Balancing the benefits of paid family leave with the challenges to productivity

A policy brief on the impact of paid family leave (PFL) summarizes the research literature showing several advantages for workers and children, and few wage or productivity implications for businesses. That is good news for employees who work in the seven states with PFL laws, and for several states that are considering similar laws.

In light of findings that PFL results in more leaves of longer duration, the reasons why we see so few business implications deserve more attention. A partial explanation is that paid leave reduces turnover costs, as more employees return to their jobs when their leaves end. But an underappreciated explanation is that employers don’t incur additional wage costs because they don’t hire and train replacement employees. Instead, they assign work temporarily to other employees.

While this may be a good strategy for maintaining a normal work tempo, the personal and professional impact on employees who cover for a co-worker’s extended absence—to bond with a new child, or for any other reason—also needs to be considered. Increased leaves that place more job-related stresses on other employees may represent a hidden cost that offsets some of the PFL benefits. IBI surveyed over 700 employees in March 2019 about their experiences with co-workers’ leaves and will report findings in the near future.

What’s more, several employers in the high-tech industry told IBI that they considered the needs of employees with no interest in becoming a parent—or whose child-rearing years were behind them—when deciding to adopt corporate PFL policies. Their concern was that resentments over co-workers’ extended absences could affect workgroup morale, but also complicate efforts to re-integrate employees back into their jobs when they returned from leave.

The good news is that absence management experts have provided practical guidelines to help employers overcome the challenges posed by an increase in extended leaves. The next step is to understand how employers can develop policies that help sustain productivity with minimal impact to staff workloads, morale and personnel costs.