Maternity leave in the US: Role model urgently needed!

The United States is the only Western country that does not mandate paid parental leave. This has not only negative consequences for women, but for all of society, as it reduces the country’s economic output. Randomly adapting any European parental leave scheme is, however, not advisable for the US. While Sweden’s leave scheme encourages a combination of work and family life for parents, other European leave schemes make it rather difficult for women to turn back to work after childbirth.

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Unlike many other OECD countries, the US government doesn’t provide a benefit for women on maternity leave. A bill introduced Feb. 10, 2011 to give federal employees four weeks paid time off to care for new children isn’t likely to make it to a vote. In contrast to the US, many other OECD countries provide paid maternity leave (on average 18 weeks). Actually, the U.S. is one of only three nations of 181 that don’t guarantee working mothers leave with compensation. The two other countries are Papua New Guinea and Swaziland.

In the US — where 47 percent of the workforce is female — anyone employed for at least 12 months by a business with a payroll of at least 50 may take 12 unpaid weeks and not lose their jobs under the Family Medical Leave Act. The 1993 law covers about half the workforce, including federal employees. However, while maternity leave with pay is a perquisite at Bank of America Corp., Goldman Sachs Group Inc. and other big financial institutions, most employers in the US don’t provide a benefit. The number offering fully paid leave fell to 16 percent in 2008 from 27 percent in 1998, according to a study by the New York-based Families and Work Institute.

Due to the increasing absence of paid leave, more and more women in the US face difficulties to combine work and family life. Hence, more women interrupt work at the arrival of a child to be able to have more time for childcare during the baby’s first weeks. As a result, women find it more and more difficult to return to work after childbirth, because they often have to find new jobs.

Janet Gornick, a professor and director of the Luxembourg Income Study Center at the City University of New York Graduate Center, confirms, that the US employment profile no longer looks very good for women overall, as women face increasing discrimination in terms of employment, earnings and career perspectives. She says that the absence of leave is part of the story. Some employers just expect women to quit their jobs at the arrival of a child and do not provide any options to come back after having a baby.

The fact that women drop out of the labour market at childbirth represents serious earning losses for families, which result in increased health risks for children. However, according to Robert Drago, research director at the Institute for Women’s Policy Research in Washington, women’s work interruption also causes economic losses for all of society, because employers loose skilled and productive workers and face extra costs for recruiting and training replacements. Family friendly policies would therefore be a profitable investment for many employers, as offering paid maternity leave helps to attract and retain workers.

Some European countries can serve the US as an example when it comes to adapting parental leave schemes. In Sweden, for example, most people who take parental leave are entitled to 80 percent of their salary, paid by the state. This applies for the first 390 days per child, for people who have been working legally in Sweden for over 240 days. However, this only applies to salaries under a certain amount. People who earn more than this will get 80 percent of the highest permissible salary. With a wage substitution for a limited time period, the Swedish parental leave scheme encourages a combination of work and family life, as parents are incited to work before childbirth and to return to the labour market within a conceivable time period after childbirth.  However, not all parental leave schemes in Europe should serve as a model, because some discourage parents to return to work. In France, for example, parents receive a lump-sum benefit for 36 months at the arrival of a second child. This keeps many mothers off the labour market for a too long time period. Especially low qualified mothers find it difficult to find their way back to work after a three-year baby pause.

Sources: Blog author’s own contribution; Bloomberg; The Local

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