(Bloomberg) — As presidential candidates debate government-mandated paid family leave, the U.S. has a 39 million-person test lab.
California in 2004 enacted the nation’s first such program, ensuring workers are paid for as long as six weeks when caring for a newborn or ailing loved one. The law is financed through an employee payroll tax, meaning companies in the world’s eighth-largest economy bear no direct costs.
It hasn’t been the death blow to businesses that opponents warned of, according to studies over the past decade. California’s employment growth outpaced the U.S. average by 2 percentage points during that time, according to data compiled by Bloomberg.
Paid leave is woven into the economic platforms that Democrats Hillary Clinton and Bernie Sanders are pitching to voters. Clinton told a New York crowd in April that it was “hard to believe” that “so many women still pay a price for being mothers.” In the party’s debate last week, she and Sanders decried U.S. lawmakers’ failure to join 183 countries in passing a nationwide policy.
Republicans such as Carly Fiorina, former chief executive officer of Palo Alto, Calif.-based Hewlett-Packard Co., and Sen. Marco Rubio of Florida, meanwhile, say businesses should be free to offer whichever benefits they choose.
National polls this year showed support as high as 71 percent of Republicans and 88 percent of Democrats for policies that benefit workers including paid family leave, equal pay and affordable child care. Some small business owners say California’s law has helped them compete.
“I’m a small agency, so I don’t have the ability to give every benefit you might expect from a larger company,” said Adam Rochon, who co-owns Sequoia Employee Benefits and Insurance Solutions, a five-employee company that brokers benefit packages for companies near Fresno. “A program like this, where it doesn’t actually have an out-of-pocket cost, is great because it allows you to offer benefits you wouldn’t normally be able to.”
Private-sector workers can collect 55 percent of their wages, capped at $1,104 per week. Payouts to 1.8 million people in the first decade totaled $4.6 billion, according to the state. Nine in 10 people claimed them to bond with a new child, and, while most recipients were women, claims by men have jumped 411 percent from the first year. New Jersey and Rhode Island have since enacted similar policies. A proposal in the California legislature aims at making the program more accessible to the poor by boosting the proportion of earnings that lower-income workers receive.
An analysis for the U.S. Labor Department led by Columbia Business School professor Ann Bartel last year examined dozens of studies on family leave. It concluded that while California’s policy prompted mothers and fathers to take more time, it didn’t harm workplace productivity, profitability, retention or morale.
“The law has not caused major problems for California employers,” the study said. “Small employers, if anything, report fewer problems than large firms.”
Papua New Guinea and the United States are the only countries to not offer cash benefits to women taking maternity leave, according to the International Labour Organization, a United Nations agency in Geneva. Financing leave through social insurance or public funds is preferable, because when employers bear the full direct costs, the ILO says, “this can create disincentives to hiring, retaining and promoting women workers.”