“Examining the Importance of Paid Family Leave for American Working Families.”
Good afternoon, Chairman Cassidy, Ranking Member Brown and members of the Committee. I am pleased to be here to discuss how
My name is
It is encouraging that our conversation today is premised on the notion that there is national economic value and a human investment imperative in creating a national paid leave program, and that using a social insurance model is the best way to go. I'm very hopeful that this general agreement signifies that national paid family and medical leave is now no longer a question of "if" or "why" but rather "when," "what" and "how." The details matter tremendously. Fortunately, research, experience and public opinion demonstrate clearly that
At the
A key part of our work to advance paid leave has involved helping to test policy solutions, and we have been honored and humbled to work with advocates and legislators in dozens of states and cities that have adopted paid family and medical leave and paid sick days laws that now cover approximately 41 million people. Just last month, we celebrated
These states set important examples as
America's need for paid leave is well-established and clear - and need doesn't distinguish by political party, or family type, or care need. No one should be kept from seeing their baby's first smile, whether at home or in the NICU, and no one should be forced to miss the opportunity to help a parent - or God forbid, a child - get to cancer treatments, or hold the hand of a spouse as she recovers from a stroke or an injury sustained in military service.
Too often, conversations about paid leave focus exclusively on new moms and babies and - to be sure - the critical importance of parental leave for moms, dads and kids is well-supported by health and economic research. But parental leave is not even half of what's needed, and a poorly designed program that results in a cut in
In my testimony today, I will first talk about why
I. A Shifting Landscape for Families: Demographic and Labor Force Trends Require a Comprehensive National Paid Family and Medical Leave Solution
Discussions about paid leave - here in
A. The Indisputable Need for Leave
Much of the national conversation about, and attention to, paid leave has focused on the needs of mothers and, increasingly, fathers to care for their newborn children. We absolutely know that parental leave - for all parents of new children, whether newborn, newly adopted or newly placed in a foster home - is important for families' economic security, women's workforce participation and earnings over time, child and maternal health, shared division of care within two-parent households and family well-being. n10 Parental leave also helps families maintain financial independence and reduce their use of public programs, such as
Indeed, it is very encouraging that a growing number of lawmakers on both sides of the political aisle agree, at least in principle, that
Children's health needs do not end after the first few months of their lives. Children, especially those with disabilities and chronic health issues, may need care for months or years. When a child is critically ill - whether at birth or later - the presence of a parent shortens her or his hospital stay by 31 percent. n13 Active parental involvement in a child's hospital care may head off future health care needs and reduce costs. n14 But parents without paid leave risk their economic security and their child's well-being by providing care. And sometimes it's the parent of a young child who needs care themselves or must provide care for another family member - and the lack of paid leave in those situations can have serious, long term effects on household financial stability too.
A more comprehensive approach would best serve parents and kids. A 12-week unpaid leave sends millions of working families down deep financial rabbit holes, whereas a paid leave plan that provides even two-thirds' wage replacement for any FMLA reason during that time is estimated to reduce the percentage of families that face significant economic insecurity by a whopping 81 percent nationwide and by 82 percent in the states represented by the Chair and Ranking Member of this subcommittee. n15
B. The Urgent and Growing Need for Family Care Leave and Personal Medical Leave
Put simply, paid leave for new parents is necessary, but it is not a sufficient or complete response to the needs of working people and families. In fact, according to the most recent data commissioned by the
In states that have had temporary disability insurance (TDI) and paid family leave programs in place the longest, people who take paid medical leave through the states' TDI programs also account for a much larger share of claims than parental leave or family care leave. n18
Health emergencies should not trigger financial emergencies - but too often they do because workers who cannot access paid leave either forgo leave altogether or face substantial financial challenges, leading them to dip into savings earmarked for another purpose, take on debt, put off paying bills or use public assistance programs. n19
A white paper the
Family caregiving is a major part of life for millions of working people. Today, 43.5 million people provide unpaid care to family members, and most family caregivers also have full-time, paying jobs. n22 An estimated 36 million working age adults live with a family member with a disability. n23 And there is increasing stress on members of the sandwich generation, the portion of the workforce that is caring for both children and older adults. n24 Millennials (18- to 34 year-olds), whom policymakers may incorrectly assume only need leave to care for a new child, actually need a much more comprehensive leave plan: Among the nation's 40+ million caregivers, one in four is a millennial, who is typically providing 20 or more hours of care to a family member with a serious health issue and working full-time. n25 In addition, the majority of military caregivers - and more than three-quarters of caregivers for post-9/11 wounded warriors - are also in the labor force. n26
Demographic trends point squarely to even more strain on people caring for elderly relatives in coming decades. In 2000, the median age in
This is a care issue, a personal economic security issue for the growing legions of caregivers and a budget issue for
In addition, most working people will themselves need medical leave at some point in their lives and millions of people do not have it - a compelling national problem that any national paid family and medical leave program should solve. Less than 40 percent of the workforce has personal medical leave through an employer's TDI plan and access varies dramatically by job type and wage level. n32 There are increasing numbers of mothers-to-be who face life-threatening complications during or after childbirth; n33 a growing number of Americans with chronic health conditions; n34 and a growing share of older people who remain in the workforce well past the traditional retirement age either because they want to continue working or because they have no other financial option but may also have chronic or acute health issues. n35 Ensuring working people can have paid leave to take time away from their jobs with access to some wage replacement and then go back to work is far preferable to the alternatives, which include no leave, delayed care that jeopardizes their health and increases costs, or an exit from the workforce altogether.
Evidence of the value of paid leave to working people, their families, health systems and government is clear. Paid family leave can support working people who are helping older family members recover from serious health issues, fulfill treatment plans, and avoid complications and hospital readmissions - all of which boost health and reduce costs. n36 Among cancer patients and survivors, access to paid leave is significantly related to completing treatment, managing symptoms and side effects, and being able to afford treatments - yet only half of cancer patients and survivors report having access to paid leave that extends beyond a few paid sick days. n37 Among family members caring for a loved one with cancer, access to paid leave is significantly related to helping loved ones get to treatment, caring for them and caring for their own health, but only four in ten caregivers say they are able to take paid leave. n38 Family caregiving can also support aging in place, which can reduce costs on public programs, but this is more practical when paid leave is available. A
C. The Future of Work
In addition to the demographic imperatives that intensify the need for paid leave, we must also look at the future of work and labor market trends. Of the 30 occupations with the most job growth anticipated between 2016 and 2026, two-thirds are occupations that typically pay wages below the current national median wage. n41 These are also jobs that, today, are unlikely to offer paid family leave benefits. n42 In addition, 10 of these 30 occupations pay low wages and are disproportionately held by women - which underscores the need for change because women continue to shoulder the bulk of caregiving for children and older adults in their families. n43 Unless the private sector substantially enhances leave benefits for lower-wage workers - which even conservative economists admit is extremely unlikely to happen n44 - public policy interventions that create a national baseline are required. Without them, the country will continue to suffer from unrealized economic growth and cost-savings - and working people across the country will continue to be unable to live their dearly-held values related to families and care.
Accounting for the future of work also means grappling with the impact of the contingent workforce and the "gig" economy, which is at least 10 percent of the workforce. n45 It is important to adopt a national paid leave plan that includes people who are entrepreneurs, freelancers, contract workers and others who have what today are considered "nontraditional" employment relationships that, in the future, may be commonplace. People should have access to paid leave, no matter their employers or their jobs.
D. Benefits to Business
Paid leave not only benefits working families; it also benefits employers both directly and indirectly. This recognition, propelled by the growing body of evidence quantifying business value and experiences, is a new and welcome part of the growing bipartisan discussion on paid leave. Business value occurs whether paid leave is adopted as an internal policy or through legislation creating a paid family leave and medical leave insurance program.
Businesses that choose to implement paid leave policies find they help attract talent. A 2016 survey by Deloitte found that 77 percent of workers with access to benefits reported that the amount of paid parental leave employers offer had some influence on their choice of one employer over another. n46 And EY reports that nearly 40 percent of millennials say they would move to another country for better paid leave. n47
Paid leave also positively affects employee retention. According to
Finally, paid leave improves employees' overall well-being: A 2016 EY study found that more than 80 percent of companies that offer paid leave reported a positive impact on employee morale, and more than 70 percent reported an increase in employee productivity. n54 After Nestle improved its parental leave policy, health care costs for infants whose parents took paid leave under the policy went down and mothers who used the policy reported lower rates of anxiety and filed fewer mental health claims. n55
This data is compelling, but the reality is that - even faced with the most persuasive evidence possible - private sector initiatives will never cover all, or even most, working people. That is why a public policy standard that recognizes the shared value of leave for employees, employers and the economy is needed.
Businesses need not fear paid leave insurance programs. Research consistently shows that employers have not been unduly challenged by the public policies adopted in states, have not encountered negative effects of the policies, and, if anything, that companies have found these policies helpful. Businesses in
Even the
In
II. A Comprehensive, Inclusive, Affordable and Sustainable National Paid Leave Plan is What People Want and the Country Needs
The FAMILY Act would create a strong, inclusive national paid family and medical leave insurance program and set a nationwide paid leave baseline. It would cover eligible individuals across the country, no matter where they live, their employer or their job; and it would apply whether they are caring for a new child, a seriously ill or injured loved one, their own serious health condition or dealing with a family member's call to military duty or a service member's health issue. It would do so by creating a new, self-sustaining fund from which working people would receive paid leave for up to 12 weeks. Workers who typically earn low and even mid-level wages would receive two-thirds of their typical wages for that time. And people who need to take time away from their jobs would be protected from retaliation when they do.
The FAMILY Act fund would be self-sustaining and deficit-neutral, just like the state programs that have paved the way. Payroll deductions from both employees and employers and contributions from self-employed workers would fund both the benefits and the administrative costs of the program. The program would be administered through a new
The FAMILY Act would provide the comprehensiveness and affordability that voters want in a paid leave plan, the help that small businesses need to ensure their workers have access to leave, and the consistency and certainty larger multi-state businesses want. It also reflects core values on which people of all ideologies and parties agree: Connecting people to work, valuing care, honoring commitment to family, encouraging health and the responsible use of heath care services, supporting employment and business innovation and strengthening our economy.
Each component in the FAMILY Act is grounded in economic, health, business and user-centered research, including research based on the experiences of workers and employers with state paid leave programs.
A. State Paid Leave Plans Show Us How to Design a Program Built to Last - the FAMILY Act in Perspective
Six states plus the
Evidence from the longest-standing state programs in
State policy designs offer lessons about what a workable national paid leave program should look like, and comparisons to more generous state plans show that the FAMILY Act is a reasonable, common-sense approach to guaranteeing paid leave to America's workforce. I'll touch briefly on key elements that must be embedded in any paid leave plan in order for it to meet the country's needs:
. Comprehensive of all FMLA-covered events and gender-equal. The FAMILY Act would provide paid leave to people equally, no matter their gender, for each FMLA-covered event - caring for a family member with a serious health condition, one's own serious health condition, military family care needs and care for a new child. In every state that has adopted a paid leave plan so far - and in the vast majority of the bills introduced in more than 30 states in the most recent legislative sessions - paid leave would be available for new parents, people caring for seriously ill or injured family members and people's own serious illnesses. To create consistency and to meet the needs of the workforce and employers now and in the future, any federal plan must include all of the FMLA-covered reasons that working people need leave and must offer gender-equal benefits.
. Adequate wage replacement. The FAMILY Act offers a 66 percent wage replacement rate, up to a
Any federal plan must replace at least two-thirds of a worker's wages, as the FAMILY Act does, and offer a meaningful capped benefit so that middle-wage workers can afford to take leave. As
. Meaningful duration of leave. The FAMILY Act offers a combined 12 weeks of leave annually for all FMLA purposes to create consistency with the FMLA, reflect the minimum amount of leave needed for maternal and child health and to provide adequate paid time off for people dealing with personal or family care needs. n67 States' TDI and paid family leave programs go further, and analysis shows that people only use the leave they need, rather than the maximum amount available; n68 after all, with replacement of only a portion of one's typical wages, people have an incentive to get back to work when their need to provide or receive care is over.
The duration of leave in the FAMILY Act is modest compared to many state plans.
. Inclusive family definitions. The FAMILY Act incorporates the FMLA's definition of family members (parents, children under 18, adult children incapable of self-care, spouses) and domestic partners. Each state paid leave law includes those covered in this definition and all but one (
. Affordable, sustainable funding. The FAMILY Act would be funded through small payroll deductions shared equally by employers and employees, or paid in full by independent contractors who receive 1099 forms. This is consistent with state financing of paid leave: Each state plan is funded through payroll deductions that are either paid by employers, employees or shared in some proportion by each. In no state are payroll deductions onerous, ranging from 0.09 percent in
To my knowledge, there has not been any backlash in states on these payroll deduction rates nor does the literature reflect any indication of pushback on these rates as too high or too onerous for either low-wage workers or, where applicable, employers. Researchers have modeled the costs of paid leave programs in states across the country and at the federal level and routinely estimate payroll deductions at or below 1 percent - most within the 0.35 to 0.6 range - depending on the duration of leave and the wage replacement rate. n81
. Employment protections. The FAMILY Act would offer anti-retaliation protections to the 41 percent of workers who are not covered by the federal FMLA. n82 This is critical because research on
B. Public Support for the FAMILY Act Approach
Not only is the FAMILY Act informed by research and successful state experience, it is the type of plan voters support. Survey after survey confirms that people in
To follow up on national polling, the
C. Business Support for the FAMILY Act Approach
More than 75 companies and business leaders across the country have endorsed the FAMILY Act. n90 They represent a cross-section of industries, including apparel manufacturing and sales, food and hospitality, technology and financial services. The reasons they give echo those offered by more than 200 business and management school experts who, in 2015, reached out to
Over the past two years, in individual discussions with company leaders and in meetings with employer coalitions and benefits consultants, we have seen a growing interest in establishing a national paid leave baseline. Some businesses want the certainty and stability that a federal standard would provide; they believe paid leave is coming, either at the state level or nationally, and would prefer to level-set on a national basis. Others focus on the value that their own strong paid leave policies have had on their employees' lives and believe that all working people and families should have the same. For example, a senior leader at
It is not just larger businesses that support the FAMILY Act approach. Smaller businesses across the country see value in a shared-cost model like the ones that have benefited small companies in
III. Paid Leave and Retirement Security Are Both Important - One Cannot Come at the Expense of the Other
The developing consensus that a social insurance model is the right way to design a national paid leave program is encouraging - and we agree that, with new resources for start-up and technology improvements, benefits and administration, the SSA is the agency that is best positioned to administer this benefit. But it is reckless and unnecessary to jeopardize
No one should face delayed retirement and a benefit cut in the future because they access paid leave today. We are deeply concerned that, under a plan proposed by the
There are five key problems with the IWF approach, based on the research and evidence presented above, the realities of retirement for millions of women, low-income workers and people of color and the current circumstances of the SSA itself.
A. Parental Leave Only Is Insufficient
First, as discussed in Section I, any plan that applies only to parents caring for new children and excludes 75 percent of people who take family and medical leave is unacceptable, short-sighted and would very likely be detrimental to the income and retirement security of a growing share of the population caring for aging and ill loved ones or their own serious health issue. Parental-only leave would also lead to stark inequities within the workplace, even for people with young children: A parent of a newborn would have access to paid time away from work for bonding, but a coworker whose six-month-old is critically ill or whose spouse needs postpartum care would have no guarantee of time or income support.
B. Wage Replacement Rates and Benefit Caps Are Too Low to Be Meaningful for Most People
Second, although
C. The IWF Policy Design Could Promote Gender Bias and Reinforce Gendered Caregiving Norms
The first and second problems together create a third: the risk of exacerbating gender-based bias and reinforcing, rather than breaking down, gender stereotypes. A program that only covers new parents and offers low wage replacement rates will be used primarily by lower-wage women who have given birth and have no other option and a significant need. Indeed, one reason the FMLA was designed to cover family caregiving leave and personal medical leave was to minimize the potential for employment discrimination. n98 While fathers increasingly want to, and do, provide care for their families, n99 norms and stereotypes about gender, work and caregiving mean that some employers perceive mothers and young women as less committed workers. A paid leave program that is only accessible to parents, especially one with low wage replacement and low maximum benefits, could exacerbate implicit bias and discrimination, undermining the potential of gender-equal leave to help create workplace equity and foster women's employment opportunities.
D. Retirement Penalties Would Average Tens of Thousands of Dollars - with Especially Harsh Effects in Retirement for Women, People of
Fourth, and of intense concern, is the penalty at retirement that workers who have used parental leave benefits will be forced to absorb. The IWF paper incorrectly assumes that people can make an unconstrained choice to work longer, and it also frames delayed retirement as a trade-off between working longer and a benefit cut, when in fact, delaying retirement itself means lower lifetime benefits.
The IWF proposal would be particularly detrimental to women's retirement security, as well as to people of color and low-wage workers, who are less likely to have employer-provided paid parental leave n102 and therefore would be more likely to use parental leave benefits that will cost them retirement income they will need later.
E. The Social Security Administration Needs Enhanced Resources and Not a Diversion of Existing Resources to Administer a New Benefit
Fifth, the IWF proposal does not contemplate any new resources for the SSA to create or administer this new benefit. SSA is already underfunded, has backlogs and is unable to provide the high-level of customer service that people need. n106
F. Additional Concerns about Setting a Harmful Precedent
Beyond the four corners of the IWF proposal itself, the concept creates a dangerous precedent of diverting existing, dedicated
Finally, while the IWF proposal purports to be budget-neutral, the
We at the
Research and evidence show what a workable plan should include and how it can be designed efficiently and effectively to provide baseline paid leave coverage to every working person in the country, no matter where they live or work or the job they hold. I urge you not to be tempted by a half-measure that would do more harm than good. The FAMILY Act is the paid leave plan the country needs to strengthen families, businesses and our economy and promote many of the core values we collectively hold most dear.
Thank you. I look forward to answering your questions.
n1
n2
n3 Glynn, S. J., & Corley, D. (2016, September). The Cost of Work-Family Policy Inaction: Quantifying the Costs Families Currently Face as a Result of Lacking
n4 Boushey, H., & Glynn, S. J. (2012,
n5 Menasce Horowitz, J., Parker, K., & Graf, N. (2017,
n6 Divecha, D., & Stern, R. (2015,
n7 Letter from Business School Faculty to
n8 Aging and Social Work Experts' Letter to
n9 FAMILY Act Coalition Letter to
n10 ZERO TO THREE &
n11 Houser, L., & Vartanian, T. P. (2012, January). Pay Matters: The Positive Impacts of Paid Family Leave for Families, Businesses and the Public.
n12 Houser, L., & Vartanian, T. P. (2012, January). Pay Matters: The Positive Impacts of Paid Family Leave for Families, Businesses and the Public.
n13 Heymann. J. (2001,
n14 Heymann, J., & Earle, A. (2010). Raising the global floor: dismantling the myth that we can't afford good working conditions for everyone.
n15 diversitydatakids.org. (2018). Full-Year Working Adults Ages 21-64 Living in Families Estimated to be Below 200% of the Federal Poverty Line After Wage Loss Due to 12 Weeks of Paid/Unpaid Family or Medical Leave (Share).
n16 Klerman, J. A., Daley, K., & Pozniak, A. (2012,
n17 Ibid.
n18 Analysis of state temporary disability insurance and paid family leave insurance programs in
n19 Stepler, R. (2017,
n20
n21 Ibid.
n22
n23 Grant, K.,
n24 Parker, K., & Patten, E. (2013, January). The Sandwich Generation: Rising Financial Burdens for Middle-Aged Americans. Pew Research Center Publication. Retrieved
n25 Flinn, B. (2018, May). Millennials: The Emerging Generation of Family Caregivers. AARP Public Policy Institute Publication. Retrieved
n26 Ramchand, R., Tanielian, T., Fisher, M. P., Vaughan, C. A., Trail, T. E., Epley, C., Voorhies, P., Robbins, M. W.,
n27
n28 Ortman, J. (2012,
n29 Redfoot, D., Feinberg, L., & Houser, A. (2013, August). The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers. AARP Public Policy Institute Publication. Retrieved
n30
n31 Ibid.
n32 See note 1, table 16.
n33 Norton, A. (2012, October). Birth Complications On The Rise In The
n34 See note 23; see also Bodenheimer, T., Chen, E., & Bennett, H. D. (2009,
n35
n36 See e.g.,
n37 American Cancer Society Action Network. (2017,
n38 Ibid.
n39 Arora, K., & Wolf, D. A. (2017,
n40 Biegel, D.E., Katz-Saltzman, S., Meeks, D.,
n41
n42 See note 1, tables 16 & 32; see also DeSilver, D. (2017,
n43 See notes 22 & 41; see also
n44 Mathur, A., McCloskey, A.M., & Rachidi, A. (2017,
n45 Mishel, L. (2018,
n46 Deloitte. (2016,
n47 EY. (2015,
n48 See note 5.
n49 Stroman, T., Woods, W., Fitzgerald, G., Unnikrishnan, S., & Bird, L. (2017, February). Why Paid Family Leave Is Good for Business. Boston Consulting Group Publication. Retrieved
n50 See note 4.
n51 Ibid.
n52 Allen, D. G., Bryant, P. C., & Vardaman, J. M. (2010). Retaining talent: Replacing misconceptions with evidence-based strategies.
n53 Hausknecht, J. P., & Holwerda, J. A. (2013). When does employee turnover matter? Dynamic member configurations, productive capacity, and collective performance. Organization Science, 24(1), 210-225; see also note 30.
n54 See note 49.
n55
n56 Milkman, R., & Appelbaum, E. (2013). Unfinished Business: Paid Family Leave in
n57 Ibid.
n58
n59 Ramirez, M. (2012). The Impact of Paid Family Leave on New Jersey Businesses.
n60 Lerner, S., & Appelbaum, E. (2014, June). Business As Usual: New Jersey Employers' Experiences with
n61 Bartel, A., et al. (2016, January). Assessing
n62
n63
n64 Bana, S., Bedard, K., & Rossin-Slater, M. (2018, May). Trends and Disparities in Leave Use under
n65
n66 See note 63.
n67 WORLD Policy Analysis Center. (2018, February). A Review of the Evidence on the Length of Paid Family and Medical Leave. Retrieved
n68 Analysis of state temporary disability insurance and paid family leave insurance programs in
n69 Cal. Unemp. Ins. Code [Subsec.] 3301(c), 2653.
n70
n71
n72
n73
n74
n75
n76 S.B. 5975, 65th Leg., 3rd Special Sess. (Wash. 2017).
n77 H. 4640, 190th Gen. Court, Reg. Sess. (Mass. 2018).
n78 See note 63.
n79
n80 See note 63.
n81
n82 See note 16.
n83 See note 65; see also Setty, S., Skinner, C., & Wilson-Simmons, R. (2016, March). Protecting Workers, Nurturing Families: Building an Inclusive Family Leave Insurance Program Findings and Recommendations from the
n84 See note 63.
n85
n86 Ibid.
n87
n88
n89
n90 Better Workplaces, Better Businesses. (n.d.). Testimonials from Business Leaders Who Support the FAMILY Act. Retrieved
n91 See note 7.
n92 Bonilla, A. (2017,
n93
n94
n95 We are responding here to the
n96
n97 WORLD Policy Analysis Center. (2018, February). A Review of the Evidence on Payment and Financing of Family and Medical Leave. Retrieved
n98 Family and Medical Leave Act of 1993, Pub. L. No. 103-3, [Sec.] 2, 107 Stat. 6, 6-7 (1993), available at https://www.dol.gov/whd/fmla/fmlaAmended.htm#SEC_2_FINDINGS_AND_PURPOSES.
n99
n100 Favreault, M. M., & Johnson, R. W. (2018, April). Paying for Parental Leave with Future Social Security Benefits. Urban Institute Publication. Retrieved
n101 Ibid.
n102 See note 1, table 32; Analysis of demographic data from several
n103 Dushi, I., Iams, H. M., & Trenkamp, B. (2017, May). The Importance of Social Security Benefits to the Income of the Aged Population. Social Security Bulletin, 77(2), 1-12. Retrieved
n104
n105
n106 Romig, K. (2017,
n107 Lukas, C. (2018,
n108 See note 99.
Read this original document at: https://www.finance.senate.gov/download/07112018-shabo-statement&download=1
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