Parental leave economics

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Parental leave economics refers to the economic aspects of parental leave; specifically, how market-based economies shape the perception, policy creation (by employers and governments), and use of parental leave. Parental leave is a broad term that encompasses maternity and/or paternity leave to care for an infant, as well as leave taken to care for a child who has been placed through adoption or foster care.[1] This leave offers job protection, and can be paid or unpaid, depending on the employer. In the United States, the Family and Medical Leave Act of 1993 (FMLA) provides for 12 weeks of unpaid parental leave for parents and, while there is no mandate requiring employers to provide paid parental leave, some employers within the private sector have incorporated paid parental leave into their benefit packages.[2]

Economics and morality[edit]

Morality is one economic aspect which has substantial impacts on social policy, its formation and use. One method of understanding the morality of economy is through the metaphor of a sphere, explained aptly by Browne, who also notes that initiatives on the part of individuals and businesses also affect the size and scope of the sphere: “Two key points clarify the meaning of a moral sphere in capitalist societies:

  1. It is clearly interior to the larger social context
  2. The sphere’s relative size and contents reflect not the degree to which the economy is moral but rather the degree to which certain mandates (as expressed in law or custom) organize the moral concerns of the economy.”.[3]

This understanding of the morality of the capitalist system allows us to see how the policies surrounding parental leave are impacted not only through policies created by the state (that is, the federal government), but also by the interests of businesses and individuals within the state. Each of these three actors have economic concerns regarding the concept and implementation of parental leave which in turn shape the ways in which parental leave policies are created and used.

State-level factors[edit]

The United States has created a federal policy that addresses parental leave: the Family and Medical Leave Act (FMLA). The United States Congress passed this bill with the understanding that “it is important for the development of children and the family unit that fathers and mothers be able to participate in early childrearing … [and] the lack of employment policies to accommodate working parents can force individuals to choose between job security and parenting”.[4] Since the bill was passed, studies have shown additional benefits of parental leave, including reduced infant mortality rates.[1] Although much of the research has been conducted on populations in other countries,[5] Berger et al.[6] found that children in the United States whose mothers return to work within the first 3 months after giving birth are less likely to be breastfed, less likely to have all of their immunizations up to date (by 18 months), less likely to receive all of their regular medical checkups, and are more likely to exhibit behavior problems at age four. Chatterji and Markowitz [7] also found an association between longer lengths of maternity leave and lesser incidence of depression among mothers.

In the creation of the bill, Congress also stressed that this piece of legislation was intended to provide leave protection for individuals “in a manner that accommodates the legitimate interests of employers”.[8] In order to accomplish this, the FMLA places restrictions on which workers are eligible for the unpaid, job-protected leave. Workers are eligible if they have been employed for at least 12 months by their employer, and have worked at least 1,250 hours during the past 12 months for their employer (roughly equivalent to 25 hours per week). Employees who meet these conditions are not eligible, however, if their employer has fewer than 50 employees (either at that work site or within a 75 mile radius of that site). In addition, if a husband and wife have the same employer, “the aggregate number of workweeks of leave to which both may be entitled may be limited to 12 workweeks” [9] if the employer so chooses.

A final stipulation of eligibility deals with “highly compensated employees” who are defined as “a salaried eligible employee who is among the highest paid 10 percent of the employees employed by the employer within 75 miles of the facility at which the employee is employed”.[10] These highly paid individuals are eligible for the leave, but their employers are not required to restore them to their original position (or an equivalent position with equivalent pay and benefits, as is guaranteed to other employees) if the employer determines that denying the employee their position is “necessary to prevent substantial and grievous economic injury to the operations of the employer” [10] and the employer provides the worker with notice of this decision, though no time frame for providing this notice is established.

If, after meeting all of the above requirements, an employee is determined to be eligible and takes the job-protected leave, it is in an unpaid status unless the employer either elects to provide paid compensation for the leave, or if the employee elects to use their annual and/or sick leave for this time. In addition, the legislation allows for the ability of the employer to require that the employee use their accrued paid leave time while taking leave under the FMLA.[11]

As a result of the many conditions attached to eligibility for leave under the FMLA, many American workers find themselves ineligible to take job-protected leave upon the birth or adoption of a child. Han and Waldfogel, in their analysis of the impact of the FMLA, note that “only about 60% of private sector workers are covered” [12] due to the clause stipulating a minimum number of employees, and once the clause stipulating a minimum number of hours worked is added, only 46% of private sector workers are eligible for leave under the FMLA.

Employer influences[edit]

The FMLA was designed, in part, with employers and their interests in mind. To some extent, some businesses adopt policies that are favorable to workers or public opinion. Kelly and Dobbin [13] note that labor economists, among other commentators, “argue that employers created maternity leave policies in response to a change in the labor market, namely feminization. This claim reinforces the idea that, in the United States, the market is powerful and the state is not.” In their study of the rise of maternity leave policies in the United States, Kelly and Dobbin found the opposite: that public policy surrounding pregnancy as a temporary disability gave rise to business practices that included maternity leave as a benefit. What happened after, they argue, is that both politicians and business leaders forgot the role that the initial policy played in the ultimate creation of the FMLA, a situation that Kelly and Dobbin [14] call “evidence of the remarkable rhetorical power of the market.”

American workers under capitalism are not afforded many of the same economic benefits of other countries, including paid parental leave. Companies are slowly starting to offer paid parental leave as a benefit to workers, seeing a profitable aspect of doing so, including reduced turnover costs, and increased productivity from workers along with increased rates of retention among women after childbirth. Since the enactment of the FMLA in 1993, more companies are offering paid parental leave, although only eight per cent of American workers had access to paid parental leave in 2007.[2] Some see the increase in paid parental leave as indicative of companies reaching out to women, as more women are working and returning to work after having children, and by doing so these companies generate positive publicity as employers with family-friendly workplaces.[15] Ruhm [16] also found that paid parental leave in Europe raises the overall percentage of women who are employed, with a larger impact on women of child-bearing age (25–34 years of age).

As Browne noted,[17] “With its nonencompassing moral sphere, a capitalist system generally makes no attempt to accommodate concerns about moral economic activity that lie outside the sphere unless these concerns either threaten to undermine an enterprise or present an opportunity to profit by integrating the concern”. Employers have an opportunity to profit through positive publicity by offering paid parental leave. For example, Working Mother magazine [1] publishes a list of 100 Best Companies for working mothers each year, a list which is noted not only by the readership of the magazine, but also by corporate America and increasingly by researchers and policy institutes as well.[15]

Companies who are offering paid parental leave are seen as leaders in adopting family-friendly policies, and are thus being used as positive role models in both the private and public sector. The Institute for Women’s Policy Research issued a report in 2009 [15] encouraging Congress to enact proposed legislation that would give federal workers four weeks of paid parental leave. In addition to research showing reduced turnover costs associated with women leaving their job after having a child, the report cited not only statistics from the Working Mother 100 Best Company list, but also a specific private sector corporation that saw a substantial increase in the retention of new mothers after adopting a longer maternity leave policy. The report also noted that it would take newer workers four years to accrue enough paid leave (sick leave and annual leave) to equal the 12 weeks of unpaid parental leave provided under the FMLA, and that private sector companies which offer paid parental leave have a significant advantage over the federal government in the recruitment and retention of younger workers who may wish to have children.

Domestic economics[edit]

Many workers in the United States are covered under the FMLA, and are thus eligible to take up to 12 weeks of unpaid leave upon the birth or adoption of a child. However, due to economic concerns, parents often do not utilize this eligibility to its fullest extent, and as a result, some studies show that the FMLA has had a limited impact on the leave-taking behavior of new parents.[18] Though specific amounts can vary, having a child (including the cost of high-quality childcare) costs families approximately $11,000 in the first year.[15]

These financial issues contribute to new mothers in the United States returning to work quicker than new mothers in European countries – approximately one-third of women in the United States return to work within three months of giving birth, compared to approximately five per cent in the UK, Germany, and Sweden,[19] and just over half of mothers in the United States with a child under the age of one work.[20]

Fathers tend to use less parental leave than mothers in the United States as well as in other countries where paid leave is available,[18][21] and this difference may have factors other than the financial constraints which impact both parents. Bygren and Duvander,[21] looking at the use of parental leave by fathers in Sweden, concluded that fathers’ workplace characteristics (including the size of the workplace, whether there were more men or women in the workplace, and whether the workplace was part of the private or public sector) influenced the length of parental leave for fathers, as did the presence of other men who had taken parental leave at an earlier point in time.

References[edit]

  1. ^ a b Tanaka, S. 2005. "Parental Leave and Child Health Across OECD Countries." The Economic Journal. 115(501):F7-F28
  2. ^ a b Lovell, O'Neill et al. 2007. "Maternity Leave in the United States." Institute for Women's Policy Research.
  3. ^ Browne, K.E. 2009. Economics and Morality: Introduction. Economics and Morality: Anthropological Approaches. K.E. Browne and B.L. Milgram, eds. Lanham, Maryland. AltaMira Press:1–40. p17 quoted
  4. ^ Congress. 1993. Family and Medical Leave Act of 1993. Washington, D.C. pH.R.1–2 quoted
  5. ^ Gregg,P.E., Washbrook et al. 2005. "The Effects of a Mother's Return to Work Decision on Child Development in the UK." The Economic Journal. 115(501):F48-F80.
  6. ^ Berger, L.M., Hill, et al. 2005. "Maternity Leave, Early Maternal Employment and Child Health Development in the US." The Economic Journal. 115(501):F29-F47.
  7. ^ Chatterji, P. and Markowitz, S. 2005. "Does the Length of Maternity Leave Affect Mental Health." Southern Economic Journal. 72(1):16–41.
  8. ^ Congress. 1993. Family and Medical Leave Act of 1993. Washington, D.C. pH.R.1–2 quoted.
  9. ^ Congress. 1993. Family and Medical Leave Act of 1993. Washington, D.C. pH.R.1–6 quoted.
  10. ^ a b Congress. 1993. Family and Medical Leave Act of 1993. Washington, D.C. pH.R.1–8 quoted.
  11. ^ Congress. 1993. Family and Medical Leave Act of 1993. Washington, D.C.
  12. ^ Han, W.-J. and Waldfogel, J. 2003. "Parental Leave: The Impact of Recent Legislation on Parents' Leave-Taking." Demography. 40(1):191–200. p191 quoted.
  13. ^ Kelly, E. and Dobbin, F. 1999. "Civil Rights Law at Work: Sex Discrimination and the Rise of Maternity Leave Policies." The American Journal of Sociology. 105(2):455–492. p487 quoted
  14. ^ Kelly, E. and Dobbin, F. 1999. "Civil Rights Law at Work: Sex Discrimination and the Rise of Maternity Leave Policies." The American Journal of Sociology. 105(2):455–492.
  15. ^ a b c d Miller,K., Helmuth, A.S. et al. 2009. "The Need for Paid Parental Leave Policy: Adapting to a Changing Workforce." Institute for Women's Policy Research. Washington, D.C.
  16. ^ Ruhm, C. 1998. "The Economic Consequences of Parental Leave Mandates: Lessons from Europe." The Quarterly Journal of Economics. 113(1):285–317.
  17. ^ Browne, K. 2009. Economics and Morality: Introduction. Economics and Morality: Anthropological Approaches. K.E. Browne and R.L. Milgram, eds. Lanham, Maryland. AltaMira Press:1–40. p18 quoted
  18. ^ a b Han, W.-J. and Waldfogel, J. 2003. "Parental Leave: The Impact of Recent Legislation on Parents' Leave-Taking." Demography. 40(1):191–200.
  19. ^ Berger, L.M., Hill, J. et al. 2005. "Maternity Leave, Early Maternal Employment and Child Health Development in the US." The Economic Journal. 115(501):F29-F47.
  20. ^ (Johnson 2007)
  21. ^ a b Bygren, M, and Duvander, A.-Z. 2006. "Parents' Workplace Situation and Fathers' Parental Leave Use." Journal of Marriage and Family. 68(2):363–372.

External links[edit]

  • Working Mother magazine Best Companies [2]