**FAMILY-FRIENDLY POLICIES:**

**WHAT THE FEDERAL GOVERNMENT CAN DO**

**Testimony before the House Committee on Education and Labor,**

**Subcommittee on Workforce Protections**

**Hearing entitled "Encouraging Family-Friendly Workplace Policies"**

**March 3, 2009**

**10:00 a.m., Rayburn Office Building Room 2175**

**Eileen Appelbaum**

**Professor, School of Management and Labor Relations and Director of
the Center for Women and Work, Rutgers University**

**Visiting Scholar, Center for Economic and Policy Research**

**INTRODUCTION**

Thank you Chairwoman Woolsey and Chairman Miller for inviting me to
speak to you today. My name is Eileen Appelbaum and I am a professor in
the School of Management and Labor Relations and Director of the Center
for Women and Work at Rutgers University, and a Visiting Scholar at the
Center for Economic and Policy Research.

These are challenging times for America -- for our families, our
workers, and our businesses. The double blow of a serious economic
recession and a crisis in financial markets -- unprecedented in the more
than 60 years since the Second World War -- has undermined the
profitability of American companies and threatened the incomes of
America's working families. Our values and our character as a nation
will be revealed in how we meet these challenges. President Obama made
clear in his remarks to the joint session of Congress last week that he
is looking to all of us to work with him to take the bold steps
necessary to build a sustainable economy to replace the now-deflated and
thoroughly discredited stock and housing bubble economies. He has
created a high-level White House Task Force on Middle-Class Working
Families and charged it to act swiftly to develop legislative and policy
proposals that can be of special importance to working families. Key
among the 5 goals the President set for the task force is to improve
work and family balance.

Today, with the economy struggling to gain traction, policies like paid
sick days and family leave insurance are more important than ever.
Especially during a recession, losing a job can be catastrophic for
employees and their families and will place added demands on already
strained state services. Paid sick days and family leave insurance
reduce job loss. They are effective job retention strategies that help
workers behave responsibly as employees and as family members and, at
the same time, enable businesses to realize net savings when the lower
costs of reduced turnover and presenteeism (coming to work sick) are
balanced against the costs of absenteeism. Paid sick days policies and
family leave insurance enable ill workers to take time off from work to
care for themselves, reduce the spread of disease to co-workers and
customers, and offer substantial savings to employers by reducing
turnover and minimizing absenteeism.

Let me briefly describe what is meant by the terms "paid sick days" and
"family leave insurance," and clarify the difference between them.

***Paid Sick Days***: Employees accrue a certain number of paid sick
days during a calendar year that they can use to recover from the flu or
other routine illnesses or medical problems. For many employees, having
paid sick days enables them to care for a child with a routine illness

***Family Leave Insurance (FLI)***: Employees in a state pay a modest
amount into a state insurance fund. These employees are then able to
draw on the fund for partial wage replacement when they need time off
from work to care for new or seriously ill family members or to recover
from their own serious illnesses. Employers gain from job stability.

**FAMILY-FRIENDLY POLICIES AT WORK**

Most families face a situation in which every available adult is in the
paid workforce. Family members must provide needed care for children,
spouses and ill or elderly parents while being responsible employees at
work and contributing to the financial well-being of the household.
Employees need family-friendly policies at work to be able to do this.
Paid sick days and family leave insurance let everyone who works for pay
to be good family members and good employees. Research shows, and
families know, that the lack of access to paid time off to care for
yourself, your children, or other family members compromises health
outcomes. Having to come to work sick or send a sick child to school
increases contagion and spreads disease in the workplace, child care
center, or school (Heymann, Earle and Egleston 1996). Not taking time
off to get better can actually result in longer absences for employees
since health may worsen and minor problems turn into major ones (Grinyer
and Singleton 2000). Children recover from illness or surgery more
quickly when their parents are there to care for them (Palmer 1993;
Krisstensen-Hallstrom, Elanders and Malmfors 1997). The elderly recover
more quickly and can live on their own longer if children are able to
care for them when they fall ill.

The American people "get" it. Polling data show that the public
overwhelming supports both paid sick days and family leave insurance. A
recent national poll found that 89 percent of voters -- 83 percent of
Republicans and 94 percent of Democrats -- favor paid sick days as a
basic employment standard (National Partnership for Women and Families
2007). It is easy to understand this high level of support across the
political spectrum. In addition to the loss of wages when an employee
misses work, unapproved absences may also be punished with temporary
unpaid suspensions or even with job loss (Dodson, Manuel, and Bravo
2002). In the poll mentioned above, 1 in 8 voters reported that they or
a worker in their family had been fired or penalized for taking time off
from work to care for a sick family member. A poll of New Jersey
residents in Fall 2006, prior to passage of the state's FLI program,
found that 78 percent of all residents, including a clear majority (59
percent) of Republicans, favored the policy. About three-quarters of
residents favored the policy even at a cost to themselves that was
double what the program actually cost (Eagleton Institute 2006). Polls
conducted in California and in Washington State prior to passage of
family leave insurance in those states found similar high levels of
support across the income and political spectrums. Activity at the state
and local level is at its highest, involving broad and diverse
coalitions including school nurses and educators, labor and progressive
business owners, advocates for children and for seniors.

While the benefits to families and to public health from paid time off
to care for yourself or a family member may be familiar to many people,
the benefits to businesses are less well known. Access to paid sick days
and to family leave insurance increases employee productivity and
reduces turnover. Turnover is costly for employers, and access to paid
time off to care for yourself or a family member significantly improves
retention and reduces these costs. In addition, letting employees stay
home and recuperate reduces the costs to businesses of illnesses that
spread among the workforce when employees come to work sick. The cost
savings are considerable and far outweigh any additional expenses
associated with these workplace policies. Indeed, many businesses
recognize the value of these cost savings, and already provide employees
with paid sick days and other paid leave benefits.

An analysis of the 2003 Survey of California Establishments, a survey of
California employers conducted prior to the implementation of family
leave insurance (called paid family leave or PFL in that state) found
that over a third of these employers (35.5%) provided family and medical
leave benefits beyond what was then required by law. This was especially
true in unionized workplaces. The survey of employers also found that
relatively few employees go on leave at any time. On average, 6.3% of
workers took family or medical leave in a one-year period; 8.0% in
establishments with more generous leave benefits. However, the survey
indicated that leave takers were more likely to return to their jobs in
establishments with more generous leave benefits -- 87.7% compared with
only 75.8% in establishments that did not provide benefits beyond those
required by law. Small businesses with more extensive leave benefits did
even better -- 95.4% of leave takers returned to their jobs (Milkman and
Appelbaum 2004).

A cost-benefit study of paid family leave in California found that
providing all employees with partial wage replacement for up to 6 weeks
of family leave through a state insurance fund would result in
significant savings for both employers and for the state. Employers
would realize a net saving of \$89 billion a year due to increased
retention and decreased turnover. In addition, the State of California
could save \$25 million annually, due to decreased reliance on
assistance programs, including TANF and Food Stamps (Dube and Kaplan
2002).

In Massachusetts, 693,000 workers -- a quarter of the private sector
workforce -- have no paid leave whatsoever and would receive new paid
sick days if legislation introduced in that state were passed. A
cost-benefit analysis of this proposed legislation found that
Massachusetts employers would pay \$218 million annually for wages,
payroll taxes and payroll-based employment benefits, and administrative
costs to provide employees with paid sick days. However benefits for
employers, mainly from reduced costs of turnover, would amount to \$348
million annually. Overall, employers in the state would save \$130
million annually as a result of the paid sick days legislation. The
weekly per worker cost of the Massachusetts paid sick days policy would
be \$1.49 while savings per work would be \$2.38, for a net savings to
employers of \$0.89. In addition, the paid sick days policy would
improve public health by reducing the spread of serious contagious
diseases such as the flu and norovirus, and would save workers \$1.5
million annually in health care expenditures. Getting medical care when
it is needed would improve patient outcomes and reduce costs for
providers and patients (Lovell, Miller and Williams 2009).

Employers are often concerned that providing employees with paid sick
days or family leave insurance will lead to skyrocketing employee
absences. The data suggest that this fear is unfounded. National data
show that employed adults 18 years of age and older lost, on average, 4
work days due to illness or injury in the 12 months preceding the data
collection (National Center for Health Statistics 2007). Employees with
paid sick days at their workplace had an average of 4.6 days of work
loss due to illness; those with no paid sick days at work had an average
of 3.8 lost work days due to illness. Fully 48 percent of employees with
paid sick days at work used none of their sick days in the prior 12
months (CEPR analysis of the 2007 National Health Interview Survey).[^1]

Similarly, usage of family leave insurance in California -- the only
state with actual experience with such leaves -- is reassuring. While
family and medical leaves are essential supports to employees welcoming
a new child or facing the challenges of caring for a seriously ill child
or parent, these are relatively rare events in a worker's life. Several
hundred thousand California working families have benefitted from access
to this insurance in the four-and-a-half years since it was implemented
in July 2004. But this represents a relatively small fraction of the
California workforce.

***Who Gets Paid Sick Days***

Many businesses already offer their employees paid sick days. According
to the latest data (National Compensation Survey, March 2008),[^2] 61
percent of private sector workers -- 71 percent of full-time and 27
percent of part-time workers -- had access to paid sick days. This means
that two fifths of all private sector workers and nearly three-quarters
of part-time employees -- had no paid sick days at all (Kramer and
Zilberman 2008). A serious problem is that more than half of the
workforce does not have or cannot use paid sick days to care for sick
children (Galinsky, Bond and Hill 2004). Moreover, access to paid sick
days is uneven -- higher-paid workers are far more likely than
lower-paid workers to be able to take paid time off when they have a bad
cold or the flu. In 2008, only 23 percent of employees in the bottom 10
percent of the income distribution had any paid sick days, compared with
83 percent of employees in the top 10 percent. For these low wage
workers, any illness -- even a sore throat and fever -- can be a health
crisis. Only 47 percent of workers earning less than \$15 an hour have
any paid sick days, while 75 percent of those earning \$15 or more have
such access. By occupation, 83 percent of managers and professionals but
only 66 percent of sales and service workers, 51 percent of production
workers, and 42 percent of service workers have access to paid sick days
(Kramer and Zilberman 2008). As a result, children in low-income
families are far less likely than other children to have a parent with
paid sick days (Clemens-Cope et al. 2008; Earle and Heymann 2002).

***Family Leave Insurance in California and New Jersey***

In 2004 California became the first state in the nation to implement
family leave insurance. Employees began contributing to this fund in
January of 2004 and, once the fund was established, were able to collect
benefits beginning in July of that year. California employees who need
to take family leave to bond with a new child or to care for a seriously
ill child, parent, spouse or domestic partner are able to collect
partial wage replacement from a state-administered insurance fund that
is fully funded by employee contributions. Employees are able to collect
55% of their weekly earnings up to a maximum that rises each year along
with the average wage paid in the state. The maximum benefit was \$728
in 2004 rising to \$882 in 2007 and \$917 in 2008. The average weekly
benefit actually paid out was \$406 in 2004, \$405 in 2007 and \$421 in
2008. While income replacement under the paid family leave program has
been very important to the well-being of families that have received it
-- and a total of about 740,000 claims have been paid, only a very small
fraction of employees has taken paid family leave in any year. The
percentage that has taken paid family leave in each year of the
program's existence has been between 1.2% and 1.4% of eligible
employees.

A large majority of the claims (88%) are for bonding with a new child.
While women still do the majority of care work in the home, by 2008 a
fifth of all bonding leaves were taken by men. The remaining claims (12%
of the total) are for care of a seriously ill family member, most often
a spouse or parent; more than a third of these leaves were taken by men
as has been the case since 2004. The average length of leave has been
about 5.4 weeks each year, reflecting the fact that most of these leaves
are for bonding. Leaves to care for a seriously ill family member are
substantially shorter. (All California data are from the Employment
Development Department of the State of California.)

In 2008 New Jersey became the second state to pass family leave
insurance and put a mechanism in place to fund it (the third state after
Washington to pass such a program). Like the California family leave
insurance program, it is fully worker funded and provides up to 6 weeks
of partial wage replacement. Employees began contributing to this
insurance fund on January 1, 2009 and will be able to begin collecting
from it on July 1 of this year. Employees will be able to collect
two-thirds of their weekly wage up to a maximum in 2009 of \$548. This
formula is a bit more generous to low-wage employees than the California
program, but it is capped at a much lower level. The cost of this
benefit is 25 cents a week (\$13 a year) for a worker earning \$7.25 an
hour and is capped in 2009 for all employees at \$26.01 a year or 50
cents a week.

**FEDERAL MEASURES TO PROMOTE FAMILY-FRIENDLY POLICIES IN THE
WORKPLACE**

Family-friendly policies take many forms. Some, like minimum wage and
paid sick days, establish employment standards and can reasonably be
expected to be provided by employers. Others, like unemployment
insurance and family leave insurance, are paid for through a payroll
deduction to cover the premium.

***Family leave insurance*** is still in its infancy in the U.S. For
California and New Jersey, which have long-standing state temporary
disability insurance funds, adding family leave insurance to temporary
disability insurance made a lot of sense. Washington State, which needed
to create the program from scratch, took another route of charging a
fixed amount per hour and paying out a fixed weekly benefit. As other
states begin to implement a state insurance fund to provide income to
families when a wage earner must miss work for a family or medical
leave, we are likely to see -- and will want to encourage -- a wide
diversity of approaches. This will be important for providing us with
important information about the best way to make this insurance
universally available. An important role for the federal government is
to provide states with incentives and support to develop their own
family leave insurance initiatives. The federal government can do this
by providing grants to states to implement programs that provide partial
or full wage replacement to those taking the types of leaves defined by
the Family and Medical Leave Act. The grants might be used to develop
and implement the program, to cover administrative costs, for outreach
and education, or to provide incentives to small businesses to provide
job protection. In particular, the grants might be used to enable states
to begin paying benefits during the initial 6-month period between the
time employees begin paying into the fund and the time the fund has
built up sufficient assets to begin accepting claims for payment. In
order to not penalize states that have already implemented such a
program, a similar one-time grant could be made to them as well.

***Paid sick days*** should be a universal employment standard in the
U.S. It is in no one's best interest to have employees come to work when
they have a bad cold or the flu. And, indeed, a majority of employers do
provide their workers with paid sick days. It can, however, be difficult
to implement paid sick days if the companies with which you compete do
not do likewise. Requiring employers to provide workers with a minimum
of seven job protected paid sick days, levels the playing field for good
employers who want to meet this standard. Employees would accrue the
paid sick days at a rate of one hour of paid sick time for every X hours
of time worked up to 7 or more days As with the minimum wage, national
legislation could provide a universal floor for all workers, with states
free to set higher standards. In the absence of national legislation
requiring paid sick days as a workplace standard, some states and
localities have begun to introduce local ordinances. Measures have
passed in San Francisco, Milwaukee and DC; the San Francisco and
Milwaukee ordinances require 9 paid sick days.

Paid sick days are even more important now, in the midst of the current
severe recession and accelerating job loss. Without access to this basic
standard, workers lose income and may even lose their jobs if they miss
work to care for their own health or that of a child. For the employee,
this would be a terrible time to lose a job. And employers are not
likely to hire a replacement, with negative impacts on the local
community and the macroeconomy. Yet, the business community's lack of
confidence during the current recession could make companies fearful of
making changes or adopting new policies, however beneficial. This is
especially true of smaller employers. And it is employees of smaller
companies, especially those who are low-paid, that are most likely to
lack paid sick days. Only about half of companies with less than 100
employees offer any paid sick days compared with nearly three-quarters
of companies with 100 or more employees (Kramer and Zilberman 2008).

One way to address this is to provide a temporary subsidy, say for two
years, to small employers that introduce and/or increase the number of
days of job protected sick days. The full subsidy would be available to
all employers with less than 50 employers and would phase out as the
number of employees increased, up to 100 employees. The subsidy would be
capped at 3% of annual pay not to exceed a \$750 credit per worker.

**CONCLUSION**

Difficult economic times like the present are the worst times for people
to lose a job. Family leave insurance and paid sick days enable workers
to maintain a stable stream of income and underpins consumption when
workers must miss work to deal with their own health needs or those of a
family member. These measures are important during the current
recession. They are also essential to building a sustainable economy for
the long run that works for working families.

**REFERENCES**

Clemans-Cope, Lisa, Cynthia D. Perry, Genevieve M. Kenney, Jennifer E.
Pelletier, and Matthew S. Pantell. 2008. "Access to and Use of Paid Sick
Leave among Low-Income Families with Children." *Pediatrics*
122:480--86.

Dube, Arindrajitm and Ethan Kaplan. 2002. "Paid Family Leave in
California: An Analysis of Costs and Benefits." Berkeley, CA: Institute
on Labor and the Economy, University of California -- Berkeley.

Dodson, Lisa, Tiffany Manuel, and Ellen Bravo. 2002. *Keeping Jobs and
Raising Families in Low-IncomeAmerica: It Just Doesn't Work.* Cambridge,
MA:

Radcliffe Institute for Advanced Study.

Eagleton Institute of Politics, Eagleton Center for Public Interest
Polling. 2006. "Summary of Poll Results for Family Leave Insurance." New
Brunswick, NJ (November 9)

Earle, Alison, and Jody Heymann. 2002. "What Causes Job Loss among
Former Welfare Recipients: The Role of Family Health Problems." *Journal
of the American Medical Women's Association* 57 (Winter): 5--10.

Galinsky, Ellen, James T. Bond, and E. Jeffrey Hill. 2004. *A Status
Report on Workplace Flexibility: Who Has It? Who Wants It? What
Difference Does It Make?* New York: Families and Work Institute.

Grinyer, Anne, and Vicky Singleton. 2000. "Sickness Absence as
Risk-Taking Behavior: A Study of Organizational and Cultural Factors in
the Public Sector." *Health, Risk and Society* 2 (March): 7-21.

Heymann, S. Jody, Alison Earle, and Brian Egleston. 1996. "Parental
Availability for the Care of Sick Children." *Pediatrics* 98 (August):
226-230.

Kramer, Natalie, and Alan Zilberman. 2008. "New Definitions of Employee
Access to Paid Sick Leave and Retirement Benefits in the National
Compensation Survey." U.S. Department of Labor, Bureau of Labor
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[www.bls.gov/opub/cwc/cm20081219ar01p1.htm](http://www.bls.gov/opub/cwc/cm20081219ar01p1.htm)

Kristensson-Hallstrom, Inger, Gunnel Elander, and Gerhard Malmfors.
1997. "Increased Parental Participation in a Pediatric Surgical Day-Care
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Li, Jiehui, Guthrie S. Birkhead, David S. Strogatz, and R. Bruce Coles.
1996. "Impact of Institution Size, Staffing Patterns, and Infection
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Lovell, Vicky, Kevin Miller, and Claudia Williams. 2009. *Valuing Good
Health in Massachusetts: A Cost-Benefit Analysis*. Washington, DC:
Institute for Women's Policy Research (February).

Lovell, Vicky. 2004. *No Time to be Sick: Why Everyone Suffers When
Workers Don't Have Paid Sick Leave*. Washington, DC: Institute for
Women's Policy Research.

Milkman, Ruth and Eileen Appelbaum. 2004. "Paid Leave in California: New
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National Partnership for Women & Families. 2007. *Key Findings from
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[^1]: The analysis is based on the methodology developed by Vicky Lovell
    and the Institute for Women's Policy Research (Lovell 2004).

[^2]: A new definition of paid sick days access was introduced in the
    March 2008 survey. It now includes previously excluded plans for
    which no worker had made use of the benefit. As a result, the latest
    numbers for access to paid sick days are higher than, and not
    strictly comparable to, earlier numbers from this source that have
    been widely used in previous publications.