The Benefits and Costs of Expanding Paid Parental Leave in New York State
Paid family leave policies allow employees to take time away from work to attend to personal family matters, such as bonding with a new child or caring for an ill family member. Notably, the United States does not provide workers with access to paid family leave at the national level. The national Family and Medical Leave Act (FMLA) guarantees job protection while participants are on leave, but does not provide leave-takers with any income replacement. Some employers provide paid family leave benefits to their employees. And, some states have introduced paid family and medical leave programs.
In this brief, we summarize and extend results from the literature on the benefits of paid parental leave, providing aggregate estimates of the benefits and costs of income support to mothers while bonding with a newborn. We then use these figures to estimate the benefits and costs of a proposed expansion to New York’s paid family leave program. Note that while the proposal would cover all workers taking family leave, including those caring for ill family members and parents of newborns, we limit our analysis to the benefits and costs of paid parental leave for newborn infants and their mothers due to data limitations. The total fiscal costs of New York’s expanded paid parental leave policy for the mothers of newborns would equal approximately $679 million, a $102 million increase from estimates of the program’s current fiscal costs. The present discounted value of current and future benefits for society roughly equals $15 billion, representing a $2.3 billion increase from the program’s current social benefits, which are more than 20 times the increase in initial costs.
Key Findings
High quality research finds that paid leave to care and bond with newborns improves infants’ health in childhood and increases their future earnings in adulthood, in addition to improving the health of participating mothers.
The present discounted value to society that flows from these benefits is more than twenty times the annual costs of providing such leave.
In New York, increasing the wage replacement rate from 67% to 90% for workers with low incomes and extending eligibility to workers with 4 weeks of consecutive employment, rather than 26, creates at least $2.3 billion in additional benefits to society at a cost of $102 million more than the current program.
Most of the $2.3 billion in additional benefits go to low-income leave-takers, but taxpayers also gain $68 million in indirect benefits.
Suggested Citation
Koutavas, Anastasia, Buyi Wang, Meredith Slopen, Irwin Garfinkel, Elizabeth Ananat, Sophie Collyer, Robert P. Hartley, and Christopher Wimer. 2024. The Benefits and Costs of Expanding Paid Parental Leave in New York State. Poverty and Social Policy Brief, vol. 8, no. 1. Center on Poverty and Social Policy, Columbia University.