Blog Post

Better Parental Leave Isn't a Perk—It's Smart Business

Jessica Stillman

Freelance Writer

Currently just 11 percent of American workers get paid family leave either through their employers or state programs, according to the Bureau of Labor Statistics. That's a pretty paltry percentage.

The low number reflects the fact that America is the only developed nation that does not require paid leave to new parents, but it also indicates the skepticism of American employers about the business benefits of maternity and paternity leave. Whatever their good intentions, a great many companies worry that paid family leave is a luxury they can't afford.

But while it's fair for companies to question whether paying a worker who isn't actually working makes business sense, a tremendous amount of research has been done on the benefits of maternity and paternity leave and it all points in the same direction. Far from being a matter of charity, paid family leave is good business.

The numbers from study after study show that in the medium to long-term doing the right thing by parents can pay for itself.

1) Mothers with Paid Leave Are 93 Percent More Likely to Keep Working

You can't employ someone who isn't actively involved in the workforce and, in America, the number of women working or looking for work has been declining in recent years (from 75 percent in 2000 to 71 percent in 2016). Economists blame a healthy percentage of that decline on the lack of family-friendly policies.

Just how much more female talent could companies retain if they offered paid parental leave? One study out of the Center for Women and Work found that women who took maternity leave were 93 percent more likely to be working nine to twelve months after giving birth than those who didn't take leave.

That's a wide angle look at the impact of paid leave on retention, but more focused studies at individual companies have produced numbers that are just as compelling. When Accenture extended paid leave from eight to 16 weeks, female attrition fell 40 percent. And when Google increased maternity leave from three to five months and from partial to full pay, the turnover rate for female employees decreased by half.

"When we eventually did the math, it turned out this program cost nothing. The cost of having a mom out of the office for an extra couple of months was more than offset by the value of retaining her expertise and avoiding the cost of finding and training a new hire," explained Google's then HR boss Laszlo Bock.

2) 91 Percent of Businesses Say Paid Leave Didn't Dent Productivity

While America is the only developed country without national paid parental leave there are state programs that offer new parents more support. The introduction of these programs created natural experiments—when the new policies came into effect did businesses experience huge disruptions or noticeable dips in profitability?

Quite the opposite. When California introduced six weeks of paid leave, researchers at the Center for Economic and Policy Research studied the impact and found an incredible 91 percent of businesses said the policy had either a positive or no effect on profitability. Paid leave didn't hurt productivity, turnover or employee morale either. A similar study in New Jersey found that 69 percent of employers said that paid leave had either a positive effect or no effect on their businesses.

3) Paid Leave Policies Influence 77 Percent of Prospective Employees' Choices

Not only will offering paid leave help you retain the people you already have and cause less disruption than you probably think, a generous paid leave program also helps companies attract the best talent in competitive markets. In a 2016 survey of 1,000 American adults by accounting firm Deloitte, 77 percent of people said potential employers' parental leave policy affected their choice of where to work at least a little.

Photo: Twenty20

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