AMERICA could do better by its mothers. The federal government does not mandate paid maternity leave and leave is job-protected for only twelve weeks. American moms look enviously north of the border, where Canadians can receive nearly a year’s leave at about $500 a week. Kirsten Gillibrand, a senator, reckons that America’s maternity-leave system is about as generous as the one in Papua New Guinea, a country one-twentieth as rich.
Some state governments are less miserly. In 2004 California was the first state to buck the trend and mandate paid parental leave. And a new paper* from the National Bureau of Economic Research suggests that paid maternity leave in California makes sense—for babies, mothers and the economy.
Financed by a payroll tax on employees and paid out by state government, the Paid Family Leave (PFL) programme mandates six weeks of paid leave at 55% of usual pay, up to $1,075 a week. Thanks to that modest income Californian mothers are under less pressure to return to work as fast as possible. The programme has raised leave-taking by the average mother by over two weeks, the paper shows. Longer leave-taking leads to (slightly) less exhausted mothers and longer periods of breastfeeding. That probably boosts infant health, according to researchers from the University of Wisconsin-Madison and Columbia University.
While the law encourages mothers to take more time off when their baby is born, PFL seems to increase longer-term work prospects. According to the paper the programme helped women with one-year-old tots to increase their weekly hours of paid work by 16%. The prospect of earning something, rather than nothing, during maternity leave probably encourages expectant mothers not to quit their jobs altogether. That makes returning to the labour market easier.
And with a speedy return to paid employment, new mothers may be more productive: their skills are less out-of-date and their professional networks are still in place. The authors of the study reckon that young mothers who benefit from the Californian programme see 5% higher hourly wages than those who do not.
As a result paid maternity leave in California probably offers value for money. According to the National Partnership for Women and Families, a campaign group, the payroll tax costs employees less than $2.25 per month. And when employees use PFL instead of relying on employer-provided paid leave, businesses save money. Indeed 9% of Californian businesses said that PFL had generated cost savings for their firm.
Progress on improving maternity leave at the federal level is unsteady. In 2011 Barack Obama tried unsuccessfully to include sweeteners for other states to emulate California’s programme. In January Rhode Island launched its own (but shorter and less generous) programme. And at the end of last year a band of Democrats announced legislation to establish a national paid family-leave insurance programme. America is taking baby steps in the right direction.
*Charles Baum and Christopher Ruhm (2013) ‘The effects of paid family leave in California on labour market outcomes’, NBER working paper 19741.
