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While there have been numerous studies of the impacts of paid family and medical leave on employees and their families, there is little information on how employers — particularly small businesses — view these policies. To fill this gap, Ann Bartel, Maya Rossin-Slater, Christopher Ruhm, and I looked at Rhode Island, whose Temporary Caregiver Insurance policy became law in 2014. The TCI program provides up to four weeks of wages to employees who require time away from work to care for a seriously ill family member.
In early 2015, we surveyed small- and medium-sized food services and manufacturing employers in Rhode Island about the impacts of the TCI on profitability and employee productivity. We expected that if any employers would be adversely affected, it would be small firms in these fast-paced environments. To our surprise, we found that a solid majority of small firms — 61% — favored or strongly favored the program (with about 15% neutral, and just under 25% opposed).
In the fall of 2016, we surveyed small- and medium-sized employers in two additional states to examine their views of paid family leave: New Jersey, which has had its paid family and medical leave law in place since 2009; and New York, where a new law had been enacted, to go into effect in 2018. We surveyed more than 2,400 small- and medium-sized employers in these states asking about their opinions of their state’s paid family leave legislation. Unlike our work in Rhode Island, this survey included businesses across all industries.
The findings echoed the results of the Rhode Island survey. In New Jersey, 63% of small- and medium-sized employers were very or somewhat supportive of their state’s program. New York employers were equally supportive, with 63% either strongly or somewhat supportive of their upcoming program. In both states, about 20% of respondents stated they were neutral, while about 15% opposed the laws. Interestingly, in both states there were no significant differences across firms of different sizes, nor between firms with different proportions of part-time or female employees.
Finally, a common — and important — takeaway emerged: Most employers revealed that they do not have major problems handling their employees’ absences. In fact, 61% of employers in New Jersey and 56% in New York said it was not difficult at all or only a little difficult to cover a female employee’s work while on leave after a birth (with 10% in New Jersey and 12% in New York reporting it was difficult or very difficult). Responses regarding other types of family and medical leave were similar.
A frequent concern raised about paid family and medical leave policies is that small businesses may be burdened with extra costs, even though employers are not responsible for paying leave benefits directly; those costs are typically funded through payroll taxes. However, employers may face costs from rearranging workers’ schedules and covering the work of employees on leave. These trepidations have been voiced by both industry leaders and the American public.
Our research across states with active or soon-to-be-implemented programs reveals that these worries are unfounded. The potential adverse financial impact of paid family and medical leave on small businesses does not accurately reflect the views from the majority of businesses in the states we surveyed. Researchers Eileen Appelbaum and Ruth Milkman found similar results through their earlier work in California. So, too, did the Small Business Majority, which found that 70% of small business owners and operators support legislation establishing a national paid family and medical leave insurance program.
As more states adopt and prepare to implement new paid family and medical leave policies, there will be additional opportunities to investigate the impact of those policies — both on employers as well as the families these policies seek to support. But our research shows that the consensus sentiment from states that already have programs on the book is positive.
Jane Waldfogel is the Compton Foundation Centennial Professor for the Prevention of Children’s and Youth Problems at Columbia University School of Social Work. The research reported here was conducted in collaboration with Ann Bartel, Maya Rossin-Slater, and Christopher Ruhm.
A frequent concern is that paid leave will burden small businesses with extra costs. But our research across states with active or soon-to-be-implemented programs reveals that these worries are unfounded.
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