In recent years, paid parental leave has become a hot-button issue. It’s no wonder that news on this topic is making headlines: The United States is ranked last in the world, one of only three countries that doesn’t guarantee paid parental leave. The nation’s policy is 25 years old, which is why California Governor Gavin Newsom is taking matters into his own hands with his proposed six-month paid leave program. The plan, which Gov. Newsom described as a “no-damn-brainer” and a “developmental necessity,” would compensate parents up to 70 percent of their wages while they cared for their newborn or newly adopted baby.
Only 74 percent of employable women in the U.S. aged 25 to 54 are working or actively looking for work, compared to 83 percent in countries like Germany and France — and nearly 89 percent in Sweden. That gap doesn’t exist because a quarter of American women are unemployable or don’t want to work. Rather, women are exiting the workforce in light of U.S. policies (or lack thereof) surrounding paid maternal leave.
As business owners and leaders, we have the power to change this statistic. By implementing parental assistance policies and programs within our companies, we’ll not only help parents stay in the workforce, but also open the hiring pool, attract high-quality talent, and become more competitive with companies that already offer these benefits.
American women are exiting the workforce and not returning
Data from The Organisation for Economic Co-Operation and Development suggests that more generous leave benefits lead to more women actively looking for work. Let’s look at a few examples:
- Canada currently offers 17 weeks of paid leave at 48 percent of previous earnings; the unemployment rate for Canadian women is 4.6 percent.
- Finland offers 17.5 weeks of paid leave at 74 percent of previous earnings, with the unemployment rate for women at 5.7 percent.
- Australia offers 18 weeks of paid leave at 42 percent of previous earnings; the unemployment rate for women is 5 percent.
Meanwhile, the U.S. doesn’t offer any paid leave, and the unemployment rate for women in the same age bracket is at the lowest of all Western developed countries at 3.1 percent.
What does this mean for American women? This lower unemployment rate is an indicator that a larger portion of them aren’t seeking work. The fact is that women ages 25 to 54, who are in the prime years for establishing a successful career, as well as in their prime reproductive years, are not given the proper support from their employers to take time off to be with their families after childbirth or adoption. Nearly all highly qualified women who are currently “off-ramped” in their careers want to rejoin the workforce, but only 40 percent return to full-time professional jobs.
Women are simultaneously being pushed and pulled out of the labor force. They are pulled by their familial responsibilities and their need to bond with their children after childbirth and are pushed out of the workforce when they’re not provided the time or financial security to do so. Given these circumstances, women often exit the workforce and don’t return, as it’s hard to re-enter after leaving.
Paid parental leave programs boost the economy and your bottom line
The individualistic mindset of the average American propagates the idea that providing paid parental time off is bad for businesses and the economy. However, we must be willing to dig past first impressions to the actual research, which shows that offering such benefits to employees has led to a better economy in other Western countries. When women are able to re-enter the workforce after taking time off, their households become dual-income. More income means more tax contributions, more spending in the community, and more money available to put back into childcare businesses. Additionally, research shows that paid parental leave programs may increase fertility rates and reduce spending on public assistance: Mothers who are able to take advantage of paid leave are 40 percent less likely to have to rely on programs like food stamps.
Parental leave programs aren’t just good for the economy. They’re beneficial at the individual business level. As these benefits become more widespread, they’ll become a must-have to attract new talent. Offering such resources to families will also positively impact your retention rates and costs associated with employee turnover. The cost of replacing an employee and training someone new is likely greater than the cost of providing an essential benefit that will boost morale and productivity. When California instituted a paid family leave insurance program, the vast majority of employers saw positive results across three different metrics: productivity (89 percent experienced boosts), profitability/performance (91 percent), and employee morale (99 percent). It’s a win-win.
Business leaders must spur the change
What does all of this mean for employers? It means that we, as leaders, need to step up and provide these benefits for our employees. Tech companies like Facebook and Microsoft are leading the way by offering significant paid leave to new parents. Spotify — founded in Sweden, which has one of the best leave policies in the world — offers new parents a full six months’ paid leave, with an extra month to transition back to work by working part-time or remotely.
At Ontraport, we have taken the U.S.’s leave policy in stride and developed resources that provide significant relief to our hard-working parents. Not only do we provide an extra month of paid leave, but we also save parents thousands of dollars each year with free childcare for every employee. Our on-campus childcare center is open to children 18 months through 5 years of age, and it offers an exhaustive education program that includes everything children need to grow and learn, as well as encourage family engagement.
Start a childcare center. Offer comprehensive time off to both parents so they can return to work refreshed and ready to advance their careers. Rethinking the way you view parental benefits will expand your talent pool, improve retention, and keep your employees happy and healthy. It’s a long-term solution that will help your business thrive in 2019 — and for years to come.