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An economist's take on why Parental Leave matters

Business prospers with a paid family leave policy. Here's why

Published: Sep 19, 2016 07:54:32 AM IST
Updated: Sep 19, 2016 11:44:57 AM IST
An economist's take on why Parental Leave matters
Image: Shutterstock

The United States is the only country among 37 developed nations that doesn’t offer paid maternity leave. Estonia, on the other hand, offers almost two years of paid leave for mothers.

But U.S. parents and caregivers have started pushing corporate and political leaders for paid family leave. Response has been mixed. Companies like Facebook and Google now offer generous packages like baby cash bonuses and several months’ leave for both moms and dads, but those policies are the exceptions. Today only 12% of private sector workers have access to paid family leave through their employer, according to the U.S. Department of Labor.

In the public sector, San Francisco this month voted to become the first city in the nation to offer six weeks of full paid leave for new parents. New York City has also taken recent steps to expand its parental leave policy.

These are big moves toward gender equality in the workplace, according to labor economist Myra Strober, professor emerita at Stanford. Paid maternity and paternity leave are vital steps in keeping women in the workforce, developing workplace acceptance for involved dads, and closing the gender pay gap. However, as Strober explains in this conversation with Insights by Stanford Business, we have a long road ahead.

You say paid parental leave is key to leveling the playing field. Why is that?
We are the only industrialized country that doesn’t have paid maternity leave. This is a big deal. We know that many women can’t afford to leave their jobs and not have any income coming in. And we know that many women are concerned that if they take the time they need, their jobs may not be there when they are ready to come back.

One of the reasons why women earn less than men is because they take time out – much more than six months – to care for a young child. And then they may have a second child and take out still more time. The data show that throughout their work lives women are penalized in terms of salary for having left the labor force when their children were young. If we had paid maternity leave with a guarantee of their job being held for them, many more women would come back after six months and continue to accrue job experience.

But this can’t just be a women’s issue. We must also have paid paternity leave. We know from the literature that men who take paternity leave to care for newborns develop a different kind of bond with those children, a very close bond. And when men begin to have a closer relationship with their children, that’s good for gender equity in the whole society.

European models – particularly in Scandinavia – offer families more time off to care for babies. Do you think these are good examples for the United States? Or do you have a different model in mind?
Well, the Scandinavian models have another problem. In Scandinavia, not only can you get paid maternity leave and paternity leave but you can also get part-time work very easily. Although that looks like a blessing, it turns out to be detrimental to women’s movement up the ladder. We don’t have employers now who see part-time workers as really committed and warranting promotion. So if you take part-time work, it often winds up being mommy track work – poorly paid on a per hour basis and not leading to mainline jobs. Also, part-time workers often find that they in fact work many more hours than they get paid for.

You’ll see that women in the U.S. do better than Scandinavian women in terms of reaching the tops of their professions. I’d like to have the paid maternity and paternity leave without the part-time work, at least as extensive as it is in Scandinavia. Part-time work for a short time could be a terrific opportunity. So let’s say you take a maternity leave for six months and then you take part-time work for six months, but you wouldn’t go part time for the next 10 or 15 years.

The other problem is that in many European countries paid maternity leaves are so long that they interfere with women coming back. Women get used to being out of the workforce. So you don’t want a maternity leave paid for three years, especially if you then take a second one maybe for another three years. Now you’re out of the workforce for six years, and that plays havoc with your career. What is the ideal paid maternity leave? I’m not sure. But six months seems good, with the opportunity to work part-time for another six months.

What’s the business case for paid maternity leave?
The business case is that it costs a tremendous amount of money to recruit good employees. And if you’ve got good employees, you can keep them by offering them a paid maternity leave for six months and then they come back.

Should companies be more competitive by offering maternity leave, childcare, and part-time work? Or do you think it should be instituted at a national level through policy, like what San Francisco just did?
Both. I think the responsibility is societal. I don’t think corporations should be asked to bear a societal responsibility, but corporations or in many cases nonprofits do provide paid parental leave and childcare because they see that there’s a business case to be made for them.

We almost had a national childcare system in 1971, but President Nixon vetoed the legislation because he thought it would weaken the family. I think he was wrong. I think it’s just the opposite: Good childcare strengthens the family by allowing families to have two earners so that the family is economically self-sufficient. If it’s a single-parent family, then it’s really important because most single parents are moms. Having affordable, accessible, good quality childcare, so that single moms can come back to work, makes a huge difference in the economic well-being of those families.

Myra Strober is a professor emerita at Stanford Graduate School of Education and a professor emerita of economics, by courtesy, at Stanford Graduate School of Business. Her most recent book is a memoir, Sharing the Work: What My Family and Career Taught Me About Breaking Through (and Holding the Door Open for Others).

This piece originally appeared in Stanford Business Insights from Stanford Graduate School of Business. To receive business ideas and insights from Stanford GSB click here: (To sign up : <a target="_blank" href=""></a>]]