Little evidence that the California paid leave law increased women’s employment, wage earnings, or attachment to employers

By John McCormick of The WSJ.

"The Biden administration has argued that its proposal to spend $225 billion over a decade to offer 12 weeks of paid leave for parenting, family, illness and other needs, worth up to 80% of a worker’s salary, would boost both quality of life and economic output by encouraging more women with children to enter the workforce.

In 2002, California became the first state to enact a paid family leave program. Since July 2004, the Paid Family Leave Act has offered six weeks of partial paid leave, funded by payroll deductions, to attend to the employee’s or a family member’s serious health condition, or to bond with a new child.

The number of annual claims has steadily grown from 154,425 in 2005 (the program’s first full year) to 288,778 in 2020, according to the state’s Employment Development Department.

The White House cites a study of the California program that suggests new mothers who took the leave are, on the whole, more likely to be working nine to 12 months after childbirth, perhaps because those with weaker attachments to the labor force had increased job continuity.

But taking a longer view, a 2019 research paper written by three economists in academia and one at the Federal Reserve Bank of Chicago that used IRS tax data found “little evidence that (the law) increased women’s employment, wage earnings, or attachment to employers.”

Compared with women giving birth in earlier years and in other states, the paper found new mothers using paid parental leave saw “reduced employment by 7 percent and lowered annual wages by 8 percent, six to 10 years after giving birth.”

New mothers with access to the paid leave could expect to receive around $1,833 in wage replacement for one year, the study found, but approximately $25,681 lower earnings over the next decade, for a net 10-year loss of about $24,000."