Making Paid Family Leave Effective for All Families
California was the first state in the U.S. to implement paid family leave. Comparing data from before and after the program, researchers identified important successes: overall, maternity leaves have doubled and, when mothers return to work, they secure more hours and higher wages on average. But, personal interviews with California families revealed a serious challenge: a third of workers who knew about the program did not apply for paid leave benefits. The benefit was too low. At the time, California provided a benefit equal to 55% of a parents’ wages (called the “wage-replacement rate”). Many parents with modest wages said they couldn’t make ends meet with only 55% of their income. Eileen Appelbaum and Ruth Milkman, the two women who led the survey, concluded, the individuals who were most likely to have the greatest potential need - those who were unlikely to have private savings or employment benefits - were those experiencing the greatest barrier to accessing benefits.
CPJ’s Principles for Family-Supportive Policies include providing effective support to families [link]. In part, this means that paid family leave should be more than a benefit in-name-only but offered in a way that those who most need it can use it.
How can federal and state policy-makers incorporate the principle of effectiveness? One way is to provide a significant wage replacement, especially for low-income households. In California, legislators have reworked their program, increasing the wage replacement to between 60-70% (depending on the worker). A proposal crafted by two prominent think tanks suggests a 70% wage replacement rate for a national paid family leave program. The New Parents Act which provides a family leave benefit in exchange for future Social Security payments allows parents to compress three months of benefits into a shorter time span, ensuring a higher monthly benefit for workers.
Although a higher wage replacement makes family leave more feasible for families, it also adds costs to the program. In order to keep overall costs in check, states have established a maximum weekly benefit. New Jersey, for example, covers ⅔ of workers’ wages up to a cap of $615 per week. Higher income workers receive less than a ⅔ wage benefit. But they are more likely to have supplemental employer benefits or personal savings to rely upon.
As more states and federal policy-makers contemplate new paid family leave policies, they should consider both high wage-replacement with maximum benefits to help balance stewardship and the effectiveness of paid family leave.