Should Paid Maternity Leave Be Mandatory For Companies With More Than 100 Employees?

Do The Merits of Paid Leave Hold Up?

Question:

Should paid maternity leave be mandatory for companies with more than 100 employees?

Answer:

No, because it should be paid caregiver leave and all employees should have access to it—regardless of the size of their employer.

A quick note on nomenclature:

I say caregiver leave instead of maternity leave because the former is more inclusive and applies to a broader range of life events. The gender-neutral caregiver leave includes the 85% of working fathers who “would be willing to do anything” to be very involved with their young child. It includes the 47% of adults who, in addition to caring for their own children, also care for an elderly parent. It includes the nearly one million same-sex couple households whose family needs may look different than heterosexual couple households.

That’s why I prefer the term caregiver leave instead of maternity leave. If you want to read more on why I make this distinction, you can do so here.

Here’s why every employee should have access to paid caregiver leave:

1. Caregiver leave benefits the household.

Children benefit when their parents are involved during their early childhood years. Studies have shown that when mothers (currently society’s default caregivers) have access to paid leave, it positively impacts their children’s long-term educational and earnings potential. Moreover, 71% of US families depend on a mother’s income for their financial well-being.

When mothers without access to paid leave are forced to exit the workforce to care for their children, they face a greater risk of a.) never returning to work, or b.) being penalized with lower wages when they re-enter the workforce. As it stands, working moms earn 71 cents on the dollar compared to their male peers and face a 4% earning drop in hourly wages per child. These are real wages that millions of women and children lose out on every year.

2. Caregiver leave benefits the organization.

We can’t argue with the business case for gender equity. Gender equitable businesses outperform lesser-equitable businesses, full stop. Pipeline’s original research across 4,161 companies in 29 countries found that for every 10% increase in gender equity, businesses see a 1-2% increase in revenue. Since access to paid leave improves women’s professional trajectory, and since women are essential to building gender-equitable teams, businesses reap the rewards of paid leave.

And that’s not all. Paid leave reduces employee turnover (which costs companies on average 21% of an employee’s salary) while simultaneously increasing employee engagement. Paid leave policies also attract top talent, with two-thirds of HR managers agreeing that healthy work-life balance policies are the #1 factor in attracting and retaining employees.

3. Caregiver leave benefits the larger economy.

The US fell from 6th place in 1990 to 17th place in 2010 in terms of female labor force participation among OECD countries. Why? Researchers pinpoint the US’s widespread lack of paid leave as a major driver of the slippage. When life events happen—such as the birth of a child or the illness of a loved one, women in the US have to choose between their job and their family.

Fast forward to today and it’s not difficult to see the second-order effects of this job-vs-family bind, as exposed by the pandemic. For starters, less than half (47%) of parents whose children are learning remotely are working full-time, whereas 71% of parents whose children have returned to in-person instruction are working full-time. And while 69% of men with school-age children are working full-time, only 41% of women with school-age children are saying the same thing.

Here’s another point worth noting: single women’s job growth has increased by 7.6% since June 2020. But married women’s job growth has gone in the opposite direction. It has decreased by .3% since June.

As I referenced at the beginning of this letter, falling female labor force participation weakens the US economy by billions of dollars. It does not serve US businesses well. It certainly doesn’t serve US families well either.

Paid caregiver leave is one tool in our policy toolbox to curb women’s free fall from the labor force. It won’t magically kick-start economic prosperity, but without it, we will not achieve an equitable economic future.