NEW YORK – President Biden's American Jobs Plan is set to reignite the debate around a federal paid family leave (PFL) policy in Congress in a matter of weeks. But historically missing from the debate, and keeping policymakers from coming to a decision, is how PFL policies impact employers. New research from Ann Bartel, Columbia Business School’s Merrill Lynch Professor of Workforce Transformation, and her coauthors, provides this long-awaited perspective, comparing data from New York and Pennsylvania to find that employers have positive experiences with PFL in a state where it is implemented, and suggesting a federal PFL policy is a no-brainer.

The new working paper, released this week by the National Bureau of Economic Research, “The Impact of Paid Family Leave on Employers: Evidence from New York,” reveals that many small and medium-sized employers function better when PFL policies are in place. With PFL, employers reported it was easier to manage extended employee absences, likely due to earlier notice and more time to recalibrate work schedules in ways sustainable for the firm.  Other key findings from the research include:

1. Employees at small companies do use the leave: Employees in small companies (10-49 employees), many of whom previously did not have access to any job-protected leave because they aren’t covered by the federal Family and Medical Leave Act (FMLA), are more likely to take leave once the policy is in effect, suggesting that these policies work to their intended purpose.
2. Leave laws do not alter workforce composition: The researchers did not find significant changes in the shares of female or part-time workers, quit rates, or the rates of absences without advance notice when PFL was in place versus when it was not. 
3. Business owners and managers support leave laws: The majority of New York employers surveyed are supportive of the state’s PFL policy, both before and after it is implemented. At the same time, a small share is very opposed, and this fraction grows over the study period.

“Employee absences are bound to happen in workplaces of any size and location, whether workers need time off for childcare or to tend to sick family members,” said Professor Bartel. “It turns out that having an established leave policy makes life easier for employers trying to manage their workflows and maintain productivity amidst worker absences. Data shows that a paid family leave law can be a huge relief, putting clear rules in place that allow employers to adapt to absences with ease, and without interrupting work.”

The research, co-authored by Stanford University School of Medicine Professor Maya Rossin-Slater, University of Virginia Professor Christopher J. Ruhm, Columbia University School of Social Work doctoral student Meredith Slopen, and Columbia University School of Social Work Professor Jane Waldfogel, is based on annual surveys with business owners and managers at New York and Pennsylvania companies with between 10 and 99 employees, beginning in 2016, when neither state had a PFL policy. The researchers surveyed the leaders of more than 4,500 companies, capturing how they fare when PFL policies are implemented by asking the same series of questions over a four-year period, through 2019, and identifying differences in responses between New York, which implemented a policy in January 2018, and Pennsylvania, which didn’t. Contrary to the argument that PFL hurts companies by allowing employees extended time off, their results found New York employers, including small companies, were better suited to handle and thrive through employee absences than were Pennsylvania firms or New York companies before PFL. 

“Our research finally brings the employer perspective to the debate around paid family leave, which we’ve long needed in order to have an informed discussion and make a policy decision,” said Professor Bartel. “Now that we have the data, the course is clear. PFL policies empower employers by offering support around long employee absences. With this key constituency accounted for and PFL on the table again in Congress, it’s time we got to work implementing it nationally.”

To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.

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