Paid Parental Leave Policy Options

Imagine this: You’ve just gone through an intense cycle of labor after a high-risk pregnancy involving a breech birth andlife-threatening complications. But thankfully, with the support of hospital staff, you and your baby are both healthy. Within 24 hours of your delivery, you receive a phone call from your company’s HR representative. After briefly asking how your baby is doing, they tell you they are ready for you to return to work tomorrow and “figured, you know, you might want to start getting paid again.” [1]

This was the reality for Bobby Dempsey and for many families in the U.S. which raises an urgent question: What doesthis say about our commitment to supporting new working families in the U.S.?

In 1993, President Bill Clinton enacted the Family and Medical Leave Act, also known as FMLA, which allows eligible employees to take up to 12 weeks of protected, unpaid leave. With no plan to support new families, we leave high stress levels to soon-to-be mothers which can cause preeclampsia, postpartum depression, and preterm babies which affects the babies’ mental and physical development.

The U.S. has the highest infant mortality rate of any high-income country, yet the U.S. is the only high-incomecountry that does not have any mandate on providing paid parental leave. Is this a mere coincidence?

A study shows that having 10 weeks of paid maternal leave would decrease infant mortality rate by 10%. Not only did infant mortality rates decrease but also new mothers were more likely to breastfeed which provides babies with themother’s antibodies to fight disease and lowers the chance of malnutrition. Infants were also more likely to receive timely immunizations with paid parental leave and new parents are 10% more likely to rejoin the same company.

Paid parental leave is the third most requested benefit from employees in the U.S., which is rated higher than 401K plans. But why is the United States singled out in terms of providing paid maternity leave? Firstly, many large corporations actively lobby against mandates for paid leave as it would affect the business’s labor costs and reduce profitability. 

Another reason is that the United States has significantly lower membership in unions compared to other high-income countries which weakens collective bargaining power for securing benefits such as paid maternity leave. 

Inconsistencies in paid parental leave, such as a company’s financial resources or the state you live in, leave gaps in passing maternity leave benefits. Lastly, conservative lawmakers view family matters as a private issue rather than asocietal one and believe the government should have a limited role in this process. 

So, how can the U.S. implement paid parental leave while providing support to businesses?

Policy Options:

1. Small Business Incentives: To support small businesses, additional tax refunds would incentivize companies to implement paid parental leave. California offers a similar model and provides tax credits to small businesses withparental leave mandates which increases participation and, similar to health insurance practices, alleviates the financial burden on small businesses to provide essential employee benefits. Although this policy is politically feasible in California, tax incentives are often insufficient to fund paid parental leave and therefore, not cost-effective for small businesses.
2. Hybrid Insurance Model: The government would provide a basic level of coverage for parental leave, and privateinsurers, through the company, would offer supplemental plans. The Netherlands has implemented this hybrid model, ensuring a minimum standard of leave for all employees and allowing for customization based on employer and employee needs. However, unlike the Netherlands, the U.S. does not have a universal healthcaresystem with many variations in state law, employer practices, and healthcare access. However, a hybrid system may leave many employees to not have the same level of insurance to complement the government-provided insurance and increase administrative costs for companies.
3. Expand eligibility criteria: In the US, around 54,000 women lose their jobs annually due to pregnancydiscrimination reported by the Equality and Human Rights Commission. To support soon-to-be parents from job discrimination and layoffs, the eligibility for paid parental leave should include individuals who have been employed for 12 months prior to layoff and have worked a minimum of 1,250 hours in the past year. The FMLA currently uses this tenure criteria but limits benefits to only active employees.
4. Payroll Tax Funding Model: Companies would offer employees parental leave funded by a small payroll tax, 0.5% for example, on employee salary with contributions matched by the employer. A successful employment of this model is The New Jersey Parenting Project which provided workers with 6 weeks of leave annually through employee payroll tax. Since the policy is built on existing payroll systems, it demonstrates political feasibilityamong labor unions, companies, and the government, but it may receive pushback from already high-income taxes in many states. With contributions from the employer and employee, the project also helped strengthen low-income working parents, proving the policy cost-effective.

America prides itself on familial values, yet our policies fail to support them. Adopting policies such as additional payroll taxes, hybrid insurance models, eligibility expansion, and small business incentives complement existingsystems that have proven effective abroad. With the profound impacts on health and well-being, paid parental leave should be a standard, not a privilege. Implementing paid parental leave is not only a policy decision; it’s a commitment to better health outcomes for new families and a stronger workforce for America.