Paid leave would cost $159 per worker, UMass report finds
The paid family and medical leave act under consideration in the state Legislature would cost $159 per worker per year and increase the annual number of leaves taken by 13,000, according to projections in a report released Thursday by the University of Massachusetts Boston.
A business group that opposes the measure, however, estimates that costs — which would be split between employers and workers — would be up to six times that amount.
Currently, only three states offer paid time off for medical and family caregiving needs — Rhode Island, California, and New Jersey — but momentum is growing. New York just passed a paid leave bill, and 13 states have legislation pending. President Obama recently directed federal agencies to give employees six weeks of paid time off for a birth or adoption and called on Congress to create a $2 billion fund to help states finance paid leave.
The Massachusetts bill, released earlier this week to the House Committee on Ways and Means, would require all private sector and state employers to provide up to 12 weeks of paid time for new parents or other family caregiving and up to 26 weeks for health conditions. The amount received would be a percentage of a person’s weekly wages — currently, 90 percent of the first $377 earned, and 33 percent of wages above that, capped at $650 a week — funded through payroll contributions.
About 12 percent of those working for private companies and the state take a leave every year, but only 4 percent are likely to use the state paid leave program, according to the UMass report by the Center for Social Policy and the Center for Women in Politics and Public Policy. This is largely because half of the leaves are so short — three weeks or less, which workers will likely choose to cover with sick or vacation time at full pay — that it doesn’t make sense for them to apply for the program, said Randy Albelda, report coauthor and economics professor at UMass Boston.
Small employers, which are less likely to offer paid leave on their own, would greatly benefit from a paid-leave insurance fund, she said, because it would reduce turnover. When Google increased its paid maternity leave policy by four weeks in 2007, according to a company executive, the rate of new moms quitting the company fell by 50 percent.
“This is one case where it benefits both employers and employees,” Albelda said.
Associated Industries of Massachusetts, which opposes the paid leave bill, disputes the UMass finding that it would have an annual cost of $159 per person. According to actuaries surveyed by the business group, the cost would be four to six times that amount.
“The employers who create jobs and prosperity in Massachusetts are under siege from politically expedient laws that collectively impose excessive financial and administrative burdens on the private sector,” spokesman Chris Geehern said in an e-mail. “Massachusetts employers, especially small businesses, are still struggling to implement the new paid sick days law and the three-step minimum wage increase, and fear another mandate.”
The proposed bill would be a boon to lower-wage workers, Albelda said, as they are the least likely to get paid leaves and can least afford to take time off without pay. Nearly one in four women go back to work within two weeks of giving birth, according to an analysis by research firm Abt Associates of a 2012 survey it conducted for the US Department of Labor.
Overall, the leave program would boost the number of workers who get some sort of wage replacement when they go on leave, including vacation, sick, and short-term disability pay, by more than 8 percentage points, from 72 to nearly 81 percent, according to the UMass report. But among low-income workers, the increase jumps to nearly 20 percentage points.
Working women would also greatly benefit from a state paid-leave program, as women take more leaves than men do, particularly after the birth of a child. It would go a long way toward helping women maintain their careers, said Beth Monaghan, chief executive of InkHouse, a Waltham-based public relations firm that offers 12 weeks of paid leave to its 90 employees, 84 percent of whom are women.
“The burden of care falls to women almost every time,” she said. “We should be able to be women and have children and have great careers.”