Funding the Costs of Maternity Leave [Guest Post]

August 31, 2016
Helpful Advice

How to Cover the Costs of Your Maternity Leave

The Ups & Downs of Maternity Leave Coverage in the U.S.A.

Does your company cover maternity leave as a standard job benefit? For many Americans, the answer is a resounding no. In fact, the Bureau of Labor Statistics reported that only 12% of Americans have access to parental benefits.

Further, the average American woman, assuming typical birthing circumstances, is often able to take only six weeks or less to heal and celebrate the birth of a new baby. At times, assuming medical complications, short-term disability (STD) might kick in…but it’s rare.

With the debate raging on as to whether or not maternity leave should be covered by tax dollars, it might be time for you to consider which side of the discussion you agree with. Let’s dig into this very touchy issue and try to balance some of the existing research on the matter.

The U.S.A. has no centralized government-run maternity benefits.

Among developed countries, only the U.S.A. and Papa New Guinea do not offer standard maternity leave benefits that are mandated by a centralized government. France, on the other hand, provides 16 weeks at 100% of salary, with a caveat of up to 34 weeks fully covered for multiple births.

Which countries offer the best maternity leave coverage? According to Women24, a popular blogging website, other countries with excellent benefits included:

  • Australia (18 weeks, 100%)
  • Germany (16 weeks, 100%)
  • Russia (140 days, 100%)
  • Armenia (140 days, 100%)

While a few others made the list, salary reimbursements varied from only 2 weeks paid (in Switzerland) to 50% (Nigeria) or 67% (Japan) of salaries being covered.

In the U.S.A., the average benefit is 12 weeks (primarily covered by the Family Medical Leave Act (FMLA), falling under state-by-state regulations to determine how much (if any) of a woman’s salary is reimbursed. Though not required, employers may also offer private maternity leave benefits.

Who should fund maternity leave in the U.S.A.?

California tested the waters with a very simple concept: have each employee contribute to a fund that covers the cost of maternity leave (including paternity leave and other catastrophic family emergencies.) Rhode Island, Massachusetts and New Jersey followed suit. They are the only states with maternity laws now officially on the books.

To highlight the basics of the system, California places maternity leave under the Paid Family Leave or Family Temporary Disability Insurance program. Under these laws, simultaneous to taking Federal Family and Medical Leave Act (FMLA) and California Family Rights Act, women are paid 55% of their salaries for up to 6 weeks.

Women may take additional unpaid time up to 12 weeks (per FMLA) during which their jobs must be held. There is no limit on the size of the company offering the benefits; they apply to all working women who are eligible for social security disability insurance (SDI).

What options do American women currently have for maternity leave?

Currently, in the U.S.A., women who choose to take time off to be with a newborn child have limited options:

  • Employers may privately cover their time off, sometimes at a reduced salary
  • Under FMLA they may take up to 12 weeks of unpaid time off
  • Women may use up all of their vacation time plus take time unpaid
  • Contractors or 1099s must privately fund their maternity leave

Research has also shown time and time again that women who take time off for maternity leave risk long-term salary losses. For each child a woman has, her salary decreases by 4%, reported a University of Massachusetts study.

Let’s note that, on the other hand, once California began offering these maternity benefits (which may be considered moderate by international standards), despite the public outcry, maternity and paternity leave had no effect on the profitability of the businesses.

Additionally, if we are discussing maternity benefits by industry, IT is clearly leading the way – Facebook, Twitter, Yahoo, Google, etc. – offer the best private employer maternity (and paternity) plans for their employees. Benefits ranged from au pair services post birth to generous 100% compensation packages.

Arguments against maternity leave for women in the U.S.A.

On the other side of the debate, would it even be possible for the U.S.A. to match the benefits offered by other socialized nations? Denmark, for example, provides a full year off for new moms, along with additional guaranteed day care benefits.

Another Pew report found that out of 38 countries, the average for protected job leave was five to six months, with the U.S.A. ranking dead last. (Mexico came in 37th in the study.) How long can an employer be expected to leave a job open for a new mom?

And let’s be sure to ask if taxes would need to be increased to support more leave for family reasons. We should note that of the four states that offer paid maternity and family leave, three (California, New Jersey and Connecticut) are among the highest taxes in the nation.

Finally, what about workers who never take maternity or family medical leave? Is it fair to them to pay into a system they will never take advantage of, such as infertile women, or men who do not procreate? (To be clear, FMLA now covers same-sex married couples.)

Surely, sitting next to a mother of four who’s preparing for yet another 12-week stint of time off just might be a little grating to those with only 15 total vacation days per year. How do we balance the rights of everyone while making the changes necessary to ease the burden for mothers in the workplace?

While it’s clear that the U.S.A. has a long way to go before it is equal to other industrialized nations on the issue of maternity leave, the fact remains that no clear-cut solution is forthcoming.

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