Paid Parental Leave: Time to Jump on the Bandwagon?

Parental Leave.BLOGPaid parental leave has gotten a lot of attention lately, including a mention in President Obama’s State of the Union address. The federal government and a number of major IT and financial companies have recently announced new or enhanced paid-parental-leave policies. Facebook’s Mark Zuckerberg decided to take two months of leave for his baby’s birth, which raised interest in men taking parental leave.

Why all the fuss?

The United States is the only industrialized nation that does not mandate paid leave for mothers of newborns. Many nations include paid leave for fathers or allow mandated parental leave to be shared. The current workforce is more concerned about work/life balance and quality-of-life issues. Millennials are more likely to have two-earner households and cite paid parental leave as a benefit that’s important to them. In addition, some industries are beginning to experience labor shortages and difficulty in attracting and retaining talent. Put all that together and paid parental leave can look like an attractive benefit to offer.

Why might an employer want to offer paid parental leave?  

Proponents say, besides being an attraction and retention tool, it increases the return-to-work rate for new moms, especially those in lower-wage-earning positions. In addition, they argue, paid leave costs less than replacing a new mom who chooses not to return to work. For example, at Google, increasing paid leave from three to five months decreased new-mom attrition by half.

Opponents say the cost is a burden for small employers who would be paying for leave at the same time they are losing the productivity of an employee on extended parental leave.

Three states currently have mandated paid parental leaves: California, Rhode Island, and New Jersey. All finance the benefit through payroll taxes paid into the states’ existing temporary disability insurance programs. California’s policy is a decade old. These states found that new moms do take more time off under paid parental leave, especially lower wage earners, and more new moms return to work after taking parental leave. New moms are also more likely to be working a year after taking parental leave.

Is your organization competitive without paid parental leave?

Despite all the media attention, paid parental leave is still not a widely provided benefit. The MSEC Paid Time Off Survey (2014) shows that 10 percent of organizations offer it and the average number of paid days offered is 14. Nationally, the Bureau of Labor Statistics reports 11 percent of workers can access paid family leave.

When might you consider offering paid parental leave?

Many organizations consider offering a new benefit when their competitors do, and they must compete for the same talent. The MSEC Paid Time Off Survey provides data on what other employers are doing. You can view the data by employer size or industry to get a feel for what your competitors are doing here