Small businesses are ready to embrace paid family leave

Federal paid family leave
Families, parents, and caregivers bring their stories and voices to Capitol Hill to call on Congress to include paid family and medical leave in the ‘Build Back Better' legislative package.
Paul Morigi—Getty Images for PL+US

Among the many reasons the U.S. does not yet have federal paid family leave is the idea that it’s too expensive and burdensome for small businesses to offer months of time off to new parents. But new research shows that when given the option, small businesses like the policy. 

In a survey of small companies in New York and New Jersey, two states with paid family leave, 71% said they were very or somewhat supportive of paid family leave, according to a November working paper from the National Bureau of Economic Research. That’s up from 62% a year earlier, before the pandemic. 

“Contrary to some commonly-cited rhetoric, small employers in states with [paid family leave] programs are actually quite supportive of PFL,” the paper said.

President Joe Biden’s Build Back Better Act currently includes 4 weeks of paid family leave—a historic first for the U.S. that still falls many months short of what most other countries offer new parents. The U.S. is one of just seven countries around the world that doesn’t guarantee any paid maternity leave, leaving the vast majority of workers with nothing at all.

Studies have found paid family leave benefits families, employees and businesses. Women with access to leave are more likely to return to work, which allows companies to hang on to existing workers and save on the costs of replacing them in a tight labor market. The economy benefits when men take paternity leave too. 

The passage of federal paid leave hinges on the support of Senator Joe Manchin. The West Virginia lawmaker has reportedly raised concerns about the logistical challenges for small businesses dealing with employee absences, potential fraud under the program and the policy’s overall cost. 

The new NBER research shows that firms that had workers that used paid leave were more supportive of it. Of those companies interviewed, 22% said they had employees use their state leave and 29% had workers take leave under the Families First Coronavirus Response Act—boosting support for paid leave at those companies by 10 percentage points.

The new NBER research surveyed  539 companies in New York and New Jersey with less than 100 employees across a range of industries. The same research team in 2016 surveyed a larger pool of these companies in those states, from which the latest survey participants were pulled. At that time, 63% of the companies in each of the two states said they were very or somewhat supportive of paid family leave programs.

“Concerns about negative impacts on small employers should not impede efforts to expand PFL at the state or federal levels,” the November report said.

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