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Monday, July 21, 2014

Following California's Lead: The Expansion of Paid Leave Through Social Insurance

Elizabeth Pandya, University of Maryland

As this particularly harsh winter draws to a close, millions of American workers have again spent another flu season faced with the challenge of choosing between paid work and caring for themselves or sick loved ones. According to a report released by the Bureau of Labor Statistics last month, nearly 2.9 million full-time workers worked only part-time this past January due to illness-related absences and another 1.2 million traditionally full-time workers missed a week of work entirely.

Despite staggering numbers of reported absences, the National Partnership for Women & Families reports nearly 40 million Americans, or 40 percent of private sector employees, continue to lack access to a single paid sick day. Since the passage of the Family Medical Leave Act (FMLA) in 1993, there has been little federal action to extend provisions to include mandated access to paid leave for those currently excluded from any employer provided fringe benefits.

Municipalities and states have served as frontrunners in addressing the mounting needs for millions of Americans. In 2004, California became the first state to implement paid medical and family leave through an employee-paid payroll tax, providing partial wage replacement for up to 55 percent of weekly earnings ($1,011 per week in 2012). This landmark legislation served as the first statewide program to provide paid leave as a social insurance program.

At the National Academy of Social Insurance’s Annual Conference, on January 30th, Ruth Milkman, sociologist and co-author of Unfinished Business: Paid Family Leave in California and the Future of U.S. Work-Family Policy, shared her findings on the progress of California’s Paid Family Leave Program (PFL). She also discussed the implications for expanding such measures on federal level.

A portion of a 1.0 percent employee-paid payroll tax finances California’s PFL program. The tax also sustains the long-standing State Disability-Insurance (SDI) program. The only requirement to receive benefits is a minimum earnings of $300 at a private-sector employer in the state in the initial period, typically five to seventeen months before filing a claim.

Professor Milkman spoke to the flexibility of the program’s design, highlighting that there is no minimum threshold for the size of the employer organization, nor is there minimum time requirement with a current employer. Although it does not expand on any of the provisions of FMLA, the Program is designed to provide economic security for those who are able to take leave.

Milkman’s evaluation of the implementation of PFL counters some of the initial arguments that such programs place crippling burdens on small business owners. Of the businesses sampled for the study, 93 percent reported no effect or positive on employee turnover. Additionally, few instances of PFL abuse have been reported.

Despite these achievements, a California Field Poll conducted in 2011 found that only 43 percent of respondents had “seen, read, or heard” of the PFL program. Low-income workers were reported as being the least likely to be aware of the program. As the program is more widely used, more areas for improvement could surface.

California’s PFL program is not flawless, but it serves as pilot for the future expansion of paid leave as a social insurance on the federal level. New Jersey became the second state to establish a PFL supported by a payroll tax. The Washington State Legislature also passed the measure, but it has yet to be implemented.

Continued success of these state paid leave funds is critical to the national effort to implement such a program. Introduced to Congress in December 2013, the “Family Act” features a very similar model as California’s PFL program, with the caveat that it would collect employer as well as employee contributions. The program would be run by a new Office of Paid Family and Medical Leave within the Social Security Administration.

Although the “Family Act” is currently the most administratively viable and cost-effective proposal to establishing paid family leave, it faces strong opposition from business interests. This further highlights the demand for states to continue to enact independent programs or mandate paid sick days.

The positive effects of paid medical and family leave span a broad range of immediate health benefits to long-term advances in overall gender parity and income security, especially for lower income families.

Men and women are entitled to equal access to paid leave under these funds, complementing societal trends that reflect more equal balance of work-family contributions surpassing traditional gender norms.

Getting sick is inevitable, and so is the need to care our families and ourselves. Paid leave is paramount for workers’ financial security, and inadequate access impacts millions of American workers and society as a whole. It is time to follow California’s lead, and expand access to paid medical and family leave through social insurance.


Elizabeth Pandya is senior Government and Politics major and concurrent first year student working toward attaining her Master's in Public Policy at the University of Maryland. She gained interest in researching the solvency of public programs, like Social Security, after interning with the Institute for Women's Policy Research. During her summer with the Institute, she contributed content to the recently published Women and Men in the Recovery: Where the Jobs Are; an annual report analyzing current employment trends with consideration to gender. She currently serves as a campus campaign coordinator for Teach for America, promoting awareness of the issues of education inequity on UMD's campus. After graduation, Elizabeth will be joining the 2014 Teach for America Corps to teach elementary school in Baltimore City, MD. Pandya was one of six students and young professionals awarded a scholarship to attend NASI’s 26th annual policy research conference January 28- 29, 2014, in Washington, DC.

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