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One of the most important insights from IBI’s interviews with benefits managers at 15 high tech firms was that many companies are ill-equipped to reintegrate new parents back from leave. The implication was that even the best-designed leave policy could be counterproductive if returning parents could not resume their previous work roles quickly—or worse, if they looked for an exit when the realities of returning to work did not meet their expectations.

A new study out of the University of Michigan corroborates the concerns that some paid leave policies fall short of what many new parents—especially first-time mothers—want or need in order to resume working.

The study compared women who gave birth in California shortly after its paid family leave law took effect in 2004. The authors' surprise, a decade later, leave-takers who were first-time mothers had 5% to 7% percent lower employment than birth mothers who did not take leave, and those returning to work earned 5% to 8% less than their peers—a cumulative earnings loss of about $24,000.

Factors such as age, prior earnings, marital status, and discrimination didn’t seem to explain much of differences in outcomes. The conclusion instead is that for whatever reasons, women who took leave scaled back work time on their own.

It’s possible that taking bonding leave encouraged many women to reflect on their priorities and decide that spending more time with their young children was worth some reduction in earnings. But it’s also possible that other factors—such as the low rate of bonding leave among new fathers, a scarcity of affordable childcare and uncoordinated return to work efforts—dampened the impulse to head back into the workplace.

Mary Bailey, one of the study’s authors, captures the importance of this insight well, noting that “the answer has to be that we think smarter about how to design [parental leave] policies.” For employers, that means doing more than deciding how generous their policy should be to make it competitive for attracting and retaining talent. Corporate parental leave policies will work best for new parents, their coworkers and their employers if they first consider how other company policies and benefits—such as flexible scheduling, transitional duties, and employee assistance programs to help new parents anticipate and manage a new set of emotional and logistical demands—can help ease the transition back to work.

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