Four Weeks of Paid Family And Medical Leave Would Add $11.8 Billion Directly to the Economy Annually And Create 65,000 Jobs
Paid family and medical leave is a crucial part of the Biden-Harris administration’s Build Back Better plan — especially after the pandemic ravaged families and workplaces, it should be an obvious priority for the American lawmakers just as it is for the American people. Paid family and medical leave is crucial for all of us to take care of our own health, the health of our loved ones, and to bond with new children — all while ensuring that those of us who disproportionately do the care work in our families can continue to earn income while doing this important work and return to our jobs without penalty.
President Biden originally proposed a national paid family and medical leave that would provide working people up to 12 weeks of paid leave to care for a loved one, including a new child, or their own serious health issue. In previous research published with Times UP, “A National Paid Leave Program,” we found that a 12-week program would add $28.5 billion to the economy annually.
After President Biden spoke about the need to compromise on a four-week annual paid leave program, I have used the same Department of Labor Microsimulation tool and economic development methodology to model the benefits to the nation of this program (see “The Economic Effects of Investing in Quality Care Jobs and Paid Family and Medical Leave” for more details) each year and over 10 years. This model quantifies the income workers will receive in wage replacement when they need to take a paid family or medical leave , as well as the effects of households spending that money — because paid family and medical leave income will continue to circulate, enabling more job creation along with the stability provided to the family directly.
This new modeling shows significant value for workers, families and the economy annually and over 10 years. I find that creating a public paid family and medical leave program with a maximum of 20 days (four work weeks) of wage replacement would enable people who do not have employer-provided paid leave now to receive income replacement of $8,086,264,577. This is based on take-up rates from California’s state program when it offered six weeks of paid family leave, and assumes that people continue to access private employer leave benefits available today.
I then find that, when this $8 billion dollars is received by households annually, it then re-circulates in the economy, boosting labor income for other households by another $3.8 billion by creating 65,000 new jobs.
Over ten years, this new program would produce $81 billion in direct benefits and another $38 billion in indirect income to households from the new jobs that arise from families’ spending. And this figure is an understatement of its economic value, since it does not account for the tremendous value of keeping caregivers in the labor force over the long-term. The industries that would see highest new employment are, unsurprisingly, where most non-wealthy households tend to spend a lot of their discretionary income and those which disproportionately employ women: retail, food service, and health care.
In previous research with Times Up, we found that paid family and medical leave, on its own, disproportionately benefits women and people of color — which is unsurprising, given labor market segmentation and patterns of caregiving. Given that workers in retail, food service, and health care are also disproportionately women and people of color, the impact of this program is even more progressive to the workers — and families — who have borne the brunt of disruption over the past year and a half. While twelve weeks would be better, four weeks of nationally guaranteed leave is a good place to start and build on in the future — for the families who would have stable income while caring for themselves, and for the rest of the economy, too.
