How a National Paid Leave Policy Will Benefit the Economy
The COVID-19 pandemic has caused an unprecedented recession, exposed gaps in our caregiving infrastructure, and intensified race, gender, and other structural inequalities. As the United States begins to recover from the economic devastation of the past year and a half, many of these issues remain unresolved.
Public investment in paid family and medical leave — which can cover working people’s time away from their jobs to care for a new child, family member, or one’s own health — has the potential to address several aspects of this multifaceted crisis and support an equitable and robust economic recovery.
In our new report, “Paid Leave Pays Dividends: How a National Paid Leave Policy Will Benefit the Economy,” we modeled how a national plan would boost national income. A national plan would enable recipients to spend money on goods and services, thereby creating jobs in the industries that need it most.
This policy reform will combat inequality by benefiting systemically marginalized individuals, address structural barriers that prevent caregivers from working for pay, and protect public and individual health by allowing people to care for themselves and others when serious health issues arise.
We modeled the effects of a national paid leave plan as proposed by the American Families Plan and the Building an Economy for Families Act. We found that a national paid leave policy would:
- Directly stimulate the economy. An additional 18 million people, or 11.3% of the civilian labor force, would take leave each year under a national paid leave plan, adding $19.1 billion in national income from wage replacement.
- Especially benefit women, people of color, and low-wage workers. Women comprise 52.7% of those who would use paid leave under this plan, while they are 47% of the labor force. Black women are 8.5% of new leave-takers, while they are 6.5% of the labor force. Women in low-wage jobs (defined as workers earning below $15 an hour) are 27.2% of new leave-takers, while they are 23.8% of all workers.
- Generate economic growth. The $19.1 billion in wage replacement from the national plan will create 162,000 new jobs, enabling workers who are not directly benefiting from paid leave to earn an additional $9.4 billion in income. Notably, some of the industries that will see the most job creation include food services, ambulatory health care services and hospitals, and retail, all of which are major employers of women and people of color across the United States.