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Salary or sick leave

The impossible choice

EOS Insight
17 August 2021 |
In the fifth article in our series about the social impacts of the pandemic, Emily DeMasi looks at how the lack of national paid family and medical leave policies in the US has contributed to widening inequalities.

Fast reading

  • Equal and ample paid family and medical leave can help address long-standing societal disparities by increasing gender equality, racial and ethnic equity, and support and opportunity for the LGBTQ+ community
  • There is significant evidence that paid family and medical leave has a positive business case
  • Investors have a role to play in engaging companies on their own paid leave policies, as well as their involvement in public policy formation around federally-mandated paid leave policies

In the United States, the lack of national paid family and medical leave policies underpins many difficult, often impossible, choices faced by disproportionately impacted worker populations, a problem that the pandemic has exacerbated. Without this basic safety net, many workers and their families must decide whether to stay at home to care for themselves or a loved one suffering from Covid-19 or other ailments, or continue earning a salary. Even as the US government seeks to increase vaccination rates, especially in communities of colour where access is an issue, some experts say that a lack of paid time off is keeping many from getting the vaccine.

At this critical moment, as the economy begins to emerge from the deepest impacts of the pandemic, we are urging companies to help make the recovery more equitable by offering some form of paid family and medical leave, inclusive of lower-wage workers. This can be through expanding paid leave benefits where they are already offered, by surveying and engaging with employees to ensure their needs are addressed, and by advocating for federally-mandated paid family and medical leave.

By paid family leave we mean money that a worker receives from their employer, an insurer, or the government while they are away from work for an extended period of time. This might be due to a serious health issue or because they are taking care of a sick relative. Paid time off for medical leave, or “sick pay,” typically only covers short-term sickness.

US federal law does not require paid family or medical leave. Although 11 states and 22 cities and counties have laws requiring paid sick days, the lack of a federal standard means that disparities exist across geographic regions, as well as across worker income, occupation, full- or part-time employment status, and race. This exacerbates inequities already present in our society.

Benefits outweigh the costs

The argument against national paid family and medical leave in the US has been mostly one of cost, but evidence from state programmes shows that in addition to increased morale, the majority of businesses do not suffer higher costs, while turnover generally falls. The Families First Coronavirus Response Act (FFCRA) required employers to provide eligible employees with up to two weeks of paid sick leave and up to an additional 10 weeks of paid family leave, which has changed the assessment of the cost-benefit implication for some companies.

An early supporter of paid family leave, Johnson & Johnson stepped up its paid leave benefits in response to Covid and employee feedback. It now offers eight weeks of paid family caregiver leave and also allows qualified medical professionals up to 14 weeks paid « medical personnel” leave. In addition to its own substantial paid leave policies to attract top tech talent, Microsoft also requires its business partners, such as its lawn and cafeteria contractors, to offer paid leave. However, offering leave is not just about attracting and retaining top talent, it’s about addressing social inequities that persist amidst the pandemic.

Without paid family or medical leave, we see women, particularly women of colour, leaving the workforce in record numbers. As the only industrialised nation without a mandated paid family leave policy for new parents, it should come as no surprise that the US lags its peers when it comes to women’s labour participation rates. The statistics are staggering:

Changing demographics

Despite the growing focus on gender equality and women in the workforce in recent decades and the introduction of laws that provide protections against discrimination and promote pay equity, paid family leave policies have not kept pace with the changing economy or US workforce demographics. The lack of paid family leave policies prevent women and other marginalised workers from reaching their full potential.

The Family and Medical Leave Act, which grants up to 12 weeks of unpaid job-protected leave for certain reasons, contains numerous eligibility requirements and leaves out many of the workforce who are part-time, contractors, and/or who do not fit the traditional definitions of “birth mother”. Also, the definition of a spouse is based on whether state laws recognise same-sex marriage, creating another obstacle to the advancement of LGBTQ+ workers.

Covid has exposed the need for a national paid family leave policy that serves all Americans, and all families, however they choose to define themselves. However, despite a growing consensus amongst politicians and business leaders for more paid and expansive family leave, public policy advancement is a slow process in the US. While the Biden Administration works to include paid family and medical leave in its recently released American Families Plan, investors and companies can help to advance more equal and ample paid family leave in the US.

Investors and their representatives can engage companies on paid leave by urging them to:

  • Offer 12 weeks of paid parental leave and six weeks of family and medical leave as a minimum in order to meet the needs of employees during critical times and allow flexibility – inclusive of lower-wage workers. The kind of low-wage jobs mostly performed by women, including working in retail and restaurants, often lack paid leave benefits and offer little flexibility. Paid time off and paid medical leave should be universal, particularly for those workers who need it the most.
  • Expand benefits beyond the basic minimum paid family and medical leave outlined above to include childcare, elder care and back up care – and make the benefits inclusive of all workers. In this way all employees regardless of gender, parental role, race and/or sexual orientation have access to them. In 2019, Target expanded its child back up care to hourly and salaried team members at all stores and distribution centres, a service it expanded again during Covid. EOS has engaged the company on the inclusivity of its contracted Shipt workers who currently don’t receive these benefits.
  • Survey and engage the workforce. Evaluate whether women and/or people of colour are either leaving the workforce or reducing their hours. Evaluate if the demographics of company applicants have changed and create a strategy to attract, retain, develop, and promote diverse talent and become the employer of choice. Amgen cited its focus on employee wellbeing, expanding mental health resources, and childcare support as valuable for retention throughout Covid, particularly for the women in its workforce. EOS is consistently engaging companies on the impact that Covid is having on the most vulnerable members of their workforces, and their plans to assess and support them.
  • Use political clout. Many companies are already advocating for national paid leave and support Businesses Advancing National Paid Leave, “an organisation of business leaders, policymakers, advocates and issue experts that have come together to endorse key principles for a national paid leave programme”.

Engagement on paid family and medical leave is encouraged, given its business case, with such leave already embraced by many companies. It is now a standard feature of best practice for corporate responsibility, to which we and our clients are committed. It is also a moral imperative to support all Americans during moments of highest need. National paid family and medical leave policies, supported by the business community, will not only increase health and economic productivity, but can help address long-standing societal disparities by increasing gender equality, racial and ethnic equity, and support and opportunity for the LGBTQ+ community.

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