐established ethos of generous support. Discuss how innova3ve policies can shape the successful businesses of the future.
Paid Family Leave Benefits Government
Expanding paid leave is likely to have economy-‐wide benefits, including: -‐Reduced government spending on public assistance, which can allow for inves3ng in other areas for economic growth -‐Increased labor force par3cipa3on, which would lead to a larger tax base and increased consumer spending New mothers who were offered paid leave report $413 less in public assistance than those who were not offered paid leave (Houser and Vartanian, 2012) -‐Further, these women were 39% less likely to receive public assistance and 40% less likely to receive food stamps in the year following their child’s birth (compared to those who didn’t take leave)
Innova3ve Global Policies Benefit Everyone
Notably, Sweden, which has a generous child leave policy (up to 480 days, can take un3l kids are eight years old) also has a lower gender pay gap than the EU average of 16.3% (2013). Sweden also has one of the EU’s lowest child poverty rates, 19.4% (2012,) and was among the top-‐rated na3ons for child well-‐being (2007, UNICEF). As an economic incen3ve for mothers and fathers to share child care more equally, the Swedish government introduced a “gender equality bonus” in 2008. The bonus is linked to the take-‐up of parental benefit and it amounts to a maximum of 13,500 SEK (€1,570) per child. Employers have no disincen3ve when it comes to hiring women who may have children and need lots of 3me off. To summarise on take-‐up: • Unpaid or low-‐paid leave of whatever kind has low take-‐up; • Leave specifically for fathers (e.g. Paternity leave, fathers’ quotas in Parental leave) is well used if paid at or near income replacement level; • Fathers take only a small por3on of Parental leave that is a family en3tlement; • Leave is used differen3ally not only by women and men, but by parents with different educa3on, income and employment both individually and in rela3on to their partners – the impact of leave policies, therefore, is not uniform. The SOWF study, released by the global fatherhood campaign MenCare, says in the U.K., fathers who took 3me off aper the birth of a child were 19% more likely to help with feeding and geqng up in the middle of the night with the baby.
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Talent acquisi3on, reten3on, increased produc3vity and higher long-‐ term compensa3on/earning power can all be linked to longer family leave. For example, when Google increased their paid leave from 12 weeks to 18 weeks, mom/employee resigna3ons decreased by 50%.
How Does This Benefit American Businesses? In Geneva in May 2000, The Interna?onal Labor Organiza?on agreed to: Provide 14 weeks of paid maternity leave. Prevent the exposure of a pregnant woman or nursing mother to work that can be harmful to her health and that of her baby. Paid leave heightens American businesses’ compe33veness in the global economy.
Paid Family Leave Improves Reten3on, Loyalty, Produc3vity and Morale Paid leave improves worker reten3on, which saves employers money through reduced turnover costs. Approximately 25% of firms spent more than 6 weeks to search for replacements for managers. Data from Na3onal Longitudinal Survey of Youth (NLSY) revealed that women with access to leave are about 40% more likely to return to work at any 3me aper giving birth than those who do not have access. Nearly 90% of businesses surveyed about the effects of the California paid leave program said that the program had either a posi3ve effect on produc3vity or no no3ceable effect. In California, virtually all employers (99%) reported that the state’s program had posi3ve or neutral effects on employee morale. Likewise, several New Jersey employers noted that the state’s paid leave program helped reduce stress among employees and improve morale among employees who took leave and their co-‐workers. Program costs are lower than expected, leading to a payroll tax cut for workers. The majority of New Jersey workers view the program favorably across gender, race/ethnicity, age, marital status, union affiliation, employment status and income.
Paid Family Leave Improves Reten3on, Loyalty, Produc3vity and Morale “When we increased paid leave at Google to 18 weeks, the rate at which new mothers le: fell by 50%.” -‐ Susan Wojcicki, CEO, YouTube “Experience shows that people perform beEer at work when they’re not worrying about home.” -‐ Tawni Cranz, Chief Talent Officer, Netlix “Such benefits are an integral part of the company’s push to create a diverse and inclusive workplace.” -‐ Chief People Officer, ZestFinance “Our employees are our intellectual property and our future; the investment is unquesMonably worth it.” -‐ Donna Morris, Senior Vice President of People and Places, Adobe “We want employees to have the flexibility and confidence to balance the needs of their growing families without worrying about work or finances.” -‐ Tawni Cranz, Chief Talent Officer, Netlix
Paid Family Leave Benefits Everyone "Mothers were able to take the Mme they needed to bond with their babies and return to their jobs feeling confident and ready. And it's much beEer for Google's boEom line — to avoid costly turnover, and to retain the valued experMse, skills, and perspecMve of our employees who are mothers.” -‐ Susan Wojcicki, CEO, YouTube "Family leave, child care, flexibility-‐ these aren't frills. They're basic needs. They shouldn't be bonuses – they should be the boEom line.” – U.S. President Barack Obama "For the good of our families and the strength of our economy, we need to lead on leave." -‐ Thomas E. Perez, U.S. Secretary of Labor
Paid Family Leave Benefits Everyone “The cost of having a mom out of the office for an extra couple of months was more than offset by the value of retaining her experMse and avoiding the cost of finding and training a new hire.” –wriven by Laszlo Bock, senior VP of Google’s people opera3ons in his book Work Rules! ”[Longer leave] means less recruitment and training costs and the ability to retain talented women whose knowledge and experience at the company are not easy to replace.” -‐ Vodafone spokeswoman “Many people go back to work before they want to, because they simply can’t afford to do without their wage earning.” -‐ Alice Gould, Senior Economist, Economic Policy Ins3tute
Companies With Progressive Family Leave Programs Virgin Group: 1 year paid leave for new parents Amazon: 20 weeks of paid leave for birth mothers, op3on to share 6 weeks of paid leave with a partner Google: Paid leave for birth mothers up to 18 weeks, 12 weeks for both parents. Fathers can get 18 weeks if they are the “primary caregiver.” Vodafone: Female employees get 16 weeks paid leave and full pay for 30-‐hour work weeks in the six months following their return Twiver: Guarantees any parent up to 20 weeks of fully paid 3me off Netlix: Offers all new parents unlimited parental leave during the first year aper they adopt or give birth to a new child. Facebook: All parents are given 4 months of paid leave as well as $4,000 in “baby cash” Yahoo: All parents, including those of foster, adopted or surrogate children, get eight weeks off Etsy: Gives new parents up to 6 months of paid parental leave
Why Offer Progressive Family Leave Programs? "These changes are in direct support of the culture we aspire to have -‐ one that allows people to build meaningful careers." -‐ Microsop's Kathleen Hogan “It may sound counterintuiMve, but the research—and Google’s own experience—shows a generous paid maternity leave actually increases retenMon.” -‐ Susan Wojcicki, CEO, YouTube “Most corporaMons don't offer leave for fathers because they haven't caught up with modern Mmes yet. I think it’s based upon misconcepMons and outmoded thinking.” -‐ Michael Sneed, VP of Global Corporate Affairs, Johnson & Johnson
Paid Leave Could Give SMEs An Advantage Over Larger Businesses
In smaller enterprises, a woman’s ability is more likely to be assessed within the context of personal rela3onships as opposed to prejudiced views about her returning from maternity leave. Research in Japan shows women leaving large organiza3ons and going to small ones that don't have formal policies but do offer more flexibility to new moms. In California, although all employers reported positive outcomes overall, small- and medium-sized businesses (those with fewer than 50 employees and those with 50 to 99 employees) reported more positive outcomes than large businesses (100+ employees).
"What we’ve seen is that when someone leaves for parental leave, it gives other members of the team the chance to step up and prove themselves at a higher level. O:en, this has resulted in official promoMons, benefiMng the individual and the company as a whole." -‐ Cecilia Xia, Change.org
SMEs Could Even Help Progress The Movement For Expanded Paid Leave
Small businesses can use their inherent flexibility to improve condi3ons for new parents. • Flexible work op3ons for those returning • Working from home • Working part 3me • Flexible hours • Pooling with other businesses to offer child care Breastfeeding is a good example of a maternity protection provision that constitutes a “win-win scenario” for both employer and employee. The same applies to some forms of low-cost child care support, such as dedicating specific office space where children can do their homework or other activities. When paid leave is administered through a paid leave insurance program, small businesses benefit because the cost of leave is shared.
"If the company can make do with not having that person's input during the time, or the workload distributed across a wider existing team, there's no additional monetary cost.” - David Hassell, Founder and CEO, 15Five
Research suggests that longer leave creates mul3layered benefits, including a healthier bovom line for businesses. For example, moms with longer paid leave sta3s3cally have bever health, leading to fewer sick days and increased produc3vity.
Paid Family Leave Benefits Women’s Career
Research finds that offering paid family leave increases the number of hours that a woman works aper returning to work by about 2 to 3 hours per week. This corresponds to a small increase in salary. A study from Sweden shows that when fathers take leave, mothers made almost 7% more money over the next four years. According to Quartz, 9/10 Swedish fathers take leave for an average of 3 to 4 months each, which has the effect of smoothing the mother’s transi3on back to work. “There is the perspecMve that new moms also have more to offer a:er coming back from extended leave: [A:er paid leave] Mothers come back to the workforce with new insights.” -‐ Susan Wojcicki, CEO, YouTube
Paid Family Leave Benefits Mom & Baby
Returning to work sooner (less than 12 weeks) is linked to greater levels of depressive symptoms, stress and self-‐reported poor health – compared with those who waited at least 12 weeks before going back to work (Chaverii, Markowitz, and Brooks-‐Gunn, 2011). Women who were exposed to a more generous maternity leave policy were 18% less likely to suffer from depression 30 years later when they were 50 or older (Mauricio Avendano, one of the study's co-authors and associate professor of social science, health and medicine at King's College London). Length of maternity leave can affect breast-feeding rates and duration, reduce risk of infant mortality and increase the likelihood of infants receiving well-baby care and vaccinations. • According to the Centers for Disease Control and Prevention, women who breast-feed are less likely to get breast cancer, ovarian cancer, type 2 diabetes and heart disease, according to the United States Centers for Disease Control. • Analysis of comparative international data finds that paid family leave is associated with lower rates of mortality for infants and young children (Heymann, Raub, and Earle 2011). Statistically speaking, the shorter a woman's leave after having a baby, the more likely she will be to suffer from postpartum mood disorders like depression and anxiety, and among many potential consequences of those disorders, suicide is the second most common cause of death in a woman's first year postpartum (Jessica Shortall’s Tedtalk-The US needs paid family leave — for the sake of its future).
New Moms Have Bigger Obstacles With Shorter Leave
" I gave birth to twins and went back to work a:er seven unpaid weeks. EmoMonally, I was a wreck. Physically, I had a severe hemorrhage during labor, and major tearing, so I could barely get up, sit or walk. My employer told me I wasn't allowed to use my available vacaMon days because it was budget season.” -‐ Jessica Shortall’s Tedtalk-‐The US needs paid family leave — for the sake of its future) “Two weeks a:er returning to work, I came to the sudden, emoMonal and very unnerving realizaMon that I had come back too early. I needed more Mme to adjust to being a new mom, without juggling work again, and I needed my boss to understand.” -‐ wriEen by Brie Reynolds in her blog-‐How Flexible Work Helps New Moms Return to Work)
Strong predic3ve correla3on between substan3al dual leave (mom and dad) and workplace equality/closing the gender pay gap
Paternity Leave Is Essen3al To Achieving Gender Equality
Since the effect of paid leave on labor force par3cipa3on rates is typically much higher for women than men, offering paid leave can help push the economy toward gender equality in labor force par3cipa3on. Giving dads 3me off work helps evenly distribute child care du3es and allows women to take care of their health, earn more money and maintain their careers. The U.S. Government Accountability Office (2007) found that paid leave for fathers helps to foster gender equity, both in the workplace and in the home, since it shortens leaves for mothers, increasing their job tenure and poten3ally their wage growth. A study by two Columbia University Social Work professors found that fathers who take two or more weeks off aper their child is born are more involved in their child's care nine months later. Fathers who take paternity leave end up much more engaged in taking on their share of domes3c responsibili3es – 23% more engaged in household du3es.
Paternity Leave Is Essen3al To Achieving Gender Equality
In California, only 35% of fathers took 3me off before the paid leave program, but now three-‐quarters take it. -‐BRYCE COVERT-‐ How The New Paid Family Leave Bill Will Benefit Everyone The report [‘The State of the World's Fathers’ (SOWF)] report makes such a strong and powerful case for why paid paternity leave sends a strong philosophical message that parents have an equal stake in nurturing and raising children, from not only the early days, but the early weeks and the early months.” -‐Chelsea Clinton “We want to support and enable parents, regardless of their gender, to play equal roles in building successful companies and nurturing their families.” -‐Juliet Gorman “While we have known for a long Mme about the maternal and infant health benefits of leave policies, we can now link paid family leave to greater labor force aEachment and increased wages for women.” –Rutger’s study "Once you have a good baseline in place to create a moMvaMng work environment, then improving and equalizing your paid parental leave policy is one of the most powerful statements you can make to break down workplace gender inequality, and support working parents and their families." -‐ Jennifer Dulski, president, Change.org “This is essenMal to protect women against discriminaMon and allow them to fully enjoy their maternity leave, which is key for maternal and child health and families' income security,”-‐ Laura AddaM, Maternity ProtecMon and Work-‐Family Specialist, ILO Gender, Equality and Diversity Branch
Marke3ng/adver3sing industry role in shaping public opinion
Why Offer Progressive Family Leave Programs? “We’re hoping to set a precedent for other companies to follow with an industry-‐leading parental leave program, which allows 16 weeks of fully paid leave for birth moms and 10 weeks fully paid for dads, partners or adopMve parents.” -‐Michael Coates, President and CEO of the Americas, Hill & Knowlton “AdverMsing has always done a great job of banging the cultural drum, but it’s never really led the charge when it comes to employee welfare – adopMng a more ‘chew them up and spit them out’ approach. That said, the employee is in the front foot now, and quality of life is at the top of most people’s agenda, probably more so than income.” -‐Simon Labbev, founder of Hometown London
Thank you
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