The Necessity of Government-Mandated Paid Maternity Leave in the United States

for

Master of Professional Studies

Strategic Human Resources Management and Development

Charlotte Mahony

University of Denver University College

July 30, 2016

Faculty: Michelle Kruse-Crocker, PhD and Allison O’Grady, MA

Director: Pat Greer, MBA PHR

Dean: Michael J. McGuire, MLS

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Abstract

Currently, the United States is the only OECD and G7 member that does not offer a

statutory paid maternity leave entitlement to its female working citizens, calling its membership

in both organizations and its global reputation into question. Businesses who have

implemented this benefit without federal mandate see many positive outcomes, despite initial

fears over the cost of administration. This capstone demonstrates how the benefit increases an

organization’s ability to attract, engage and retain talent and improve employee well-being. It

will propose an approach to garner support for the creation of legislation through professional

channels. The findings show that the positive effects of the implementation of the entitlement

are much greater than the negative repercussions of the upfront cost.

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Table of Contents

Abstract………………………………………………………………………………………………………………. iTable of Contents……………………………………………………………………………………………..... iiBackground………………………………………………………………………………………………………… 1Importance of Topic…………………………………………………………………………………………….. 1Problem Statement……………………………………………………………………………………………… 3Approach…………………………………………………………………………………………………………... 4Literature Review…………………………………………………………………………………………....... 8Statutory Paid Maternity Leave Around the World………………………………………………. 9Paid Maternity Leave in the United States…………………………………………………………… 11The Business Case for Paid Maternity Leave……………………………………………………….. 11Paid Maternity Leave and Maternal and Child Well-Being………………………………….. 14Paid Maternity Leave and Work-Life Balance……………………………………………………… 15Paid Maternity Leave and the Disparate Impact of FMLA……………………………………. 16Solution……………………………………………………………………………………………………………… 19Discussion…………………………………………………………………………………………………………… 21Strengths……………………………………………………………………………………………………………… 21Weaknesses…………………………………………………………………………………………………………. 23Opportunities………………………………………………………………………………………………………. 24Threats………………………………………………………………………………………………………………… 25Trends…………………………………………………………………………………………………………………. 26Recommendations…………………………………………………………………………………………….. 26Conclusions………………………………………………………………………………………………………... 28References………………………………………………………………………………………………………….. 29

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Background

The United States is often perceived as a progressive innovator in terms of labor policies

and worker rights, especially compared to other countries around the globe. While the

International Labour Organization (ILO), an agency of the United Nations, and its members did

not adopt a convention mandating the right of workers to organize and maintain union

membership without fear of discrimination until 1948, the US passed the National Labor

Relations act 13 years prior. But concerning basic human protections, the U.S. is consistently

behind other nations. Perhaps most shockingly, as of 2016 the United States is the only

“developed economy” in the ILO that does not offer a statutory paid maternity leave

entitlement to its female working citizens (ILO 2014, 3). Regarding this necessary protection,

the United States is an outlier (Livingston 2013).

Importance of Topic

Building on its partnership with the ILO beginning in 1919, the United States further

dedicated its commitment to fair labor standards by helping to form the Organisation for

Economic Co-operation and Development in 1961 (ILO 2016b; OECD 2016a). In 2011, the ILO

and the OECD issued a new Memorandum of Understanding, in which each committed to

continued cooperation, “as an efficient and effective means to achieving their shared objectives

including monitoring and assessing…employment situations and the impact of labour market

and social policies” (ILO 2011, 1). The U.S.' participation in both groups reinforces its public

commitment to fair labor and employment standards.

Adding to its considerable global influence regarding market practices is the United

States’ membership in the Group of Seven, created to, “facilitate collective action,” around

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issues such as, “global economic governance” (Council on Foreign Relations 2015, under

“Introduction”). The United States’ membership in all three organizations and partnerships, in

addition to its status as a developed country and a world leader in economic performance,

indicates the duty the country has to promote and implement the most beneficial employment

and labor policies.

To secure membership in the ILO, OECD, and the G7, the United States committed to

upholding the goals and missions of each organization. Similarly, human resource professionals

commit to implementing and supporting human resource management best practices within

their organizations. By definition, human resource management is the formal approach to the

management of human capital within an organization. Effective organizations use human

resource management practices to promote organizational goals and objectives through

policies and systems that balance employee well-being with government regulations and

business strategy.

Finding policies that can satisfy these three requirements can be quite challenging.

Fortunately, a statutory paid maternity leave benefit can do all three. Organizations will be

forced to implement the benefit due to government mandate, and in doing so will meet a goal

of compliance. Providing employees with this benefit will allow organizations to promote work-

life balance and foster engagement. Engaged employees will be more committed to helping the

organization achieve its strategic goals and objectives. Simply put, a paid maternity leave

benefit, statutory or not, is a smart business move.

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Problem Statement

With the significant influence afforded to members of the G-7 plus its standing within

the OECD as a “Developed Economy,” the U.S. is in the unique position to adopt policies and

practices that set a standard for governments around the world (ILO 2014, 3). But in the case of

statutory paid maternity leave benefits, the United States remains an aberration. In 2016, the

U.S. is the only OECD member and the only G-7 country that does not offer government-

mandated paid maternity leave to its working female citizens (OECD 2016b, under “Summary of

paid leave entitlements available to mothers”). This reflects poorly on the country’s status as a

developed economy, and puts its reputation of a leader in ethical and fair treatment of workers

in jeopardy.

In its fiftieth anniversary vision statement, the OECD and its members reaffirmed their

commitment to, “increase growth in our economies, generate jobs and increase living

standards,” by developing, “effective strategies to increase employment opportunities,” which

support, “high-quality…health, and social-protection policies” (OECD 2011, 2). Similar to the

mission of the OCED, the G7 declare their commitment to upholding human rights and, “the

empowerment of women” (Group of Seven 2015, under “State of the Global Economy”). As the

only OECD member that offers, “no statutory entitlement to paid leave on a national basis,”

and the only G7 member without a legislative sanction of paid maternity leave, the United

States’ actions are directly contrary to the shared vision of both organizations (OECD 2016b, 2).

Even more concerning, by not having a statutory paid maternity leave entitlement, the

United States is acting in opposition to its commitment to the creation and maintenance of a

prospering workforce. Historically, the country’s prosperity and economic growth were

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achieved, “through an implicit partnership of federal, state and local governments,” with the

federal government providing overall financial security,”” (Berger and Fisher 2013, under

“Introduction”). However, as state and local governments embrace a more expansive role in

economic policy, their primary means of power becomes tax cuts offered to businesses that

operate in the state (Berger and Fisher 2013). To cut taxes, many of the programs that benefit

workers are discontinued. The federal government must reassume its original role of ensuring,

“that the economy never veer[ed] too far from full employment” (Berger and Fisher 2013,

under “Introduction”). Federally mandated benefits for workers can fulfill this duty.

It seems rather unusual that one sanction would allow the United States to take steps

not only toward its commitment to a prospering workforce but also to uphold the membership

pledges of both the OECD and the G7, but here that is the case. Implementation of a statutory

paid maternity leave entitlement for working female citizens will allow the United States to

fulfill its membership duties in the OCED and G7, while ensuring the promotion of a prospering

workforce.

Approach

The subject of a paid maternity leave entitlement arose after finding a social media post

about a pregnant female employee attempting to crowd-source funds to cover her upcoming

leave. This lead to casual initial research of the topic using the websites of Google, the Society

for Human Resources Management and the Harvard Business Review. This initial research

played an integral role in informing the overall research process as well as guiding the topic

scope. It was quickly apparent that paid leave (maternity, sick, etc.) is a hot topic in the field of

human resource management as well as economically focused and labor-centric U.S.

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government departments and agencies. Also, this casual research emphasized the importance

of comparison of entitlements on a global scale. The literature review was conducted in an

attempt to solidify and direct the scope of the topic, to provide insight into the current and

historical research on the subject and contribute to the recommendations prepared as a

portion of the solution.

A search for sources to be used in the literature review was administered in three steps:

database identification, keyword search, and choice of applicable articles. Google Scholar was

identified as the most appropriate database based on the type of source that it would return

and the expanse of its search capabilities. The first keyword search utilized the following terms

or phrases: statutory paid leave, paid parental leave, retention, attraction, total rewards, HR

practices, total rewards compensation strategy, employee well-being, well-being and

mandatory benefits. To narrow the scope of the search, only articles that came from peer-

reviewed journals, government agencies, or distinguished research centers were used. Articles

were additionally classified with search parameters of a publishing date of 2000 or after, with a

specific emphasis on finding articles published after 2012, although articles used for historical

reference or that provided the foundations for research in the field conducted post-2012 were

not held to the same criteria.

Further review of common forms of comparison between different countries from the

keyword search solidified the choice to use the OECD, ILO, and G7 as a barometer for standard

behavior and articles with data that did not use these entities or their member countries as a

reference were discarded. Due to the global importance of these partnerships, this capstone

will use the standards and member conventions of the ILO, the OECD and the G7 as a measure

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of acceptable labor practices around the world. The first keyword search helped to solidify the

scope of the topic as statutory, paid maternity leave (paternity and parental leave not

included), revealed common avenues for comparison of labor practices across the globe and

brought focus to the standard HRM (human resource management) practices the topic

supports.

Sources for the capstone were chosen from the articles that were found using the initial

keyword search. Articles selected had a subject that could be grouped into one of four

categories or some combination thereof: HRM practices (specifically attraction, retention, and

engagement); global labor practices surrounding statutory entitlements; child or maternal well-

being; and case studies of states, countries or businesses which currently have a paid maternity

leave benefit. Categories were determined based on the potential usefulness of an article to

the literature review and additional sections of the capstone. The category of the article was

determined after reading the abstract and establishing relevance to the overall topic.

The case studies were used to provide demonstrable evidence that implementation of a

similar program in the U.S. at a federal level will have similar results. Data from the HRM

practices category will be used to provide evidence of return on investment for the businesses

that will be forced to implement them upon passing of legislation. Data from the global labor

practices category was used to provide evidence of the existence of statutory paid maternity

leave practices in other OECD countries as well as a reference for potential regulatory

guidelines in the U.S. in the solution portion of the capstone. Articles placed in the HRM

practices category had to have documented proof of the benefit’s return on investment; those

that did not were discarded.

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Once categorized, full text of the article was pulled for detailed review. The reference

list of sources that fit into more than one category was investigated to determine other

relevant articles suitable for use. An additional keyword search using some of the keywords

previously named was conducted using the DU Summon database at the University of Denver

library. The articles found were categorized using the same criteria mentioned above and the

full text of these sources was retrieved for detailed review. The final list of selected sources was

considered complete after each category contained at least five articles and it was checked that

at least two-thirds of all sources came from a peer-reviewed journal. Upon full text examination

of the articles chosen, sources not designated as part of the case study or HRM practices

category underwent additional differentiation to determine where in the literature review the

article would be referenced.

The approach was taken in order to determine the exact scope of the topic and to find

prior data and research on what steps had already been taken to solve the problem. It quickly

became apparent that there was little to no research on presenting the topic from a global

rewards perspective outside of the HR community. This spawned the conclusion that a solution

that included input from the HR community about the topic from a global rewards perspective

to the community at large would be a fresh way to approach the problem. As the solution is

the passage of federal legislation, it was important to find as much hard data as possible that

could be used to provide a reference for the gravity of the situation and the importance of the

topic as a whole.

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Literature Review

To present an appropriate solution to the problem of the United States’ lack of a

statutory maternity leave entitlement, review of previous research on multiple facets of the

topic is presented in the literature review below. First, to establish a baseline or average paid

maternity leave offering for ILO, OECD, and G7 countries, a standard definition of the leave

must be adopted. This capstone will use the definition endorsed by the OECD, which designates

maternity leave as an “employment-protected leave of absence for employed women at

around the time of childbirth, or adoption in some countries” (OECD 2016b, under “Definitions

and Methodology”). Upon deciding this, it is now important to determine why the lack of a

statutory paid maternity leave entitlement in the United States is a problem. The root of the

problem appears to stem from the country’s conception of employment and the employee’s

relationship to the market as a whole.

In a 2013 study of the statutory leave entitlements of developed countries, Richard

Block and colleagues (2013, 127) used Block’s (2007) previously established methodology for

measuring the adequacy of labor standards. Block and colleagues (2013, 139) posit that the

United States’ core presumption that, “markets work, there is competition, and that all

economic actors have equal market power,” fuels the belief that employees and employers

have an equal say in the employment relationship. This view presumes that the government

does not need to get too heavily involved in the employer/employee relationship, because due

to their (presumed) equal status, employees have the ability to demand what they need.

Unfortunately, the assumption that markets function efficiently by themselves, giving all

economic actors equal power is incorrect - it is the employer who sets the conditions and price

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of labor. The product of this false assumption is, “the resulting conception of employment as a

transaction…in the context of employer pricing and the absence of regulation” (Block, Park, and

Kang 2013, 140). Company-dictated pricing combined with the country’s perception that the

market works without governance and all parties in the employment relationship are equal

results in a labor market without the statutory leave entitlements that citizens of other

countries receive (Block, Park and Kang 2013, 140). The United States’ core beliefs about the

labor market allow a hands-off approach when it comes to employee benefits.

Statutory Paid Maternity Leave around the World

Understanding the ideas influencing the United States’ view of the labor market makes

their lack of a statutory maternity leave entitlement easier to comprehend. However, the

practice is still concerning when compared to the offerings of the other 186 OECD member

countries (OECD 2016a). Regarding overall paid leave available to mothers, the OECD average is

54.1 weeks, while the average for developed countries is 38.8 weeks (OECD 2016b). The OECD

average payment rate for the length of the statutory entitlement is 74% of earnings, while

developed countries offer an average of 65.4% (OECD 2016b). When compared to other OECD

members, the country’s continued lack of the statutory entitlement becomes even more

concerning.

As the majority of OECD members lack the global or economic influence of the United

States, it is necessary to compare the paid maternity leave statutes in countries on similar or

equal footing – other members of the G7. The first figure below denotes the average amount of

weeks of paid leave for each G7 member, with the average payment rate (listed as percentage

of total earnings) noted. The second figure below denotes the amount of weeks of paid leave

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for each G7 member paid at 100% of earnings. The figures provide visual proof that the United

States is substantially behind the average of 20.28 weeks paid at an average payment rate of

70% of total earnings, or an average of 12.6 weeks paid at 100% (OECD 2016b, under “Summary

of paid leave entitlements available to mothers”, (table PF.2.1.A).

Figure 1. Total Weeks of Paid Leave (OECD 2016b, under “Summary of paid leave entitlements

available to mothers”, (table PF.2.1.A).

Figure 2. Weeks of Paid Leave Paid at 100% of Earnings (OECD 2016b, under “Summary of paid

leave entitlements available to mothers”, table PF.2.1.A)

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The numbers reflected in both figures provide validation that the United States lags

substantially when compared to its G7 counterparts.

Paid Maternity Leave in the United States

Before a federal mandate for a statutory paid maternity leave entitlement in the United

States can be enacted, it is important to determine whether or not a demand for the benefit

exists, and if instituted, if the leave will be used. In a survey of 2007 Fortune 100 firms, 88.7% of

businesses sampled reported, “offering some kind of paid leave…for the birth of a child” (Joint

Economic Committee Majority Staff 2008, 1-6). Note that all Fortune 100 firms meet the

requirements which mandate that they offer FMLA (Family Medical Leave Act) unpaid leave. In

addition to the paid leave described above, unpaid FMLA leave is also an option for their

employees, and 40% of the firms sampled reported providing some paid leave alongside the

weeks of unpaid leave (Joint Economic Committee Majority Staff 2008, 1). These firms have

recognized the demand for paid maternity leave and clearly understand the business case for

offering it.

The Business Case for Paid Maternity Leave

Despite the possibility that a federal statutory paid maternity leave entitlement could be

funded through direct employee payroll contributions like the federal Social Security program,

American organizations will be quick to judge that the implementation of the benefit will cause

them undue hardship and create a financial burden (U.S. Bureau of Labor Statistics 2012, 1).

Because of this, it is important that businesses understand the positive effect that such an

entitlement could have on their bottom line. Both public and private research document the

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return on investment not only in an economic sense but regarding the organization’s ability to

attract, retain, and engage employees.

Any human resource professional knows that an organization’s ability to attract and

retain top talent is key to its success. Smart businesses have recognized that most potential

employees are looking for more than just a paycheck from their employer, leading them to

adopt a total rewards strategy when it comes to recruitment. The total rewards model includes,

“not only the transactional and relational elements of reward,” but also six key components

that create a “compelling workplace” including “work and life balance”; “inspiration and

values” and “enabling environment” (Schlecter, Faught, and Bussin 2014, under “Employee

retention (total rewards model)”). A paid maternity leave benefit can help fulfill three of these

– work life balance, inspiration and values, and an enabling environment.

A large body of research highlights that total rewards compensation “practices can

benefit employers by improving their ability to recruit and retain talent, lowering costly worker

turnover and minimizing loss of firm-specific skills and human capital” (The Council of Economic

Advisers 2014a, 17). The Council of Economic Advisers (2014b, 14) posits that the

implementation of all types of paid leave programs, “can potentially pay for themselves if they

help a company reduce turnover or increase recruitment.” Research by the Joint Economic

Committee (2008, 4) reinforces this, finding that “paid leave is a better retention policy that

unpaid leave because the probability of returning to the same employer after having a child is

5.4 percentage points greater for women who received paid maternity leave." Organizations

must ensure that they do not disregard the potential gains of a paid maternity leave policy

simply due to the upfront costs.

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Organizations are also quick to overlook the potential recruitment of individuals who

are not currently in the labor market due to a lack of family-friendly policies. According to the

Council of Economic Advisers (2014a, 5), “about half of prime-aged women (age 25-54) were in

the workforce in 1970...three-quarters were in…by the early 1990s” but that, “since the 1990s,

female participation... has stalled.” The implementation of a statutory paid maternity leave

entitlement has the potential to jumpstart the instance of females in the workforce, as there is

growing "evidence that having access to maternity leave increases the likelihood that mothers

return to work and continue progressing in their careers” (The Council of Economic Advisers

2014a, 7). The implementation of such leave is a necessity if organizations want an increase of

prime-aged women in the labor market.

Perhaps even more concerning regarding potential costs is the considerable financial

damage that losing an employee can have on the business. Research from 2014 found that

“employee replacement costs range from 10-30% of annual salary for low and moderate

income positions up to 100-200% of annual salary for some higher-income professionals” (The

Council of Economic Advisers 2014b, 14). Fortunately, the benefit of paid maternity leave can

help employers avoid these costs altogether. For females, the likelihood of returning to work

with the same employer in the 9-12 months postpartum is, “76.6% if she takes paid leave,”

compared to only 63% with no leave benefit (Houser and Vartanian 2012, 7). Another study

puts the numbers even higher, with, “more than 95%," of those who took paid leave returning,

“to work at the end of the leave period, and more than four-fifths,” returning, “to the same

employer they had worked for prior to the leave” (Appelbaum and Milkman 2011, 25). Astute

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employers understand that the upfront cost of implementing programs to retain current

employees far outweighs the costs of finding and training their replacements.

Some of this ability to recruit and retain talent is attributed to the message the

organization sends to potential and current employees, who perceive the instance of these

programs as a measure of, “organizational support” (Muhammad, Metz, and Kulik 2015, 556).

This message is critical and has actual cost implications, as it is not only heard by potential and

current employees but the public as well. In a study tracking the stock price of Fortune 500

organizations after the announcement of new work-life programs, firms saw a price increase

of .36 percent in the days following the statement (The Council of Economic Advisers 2014b,

23). Despite the perceived increase in the cost for employers of the benefit implementation,

actual research confirms that the costs of not doing so are much greater.

Paid Maternity Leave and Maternal and Child Well-Being

The debate about paid maternity leave is usually a discussion of the costs to employers

weighed against the benefits for employees. However, it is important to include discourse

about the potential benefits of the entitlement on maternal and child well-being, as these

effects have implications for greater society as a whole. Judith Galtry (2002, 273), a primary

researcher in the field of infant well-being, feels strongly that U.S. policy should be reassessed,

“with regard to the extent which [it] support[s] infant health.” As today’s children are

tomorrow’s workforce, their health and welfare in the present can have a huge effect on the

robustness of the labor market in the future.

From the perspective of infant health, perhaps nothing is more important than ensuring

that the newborn has adequate time to be breastfed. Judith Galtry (2002, 259) reviews multiple

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global epidemiological studies and declares that there is substantial evidence, “that

breastfeeding decreases the incidents and/or severity of dirrhoea (sic), lower respiratory tract

infection… bacterial meningitis,” and a host of other illnesses. Also, she notes that

“breastfeeding confers health benefits on mothers” (Galtry 2002, 259). Unfortunately, among

industrialized countries, “the USA has one of the lowest breastfeeding rates,” despite numerous

recommendations from medical bodies, “for 6 months’ exclusive breastfeeding” (Galtry 2002,

268-271). Galtry (2002, 260) surmises that this is because, “for many women ‘competition

clearly exists between work and breastfeeding’, it is breastfeeding that is sacrificed given that it

represents the more flexible constraint.” Despite the laws and regulations protecting women’s

right to breastfeed while at work, if paid maternity leave were offered, women might not have

to make the choice between work and breastfeeding quite so soon.

In addition, for the majority of women, the only option for childcare upon returning

work is a group setting. Unfortunately, “infants and children are at greater risk of infectious

disease in the first few months of commencing day care,” and there is an additional, “increased

risk of repeated infection” (Galtry 2002, 262). However, for women without paid maternity

leave, the option to keep a child out of daycare is non-existent. A federally mandated statutory

leave entitlement will help ensure that every mother has a choice.

Paid Maternity Leave and Work-Life Balance

From a total rewards perspective, policies that promote work-life balance are

increasingly being used to show employees that the organization values their diverse family

situations. Even the United States government understands that “children are increasingly

raised in households in which all parents work in the labor market” (The Council of Economic

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Advisers 2014b, 5). Despite this increase, only 40% of female workers in the United States

report access to a paid maternity leave benefit (The Council of Economic Advisers 2014b, 14).

This may be attributed to the fact that some workers may not be aware of such policies, or are

unwilling to ask to use the benefit due to the fear of retaliation (The Council of Economic

Advisers 2014b, 14).This lack of benefit is unfortunate, as the returns the employer sees from

offering such paid leave are much greater than the upfront costs.

The Council of Economic Advisers reports that “workers with more flexible

arrangements report higher levels of job satisfaction, more loyalty and commitment to their

employers, and “high likelihood[s]” of remaining with their employers for the following year”

(The Council of Economic Advisers 2014b, 19). The Council (2014b, 21) points to the increasing

amount of data demonstrating the link between job stress and poor health, which eventually

results in a loss of productivity and increased absenteeism. A smart organization understands

that the initial cost of offering benefits that allow for flexible work schedules will ultimately be

minimal compared to the gains from healthy and productive employees.

Paid Maternity Leave and the Disparate Impact of FMLA

Conceivably, the number one reason the United States is so hesitant to implement a

statutory maternity leave entitlement is the existence of the FMLA. Unfortunately, a multitude

of research demonstrates that “FMLA has not done enough for leave-taking, especially for

economically vulnerable families” (Houser and Vartanian 2012, 4). While it is helpful that the

FMLA allows for leave, because many workers cannot afford to go that long without pay or

work for organizations who are exempt, they are simply unable to take advantage of the

benefit.

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From a cost perspective, a statutory paid leave entitlement funded directly from worker

contributions might ultimately be less costly to the government than only relying on FMLA.

Data from a 2000 survey on leave-taking habits reported that “almost one-tenth of workers

using unpaid FMLA leave after the birth of a child used public assistance during their leave” and

that “women who take paid leave are 39% less likely…to report public assistance receipt in the

year following the child’s birth” (Houser and Vartanian 2012, 8). Use of public assistance could

be attributed to The Council of Economic Advisers (2014a, 12) findings that, “the most

pronounced disparities in access to paid leave exist across education and wage levels.” If the

United States chooses to pay attention to these disparities, the economy may benefit in the

form of reduced dependence on public assistance.

A 2011 evaluation of California’s Paid Family Leave (PFL) program further confirms the

disparate impact of FMLA and additional paid leave benefits on women in lower-wage jobs with

less stringent educational hiring requirements. The research found that, “93.5 percent [of]

respondents with high-quality jobs,” (paying $20 or more per hour with health benefits), “had

access to employer-provided paid sick days and/or paid vacation, compared to only 62.1

percent of those with low-quality jobs” (Appelbaum and Milkman 2011, 11). Although many

employers without specific paid maternity leave policies allow employees to use a combination

of other types of paid leave for the birth of a child, those in low-wage jobs seldom have access

to such benefits.

Data further confirms that workers in low-wage jobs are more likely to be minorities

with no access to paid leave. The Council of Economic Advisers (2014a, 12) found that “only 43

percent of Hispanics,” have access, “to paid leave in comparison to 61 percent of non-

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Hispanics.” The Council (2014a, 12) confirms that for minorities, “total compensation

inequality” (here, total compensation refers to the total rewards package), “is greater than

inequality implied by take-home pay.” Therefore, the FMLA, does not provide the same

protection for all U.S. workers.

However, a statutory paid maternity leave entitlement could help to remedy this

inequality. Appelbaum and Milkman describe California’s PFL as, “a potential social leveler that

could narrow or perhaps even close the gap in access to paid leave between the “haves” and

“have-nots”” by making a promise to California’s workforce to, “provide access to paid leave to

workers who have no other means of obtaining it, especially low-wage workers” (Appelbaum

and Milkman 2011, 11-12). A federal statutory paid maternity leave entitlement would make

this promise to all the females in the workforce, providing for actual equality in coverage

regardless of race, job type or education level.

The literature review makes it increasingly clear the United States’ perception of the

labor relationship affects their view on federal policies that provide protection for employees.

With little regard for how their country’s females employees are treated when compared to the

rest of the world, the United States continues to presume that the requirements of the FMLA

are enough to protect the health and well-being of working mothers and their newborns.

However, the research clearly disputes this.

Solution

The literature review provides a vast amount of evidence as to why the implementation

of a statutory paid maternity leave entitlement would be beneficial not only to female working

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citizens of the United States, but also to businesses and the economy as well. From the

perspective of the current U.S. economy, a workforce with increased participation of women

and full of engaged employees is ideal. From the perspective of the U.S. economy of the future,

a workforce full of hearty individuals who were raised in the healthiest manner possible during

infancy presents the greatest possible chance for continued success. Also, data from the

literature review collected from both the OECD and the G7 highlights how aberrant the United

States’ lack of a statutory entitlement is in the current global economy. It is time for the United

States join the rest of the world’s developed economies by implementing a mandatory benefit

through the creation of federal legislation. The federal legislation must include provisions for

funding, as an unfunded mandate will not solve the problem.

Convincing Congress to pass a bill mandating federal paid maternity leave entitlement

will be challenging, and will require engaging the correct congressional member to introduce

legislation for recommendation to a committee. Senators who are members of the

Subcommittee on Employment and Workplace Safety in the Senate Committee on Health,

Education, Labor and Pensions will have valuable contacts that they can engage for additional

support (U.S. Senate Committee on Health, Education, Labor and Pensions 2016, under

“Subcommittees”). House Representatives who are members of the Subcommittee on Health,

Employment, Labor and Pensions in the House Committee on Education and the Workforce will

have similar connections that may have additional resources to aid in passing the legislation

(Education and the Workforce Committee 2016, under “Members, Subcommittees &

Jurisdictions”). The congressional member who introduces the legislation should make sure to

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provide a comparison between the U.S. and other G7 members when making the introduction,

as this will demonstrate the necessity of bill.

To gain support from the professional field for the legislation, this capstone also

proposes tapping the Society for Human Resources Management (SHRM) for help in the form of

an official public policy statement issued by their Board of Directors. In order to have SHRM’s

Board of Directors create an official public policy statement, the capstone and any necessary

supporting materials will be submitted to SHRM’s call for proposals for their annual conference.

If selected, a presentation will be made to conference attendees, with a solicitation at the end

of the presentation for members to notify the SHRM Government Affairs Committee. The

Committee will then petition the Board of Directors to create the statement to be distributed to

congressional members through the proper channels. The information included in the public

policy statement can be utilized by the congressional member who introduces the bill as

validation that there is support from the professional field for federal implementation.

Should SHRM be unable or refuse to participate in assisting with implementation of

legislation, the Fortune 100 businesses surveyed by the Joint Economic Committee Staff

referenced previously should be called upon for assistance. These businesses can engage their

industry lobbyists to contact the congressional members they work with to ensure support for

the legislation once it is introduced. The organizations should be provided with the same

information as SHRM so that the lobbyists will have all available resources when they engage

their congressional contacts. This information can be utilized by any congressional member for

validation that there is support from leading businesses and their industries for federal

implementation.

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Discussion

The proposed solution of an implementation of a federally mandated paid maternity

leave entitlement was chosen out of necessity. There is simply no other way to ensure that

every working female citizen, regardless of education level, job type or minority status will

receive the benefit. The proven disparate impact of the FMLA attests to that. The

implementation in either part of the legislative branch provides a greater chance to garner

support for the issue, which will increase the likelihood the legislation being passed. By utilizing

SHRM’s Capitol Hill channels to distribute their official public policy statement, there is a much

greater possibility for potential discussion and action by congressional members. And by having

the contingency plan of engaging Fortune 100 businesses for support should SHRM decide not

to participate, there is even greater possibility of passage of the legislation.

Strengths

Passage of a statutory paid maternity leave entitlement at the federal level is the

ultimate solution and endgame – it solves the problem once and for all. It is important to note

that the passage of legislation must come at the federal level and not be left to the discretion of

individual states, as is currently the case. Although some states, like Washington and California,

have been successful at passing legislation, implementation remains an issue. In California, the

Paid Family Leave program was implemented, but many employees are unaware that the

program exists (Appelbaum and Milkman 2011, 14). In Washington, legislation was passed but

the program has not been implemented due to lack of funding (Appelbaum and Milkman 2011,

3). The solution of implementation at a federal level will help to avoid pitfalls that the state

Mahony-22

implemented programs discovered and ensure that the new legislation does not have a

disparate impact like FMLA.

Utilizing SHRM for assistance with implementation of legislation demonstrates the

support of the entire professional field. Support from the field is extremely important, as it will

be those individuals charged with administering the specifics of the legislation upon

implementation. As SHRM is the largest professional human resources society in the world,

their influence cannot be understated (SHRM 2016c, under “Vision, Mission & History”).

SHRM’s public support for pending legislation has a demonstrated effect on the likelihood of

that legislation passing. For example, their position statements on the ADA Amendments Act of

2008 and the Overtime Reform and Enhancement Act of 2016 provided much-needed

professional backing which assisted in the passing of both bills (SHRM 2016d, under “HR Public

Policy Issues”). The aid of the professional field, demonstrated through SHRM’s public policy

statement, will undoubtedly help the legislation to pass.

Finally, having the contingency strategy of engaging the executives of Fortune 100

companies should SHRM decide not to participate ensures that the bill will have support

outside of the legislative branch in any scenario. As the largest corporations in the country,

these organizations are often seen as a “model” of “basic employment standard[s] for all

workers in the United States” (Joint Economic Committee Majority Staff 2008, 15). This status

affords this group of organizations considerable influence over regulations that will affect

workers. In addition, these organizations represent a multitude of industries, including those

with a large lobbying presence, which can be used to create additional influence. Having a

Mahony-23

supplementary source of outside support for legislation creates additional insurance that the

proposed bill will be passed.

Weaknesses

It is important to note that the steps within the solution contain weaknesses. After

hearing the presentation, Congress may fail to act on the bill, essentially killing it before it is

sent to committee. Even if the legislation is brought to Committee, the Committee itself may

decide that it is not worth voting on. And even if bill is voted on, it may not pass. There have

been 5 different bills that have included some type of paid family leave entitlement introduced

in Congress since 2005, and the legislation still does not exist (Joint Economic Committee

Majority Staff 2008, 14). Unfortunately, this is a track record that may be hard to change.

Also, despite the multitude of research that speaks to the advantages for business that a

paid maternity leave benefit can have, there are still business that report little to no positive

effects upon implementation. In their 2011 study of California’s Paid Family Leave program,

Appelbaum and Milkman (2011, 14) saw numerous responses from business that the benefit

had, “no noticeable effect on productivity…profitability/performance…turnover…and employee

morale.” Such reports from businesses that have implemented the benefit due to mandate

provide a powerful contradiction to the large amount of data of organizations that have

implemented the benefit by choice.

Finally, it is important to note that while a lack of a statutory paid maternity leave

entitlement does go against the United States’ membership pledge in both the OECD and the

G7, they still remain members. Neither organization states anywhere that refusal to implement

Mahony-24

an agreement or convention will result in a loss of membership. Ultimately, this means the

United States faces virtually no consequences from either organization for their failure to act.

Here, the persistent perception of business leaders of the enormous cost of implementation

combined with the fact that the U.S. is still a member of both the OECD and the G7 regardless

of their decision not to enact an entitlement may convince legislators that legislation will not

make it past floor action. Clearly, the introduction of legislation to Congress is only a starting

step on a giant ladder.

Opportunities

The creation of legislation provides ample opportunities for input and more research.

First, the addition of research about the potential cost for implementation, either through

direct employee contributions or on the part of employers would help to determine the

viability of enacting potential legislation. It would be well worth it for specific research to be

conducted on the state of Washington, as the state has implemented a paid leave policy similar

to California but has been unable to fund it. Research to determine why and how that

happened would be helpful to prevent future pitfalls should legislation eventually be enacted.

In addition, additional research could be conducted on the successful implementation of the

federal Social Security and Medicare programs to see how they were realized and how that

information can be utilized to make implementation more seamless.

SHRM members could offer input as to whether the statutory legislation should be

maternity-specific or if it should fall under a general family leave policy. Also, they may be able

to provide valuable lessons learned should they work for an organization that has implemented

any type of paid family leave policy on its own like instances of employee lack of use or abuse of

Mahony-25

the entitlement and how the benefit is administered and tracked. This information would be

extremely helpful as businesses will certainly have questions about these issues should

legislation be implemented. Tapping in to the professional field’s insight and knowledge will

provide added resources for congressional members as the specifics of the legislation are being

fleshed out.

Threats

Unfortunately, there are obvious threats that may potentially jeopardize the passing of

legislation. Even if a bill is eventually created and put up for a vote, there is a significant

possibility that it may not pass. Such was the case with two bills about paid leave created in

2013, H.R. 517 – Federal Employees Paid Parental Leave Act and S. 1810 – Family and Medical

Insurance Leave Act, both of which were referred to committees for further debate and have

since been all but forgotten (congress.gov 2016a; congress.gov 2016b). Congress may point out

that no new legislation is needed due to the existence of FMLA, despite the disparate impact

that legislation has on working females throughout the country.

In addition, depending on the legislation, the entitlement could be paid for in the same

manner as Social Security or Medicare, meaning that there will be a cost to employers, who in

2012 paid an average of $2.33 per employee hour worked (8.1% of total employee

compensation) for these benefits (U.S. Bureau of Labor Statistics 2012, 1). Employers will be

quick to contact their congressional allies to lobby against this, despite the overall evidence of

the benefit on other aspects of the organization. Such was the case in the instance of the

legislation to increase minimum wage in 2014 (Liberto 2014). Despite support from 76% of

Americans, the National Retail Federation, “spent $1 million in the first three months of the

Mahony-26

year lobbying Congress on minimum wage,” (Dugan 2013, under “Tying minimum-wage

increases to inflation is slightly less popular”; Liberto 2014, under “Business are pulling out all

the stops to fight a federal wage increase to $10.10 from $7.25 an hour”). As for-profit

organizations in the past have put forth a nearly un-ending supply of funds to fight legislation

that may impose an unwanted cost, the potential threat of lobbyists may mean the end for the

legislation.

Trends

Despite the obvious threats, there are some very positive trends within the human

resources field that speak to the viability of overall support for a paid maternity leave benefit in

the United States. SHRM’s 2016 report on the state of employee benefits discloses that 26% of

organizations surveyed are offering a stand-alone paid maternity leave benefit and that a

majority of businesses (83%) with a family leave plan include paid maternity leave (SHRM

2016a, 3). Employees at the organizations offering these benefits are taking advantage, with

63% who offer paid leave reporting that their female employees had used all available paid

leave to care for a new child (SHRM 2016a, 3). These trends provide validity to the position that

employees seek employers who offer programs promoting work-life flexibility and speak to the

fact that businesses are beginning to listen to their employees and offer such arrangements.

Recommendations

This capstone has made an initial step in what will undoubtedly be a challenging path

towards the passage of a federal statutory maternity leave entitlement. First, further research

must be conducted about addition viable ways to ensure that the introduced legislation is

ultimately passed, such as identification of key congressional allies or lobbyists who can provide

Mahony-27

support. Aside from the Society of Human Resources Management, executives from well-

known businesses within influential industries, such as energy or technology could be engaged.

Those industries will have lobbyists working on their behalf who could provide additional

endorsement. It will be important to amass as much support as possible for the potential

legislation from the business sector, especially if any funding must come from businesses

themselves. This show of support will demonstrate to congress that organizations are willing to

take on the cost of legislation in order to establish that their worker’s needs are met.

To garner as much support as possible for the topic from the professional human

resources community, additional education may need to be provided directly to the SHRM

Government Affairs Committee as they will need to provide clarification to the Board when the

statement is being created to ensure that it includes verbiage to include every female working

citizen. As congressional members will undoubtedly turn to the professional field for assistance

in crafting the proposed legislation, this additional preparation will ensure that the bill that is

passed covers all potential loopholes and considers every stakeholder.

Finally, it would be wise the congressional members introducing the bill to partner with

prominent advocates in women and children’s health or worker rights to increase support for

the issue. These leaders may have additional ideas about funding, and can provide expertise

about previous legislation their fields assisted in getting passed. In order to ensure the passage

of the Patient Protection and Affordable Care Act of 2010, which included an allotment of time

on the job for breastfeeding, the American Academy of Pediatrics issued a public policy

statement outlining the benefits of breastfeeding and recommendations for breastfeeding

healthy infants (US Department of Labor 2016, under “Break Time for Nursing Mothers”;

Mahony-28

American Academy of Pediatrics 2012, 1). By engaging leaders in multiple spheres of influence,

Congress will be more easily convinced of the importance of the paid maternity leave

legislation.

Conclusion

The lack of a statutory paid maternity leave entitlement in the United States puts the

country’s reputation as a global economic and labor leader in jeopardy. If the United States

does not fulfill its membership obligations in the G7 and the OECD, then the country should not

enact any economic or trade restrictions against other members who do not fulfill their

membership obligations. Now the common goals of the organizations seem voluntary at best,

which ultimately negates the reason for having them in the first place.

The implementation of a statutory paid maternity leave entitlement on a federal level in

the United States will have a huge impact on its female working citizens. No longer subject to

the disparate impact of FMLA, all female workers can expect improvement in their children’s

and their own physical and mental well-being, as well as a work environment that is more

accepting of the demands of outside life. Businesses can expect an increase of available female

job candidates, a decrease in female employee turnover and a happier, more engaged

employee population. The United States will show the world its renewed commitment to a

viable robust workforce, as happy and healthy workers who are equipped with the means to

balance all aspects of their lives will only serve to benefit the economy within the global

marketplace. The implementation of this entitlement is a smart business move on the part of

employers, and will enhance the role of the United States as a leader within the global

economy.

Mahony-29

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