Cutting Parental Leave Is Bad Business

A recent survey shows many companies are cutting back on parental leave policies to pre-pandemic levels, but this is a short-sighted strategy for the bottom line.

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For those of us working to expand access to paid family leave in America, a recent report delivered a tough blow. “Companies are cutting back on maternity and paternity leave,” The Wall Street Journal declared, citing a survey from the Society for Human Resource Management (SHRM). This isn’t just bad news for families; it’s bad news for businesses.

In the SHRM survey, only 35% of employers reported offering a paid maternity leave policy beyond what is legally required, down from 53% in 2020 and equivalent to the pre-pandemic level. Only 27% of employers said they offer paid paternity leave, down from 44% in 2020 and even lower than the pre-pandemic percentage.

At first, the drop seems drastic. But fortunately, a closer look at the numbers shows that the picture is not quite so dire.

Only 24% of companies offered paid family leave (which applies to parents and other caregivers) before the pandemic, but this number shot up to 31% in 2020 and remains there. And parental leave is now at 33%, which is down from 2020 but still well above where it was before the pandemic. Some businesses I’ve worked with have stopped offering separate maternity or paternity leave benefits and instead cover parents under parental or family leave.

If these figures seem confusing, that’s because they are. Having studied and tracked leave policies for more than a decade and written a book that delves into them, I’ve found that often, many employees — and even executives — don’t fully understand what their policies offer. I also speak regularly to government and legal groups, parsing the specifics of leave policies. They are a complex, tangled morass.

of employers called paid family leave “very important.”

In a nutshell, here’s what we know: Businesses increased paid caregiving leave during the early phases of the pandemic, when people faced unprecedented challenges, including periods of widespread lockdowns with no access to child care. Some have since reduced those benefits or dropped them altogether. We don’t know how many. (SHRM tells me its figures do not show how many businesses lack any paid leave for parents.)

And there may actually be more parental leave on the horizon. A recent Mercer survey found “rapid growth in offerings on a wide range of family-friendly benefits, with 70% of surveyed employers currently offering or planning to offer paid parental leave in 2023.”

Family Leave Boosts the Bottom Line

What I push hardest for, as do several organizations, is paid family leave. This allows anyone time off to care for a loved one, whether it be a new child, an elderly parent, or a sick spouse. It generally also includes medical leave, allowing someone paid time for recovery after an illness. Everyone could use paid family leave at some point.

Rather than draining companies’ coffers, these leave policies save them money. One way they do this is by serving as a major draw for talent. In the 2022 SHRM survey, 82% of employers called leave “very important,” listing it among the most important benefits for organizations to offer, behind only health care.

Boston Consulting Group found that paid family leave policies also “can boost employee retention, reducing turnover costs and helping to diversify company leadership teams.” More than 80% of companies that offer comprehensive leave options “saw a positive impact on employee morale, and more than 70% reported an increase in productivity.” Ernst & Young found that more than 90% of employers offering paid family leave “felt that the effect was positive or neutral, not only on employee-related outcomes such as morale and turnover, but also on operating outcomes such as profitability and productivity.”

Why Public Policy Is Needed

It’s good that many companies are recognizing the benefits that paid family leave brings both for employees and the business. The long-term solution, however, can’t be that workers must rely on businesses, with their disparate patchwork of policies, to offer sensible benefits. What we need is a national paid family leave insurance system.

Similar programs are already in place in several states. Contrary to what many people believe, these are not laws requiring businesses to pay salaries while someone is out. Instead, workers — and, often, businesses — make tiny payroll deductions that go into a fund. When someone needs to take paid family leave, they are paid from the fund. California was the first to create such a system and soon found that the results were phenomenal: An overwhelming majority of businesses reported that paid family leave had either a positive effect or no noticeable effect when it came to productivity, profitability/performance, and employee morale.

When paid family leave is in place, it helps make paternity leave a social norm and nudges more men to take advantage of it.

Paid leave is also a critical pathway for keeping caregivers in the workforce as the U.S. continues its rebound from the exodus of working parents — predominantly mothers — who were forced to leave their jobs during the pandemic. Together with affordable child care, paid family leave tops the “wish list for working women,” Bloomberg reports. The National Partnership for Women and Families estimates that a national paid leave program could keep more than 6 million caregivers connected to the workforce by 2030.

It isn’t just women who seek paid leave. Men do, too. I have a partnership with Dove Men+Care, a brand that I have worked with to advocate for legislative and cultural change around the issue of parental leave through the Pledge for Paternity Leave. In a research survey by Promundo and Dove Men+Care focusing on working dads, 85% of fathers across seven countries, including 79% in the United States, said they would “do anything” to be more involved after the birth or adoption of a child.

One of the biggest forces holding men back is financial concerns, which paid leave helps to address. Another issue is the stigma surrounding taking leave. Men have been fired, demoted, or lost job opportunities for taking time off for caregiving. But my research shows that when paid family leave is in place, it helps make paternity leave a social norm and nudges more men to take advantage of the full benefit.

It’s no surprise that paid family leave is overwhelmingly popular across political lines. The latest surveys make it clearer than ever that we need a national system in place. “The uncertainty and confusion in the data from year to year reflects the need for a public policy standard and public investments,” says Vicki Shabo, senior fellow for paid leave policy and strategy at New America. “People’s ability to take leave for caregiving should be something that’s certain.”


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