State Paid Parental Leave Policy: A Tool to Reduce Inequality Within and Between Families

David W. Rothwell, M.S.W., Ph.D.
/ NCFR Policy Brief

Policy Brief- January 2024

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Talking Points

  • At the time of a new birth, nearly all parents leave the workforce for the short term, for the long term, or permanently. Paid parental leave during this period guarantees that all families continue receiving economic resources and reduces stress at a critical point in the life course for families.
  • Low-income workers have the most inflexible jobs and the least access to paid parental leave.
  • The lack of a federal paid parental leave law means that many workers are without access to unpaid or paid leave. The existing patchwork of employer-sponsored and state-administered paid leave programs leads to many gaps across and within families.
  • At the time of a new child’s arrival, facing difficult trade-offs, low-income mothers and their partners often choose to work out of economic necessity.
  • When state policies provide universal eligibility and sufficiently high wage replacement, paid parental leave policies can potentially reduce income inequality between and within families.

Abstract

In the absence of federal legislation, 13 states and the District of Columbia have implemented or passed paid parental leave policy. New evidence suggests that paid parental leave improves maternal and child health, reduces economic hardship, and has a positive impact on partner relations. Policy design features such as eligibility, leave duration, and wage replacement rates vary across states. To reduce between- and within-family inequality, paid parental leave should be accessible to all workers, should include full or near-full wage replacement, and should last at least 12 weeks.

The rise in levels of education and female employment across the 20th century has greatly reduced gender gaps in pay and employment. This rise in education and female employment has also exposed new demands for family care, child care, elder care, and caring for the ill, all of which are family responsibilities historically carried out by women and mothers at home.1 As social and economic life continues to change rapidly, policymakers are grappling with how to support families who need time away from work to care for self or family. Paid family and medical leave (PFML) policies provide families with time to give care, economic stability via wage replacement, and a connection to the labor market. Family leave policies originate with the employer or with governments at the city, state, or federal level. In the absence of federal policy, 13 states and the District of Columbia have implemented or passed legislation for paid family leave, which includes parental leave. As policies have rolled out, new evidence on the impacts of paid family leave has proliferated.

This brief appraises evidence on the effects of state-level paid leave policy, with a specific focus on inequalities across the income distribution. It is worth noting that most of the accumulated evidence embraces a heteronormative assumption, under which families comprise male fathers and female mothers. As a result, the perspectives and policy responses of LGBTQ and other diverse families are largely absent from the research. The goal of this brief is to summarize the evidence to inform state policymakers who are considering adopting or revising paid parental leave policy.

Definitions: Parental leave

Across the life course, nearly all families will sooner or later experience a need to leave work to care for self or family members. While PFML includes parenting, medical, and other types of leave, this brief focuses primarily on paid parental leave. Parental leave refers to time off from work to care for and bond with a newborn, a newly adopted child, or a newly placed foster child. Leave for medical reasons or leave to care for other nonchild family members is often included in PFML policies but is not the focus of this brief.

Legal scholars have distinguished at least six rights related to workplace leave that are central to understanding how paid parental leave functions: (1) the generic right to "leave," (2) the right to reinstatement, (3) the right to pay, (4) the right to continuation of health insurance, (5) the right against retaliation, and (6) the right against interference.2 Three elements are important for understanding state-level paid parental leave policy:

a. Time away from work: The generic right to be absent from work is the most fundamental, and this right is tied to a fixed duration of leave.
b. Protected job status: The right to return to one’s job guarantees that the worker can continue working in the same capacity after the leave is complete.
c. Pay: Also known as wage replacement, this involves a legal right to monetary compensation during the time of leave. Paid family leave policies typically are based on a percentage of worker income up to a cap and can be complicated by a choice or requirement to use other accrued paid leave, such as vacation or sick time. Paid leave is critical for families because it smooths the economic instability that comes with the arrival of a new family member.

The problems with no national paid parental leave

Following the birth of their first child, the majority of women return to work within 6 months, and a third of mothers return within 8 weeks.3 Since 1993, workers in the United States have had access to 12 weeks of job-protected but unpaid family leave during any 12-month period through the Family and Medical Leave Act (FMLA). To be eligible for FMLA, one must work for an eligible employer with at least 50 employees and must have worked at that organization for at least 12 months or 1,250 hours. The key provisions include 12 weeks of job projected leave with continuation of insurance coverage.

This U.S. approach to leave is unique in that it provides an unpaid individual entitlement. The current policy is further distinguished by its focus on medical and caregiving needs, gender neutrality, and its nontransferable nature. In other countries family leave is designed around who provides and receives care.4 Many states have introduced various forms of unpaid family and medical leave to complement the FMLA policy coverage. For states that have implemented paid family leave, leaves from work are not always protected. For example, workers in Washington have access to paid family leave but no job protection beyond that provided by FMLA. State-level paid parental leave policies generally provide more generous eligibility than FMLA. For example, in California, all private-sector employees are covered and self-employed workers can opt in to the state paid leave program.

Eligibility for leave involves potential eligibility from a variety of sources, including FMLA, state unpaid leave, state paid leave, and employer-provided paid leave. This fragmented and complex system of support falls short of supporting all modern working families and generates between- and within-family inequalities.5 The primary shortcoming of the status quo is the lack of universal access. Whether families have access to paid leave depends on their employer or state of residence. Presently, many workers do not qualify for FMLA—specifically, around 44% of workers.6 Most workers lack access to employer-provided paid leave.7 And low-income families are less likely to take FMLA because they cannot afford unpaid leave.8 Because the quality of jobs and income distribution are racially stratified, there are notable racial/ethnic inequalities in access to FMLA and employer- and government-provided paid leave.9,10 The lack of standardized access to paid parental leave creates inequalities within families. For two-parent families, it is common for one partner to be eligible for one set of leave provisions (e.g., job-protected but unpaid leave) while the other partner has another (e.g., 6 weeks of employer paid leave). The lack of wage replacement (i.e., lack of paid leave) is another central problem with the status quo. Without pay, families who may be covered by unpaid FMLA struggle with how to cope with a decline in household income when consumption goes up. This concern is heightened if we look across families, as those working in low-wage jobs often struggle to make ends meet. Research has demonstrated that providing paid family leave reduces but does not eliminate income losses for Black and Hispanic mothers.8,11 

What have we learned from state policies?

Since the late 1970s, the constellation of social programs to support children and families has grown increasingly decentralized. On the one hand, this devolution of power from Washington, D.C., to states has led to innovation and variation in how family policies operate.12 On the other hand, states have diverged, with some trending toward providing resources necessary to help families thrive, while other states provide less and less social provision, which ultimately results in inequality across states.13 Without a standardized federal approach, state legislatures are driving variation in how government supports or fails to support working parents.14 Beginning with California in 2004, several states have since initiated some form of paid family leave.

Table 1 describes the 13 states and the District of Columbia family leave policies. It is important to note that policy parameters have changed over time; for example, California’s policy began with wage replacement set at 55% but is now at 70%.15

Across the jurisdictions with active or to-be-implemented family leave laws, there is considerable variation in the amount of protected leave and wage replacement. Notably, most states that have implemented or that will implement policies after 2020 will guarantee at least 12 weeks of paid leave and at least 80% of wage replacement for low-income workers.

Table 1. The 13 states and the District of Columbia with paid leave policies in 2023

State Year Effective Maximum length of leave in weeks Percent of worker's weekly wage for lowest income earners
California 2004 8 70
New Jersey 2009 12 66
Rhode Island 2014 4 Anchored to 4.62 percent of the highest quarter in the worker’s base period
New York 2018 12 55
District of Columbia 2020 8 90
Washington 2020 12 90
Massachusetts 2021 12 80
Connecticut 2022 12 95
Oregon 2023 12 100
Colorado 2024 12 90
Maryland 2025 12 Unclear
Delaware 2026 12 80
Maine 2026 12 90
Minnesota 2026 20 90
Note. Each state has specific eligibility criteria for which the percent of worker’s weekly wage applies (e.g., in D.C., the 90% rate applies to workers paid wages less than or equal to 150% of the minimum wage.) Data from National Partnership for Women and Families. https://nationalpartnership.org/wp-content/uploads/2023/02/key-facts-th….

Effects of paid parental leave

The evidence to date shows that families make use of paid leave when it is available. The most claims in PFML programs to date have been for medical leave, followed by family leave.16 In reviewing the literature on the effects of state policies, most empirical work has emerged from California. And much of the research has focused on health outcomes—showing that access to paid parental leave encouraged breastfeeding, on-time vaccinations, and postpartum care.17-19 Paid leave also improved parent health20,21 and infant and child health,20 and it reduced mental health problems,22,23 stress, depression, and postpartum depression.24

A second line of research has examined how paid parental leave relates to subsequent employment. California’s paid leave law was found to increase the number of hours worked by new mothers from 10% to 17%.11 One year post-birth, the California policy had increased the probability of mothers returning to work by 18%.25 The employment impacts appear to be lower among low-income mothers eligible for Temporary Assistance for Needy Families (TANF).26 Nevertheless, the sum of evidence has led some to conclude the policy improves long-term economic security for unpaid caregivers who enter the labor force.27

Regarding family relationships, by delaying or preventing early return to work, PFML may improve relationships between parent and child. A qualitative study in New Jersey found that mothers who used PFML appreciated the time away from work to bond with their children, although many desired more time.28 Workers in low-quality jobs who used California’s PFML compared to those who did not reported that the policy had a positive effect on their ability to care for a new child and arrange for childcare.29 Using data from the Internal Revenue Service, one study found that California’s PFML produced sizable monetary investment in parenting among eligible mothers.30 When fathers take paid leave, it can demonstrate investment in parenting and the father-child relationship. The introduction of California’s PFML increased father leave by 46%.31 Further, in a study restricted to two-parent families where fathers were employed at the time of birth, when fathers took time off from work, they were more likely than comparison fathers to remain in stable relationships.32 Similar work restricted to couples who were romantically involved and in which the father was employed at the time of birth found that paternal uptake of leave reduced the likelihood of family dissolution.33 And fathers’ time off from work has been positively associated with relationship and coparenting quality at 1 year and 5 years after birth.34 Overall, relative to health and employment, much less research has been conducted on how PFML shapes family relationships and functions such as caregiving, resource sharing, and partner support.

Low-wage work and inequality in paid parental leave

Before, during, and after childbirth, economic resources fall because parents who were working leave the labor market for some period of time. The magnitude of change in economic resources around childbirth is greater for low-income families and single mothers than for high-income families and wedded mothers.35 And low-income mothers return to work at lower rates than higher-income mothers because, often, the benefits of returning to work do not outweigh the costs.3,36 Because of these realities, the wage replacement inherent in paid parental leave policy has outsized impacts on the family finances of low-income families. Several other realities illuminate why paid parental leave is especially important for low-income families:

  1. Low-quality jobs. The nature of work makes it especially difficult for some low-income families to manage work and care. Low-quality jobs are characterized by a lack of flexibility, scheduling uncertainty, and income instability as a result of frequent job changes and income fluctuations.37 As inequality rises, low-skilled jobs have become more unstable.38,39 Current estimates suggest that the service sector makes up about 20% of the U.S. labor force.40 Other jobs in production and transportation, part-time, and construction and manufacturing are considered low quality.
  2. Access to paid parental leave and program uptake. For workers living in states without PFML policy, workers in low-quality jobs are much less likely to have access to paid parental leave than other workers. Among the top quarter of wage earners, 35% have access to some form of paid parental leave, compared to 12% in the bottom quarter.7 An early comparison of California PFML administrative data revealed that mothers above the 25 percentile of the income distribution were disproportionately using PFML.41 Other research from California showed lower uptake among low-wage employers.42 By and large, workers with a college degree or more are more likely to have access to employer paid leave provisions and qualify for or know about state-sponsored paid leave provisions. Without access to a federal system of paid parental leave, low-income mothers have reported distress about having to return to work out of economic necessity.28
  3. The role of the safety net. Around the time of a new birth, working women with low incomes must negotiate the trade-offs of low-wage work, cash assistance from programs such as TANF, and (if available) the wage replacement included in paid parental leave. Without access to paid parental leave, some low-income mothers enroll in TANF (especially those with work histories) for short periods as a pseudo-means-tested paid parental leave program.43 A persistent question for policymakers centers on the extent to which paid parental leave may reduce participation in TANF and other safety-net programs. Low-income mothers might replace or combine resources received from TANF and paid parental leave. One study found that mothers in states with PFML laws were 4% less likely to use TANF than comparable mothers in states without PFML.44

Challenges in implementation

The idea of paid parental leave is supported by a majority of voters and both Republican and Democrat leaders.45 Paid parental leave was debated in the 117 U.S. Congress but dropped during the later stages of negotiations for the Inflation Reduction Act.46 In the near future, action on paid parental leave policy is likely to occur at the state level. States looking to support working families will need to consider how to implement or revise existing paid parental leave policies. There is considerable variation in states’ preparation and readiness to implement PFML policies. Many states that were early adopters of paid parental leave had existing Temporary Disability Insurance (TDI) programs that serve as a de facto paid parental leave policy. For example, California, Hawaii, New Jersey, New York, and Rhode Island have TDI programs that provide wage replacement but not job protection.47 Several challenges must be considered. Research has not yet studied how variation in these elements will affect family well-being and inequality, but this is a fruitful area for future study.

First, states must decide eligibility criteria and duration of leave. Will all workers, including those on the fringes, such as seasonal and part-time workers, be eligible for paid leave? Will there be earnings and work history requirements, and if so, how much of each? Policymakers also must decide the amount of wage replacement and the extent to which the pay amount will be progressive. If wage replacements are not high enough to make ends meet, it is likely that many low-income families will not use the program.8 Length of leave is also critical. Cross-national research has shown that 24 weeks of leave may provide the health and family benefits of leave without penalizing long-term employment and economic trajectories.48 More work is needed to determine the ideal length of leave in the U.S. context. Where states land on these policy decisions will determine the extent to which paid parental leave reduces or worsens existing inequalities within and between families.

During implementation, states must address barriers, such as low awareness and confusion surrounding the policy.28,49 Further, there is likely to be uncertainty surrounding whether paid parental leave benefits count toward means-tested programs such as TANF and food assistance eligibility criteria. States must grapple with establishing the insurance pool, including thorny questions around how much employers and employees will contribute. A final policy question centers on employer eligibility. In most states, there is a cap on the size of the employer that allows businesses with smaller numbers of employees to opt out. Despite research showing benefits to employers and general support for PFML policies,50 how to protect small businesses remains a critical concern.

Conclusion

Around the time of a new birth, the levels and availability of family economic resources shape the relationships among caregivers and are critical to a child’s lifelong health and development. Parents face difficult choices around how to manage time off from work to ensure the stability of economic resources. Without a national paid family leave law, access to paid leave varies widely by employer and geographic location, leading to inequalities between and within families. While passing national paid parental leave has proved challenging, there is an opportunity for states to consider new policies or revisions to existing ones.

The body of research to date suggests that access to paid leave from work improves health, reduces gender inequalities at home and in the labor market, and helps families avoid economic hardship. For low-income workers, replacement rates are particularly salient—low replacement rates may not encourage program uptake and lead to complex choices between paid leave and existing cash assistance programs. Overall, by guaranteeing continuity of resources around welcoming a new member to the family, state-level policies on paid parental leave have the potential to make a positive impact on families. But policy structure matters such as eligibility, replacement rates, and duration of leave are likely to determine the extent to which paid parental leave policy will effectively reduce inequalities.

Policy Recommendations

  1. Establish universal paid parental leave for all workers, including part-time and seasonal workers.

  2. Provide full wage replacement to low-income workers to ensure economic stability.

  3. Promote paid leave policy to ensure maximum uptake. Promoting the program will require educating employers, employees, and institutions.

  4. Conduct family-centered research on the potential impacts of paid parental leave for parents and all families.

  5. Support cross-state research on how policy elements such as eligibility, replacement rates, and duration of leave affect family well-being and inequality.

 

Author Bio

David W. Rothwell, M.S.W., Ph.D., is the Barbara E. Knudson Endowed Chair in Family Policy and an Associate Professor of Human Development and Family Sciences at Oregon State University.

 

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