How a lack of paid leave is making wealth inequality worse

The United States is famously exceptional in its failure to guarantee paid family leave to new parents. What is less well-known is that this failure contributes to the growing problem of income inequality, widening the gap in well-being between the haves and the have-nots.

In 21st-century America, paid leave is available to most upper-level employees, especially professionals and managers, when they become parents or need to care for a seriously ill family member. However, the nation’s burgeoning ranks of low-wage workers typically have no access whatsoever to any kind of paid leave. Instead, they are repeatedly forced to choose between earning a day’s pay and providing vital care to their families. When they choose the latter, they fall even further behind.

The only federal legislation addressing this issue is the 1993 Family and Medical Leave Act, the very first bill President Clinton signed into law after his inauguration. It requires many employers to provide up to 12 weeks of unpaid family and medical leave to both men and women who need to care for a new child or attend to the health needs of themselves or a close family member. It also ensures that workers can return to the same job or a similar one after an FMLA leave.

Although it was a major breakthrough when it was passed, the law has severe limitations. FMLA covers only employers with 50 or more workers and stipulates various other requirements. In practice, it covers only about 60 percent of the labor force and less than 25 percent of new mothers. And perhaps most importantly, most workers simply cannot afford to take time off without pay. A 2012 study by the Labor Department found that nearly half (46 percent) of FMLA-eligible workers who needed a family leave but did not take it cited lack of pay as the reason.

Some U.S. employers do provide paid family leave to their employees — but this covers only about 12 percent of those employed in the private sector. In many cases, however, only highly trained full-time professionals and managers are eligible for employer-provided benefits, while low-wage and part-time workers are all too often left out entirely. The Census Bureau reports that 66 percent of new mothers with four-year college degrees have access to some type of paid maternity leave, but only 18 percent of those without a high school diploma do. Yet because less educated workers typically are at the bottom of the labor market, living paycheck to paycheck, they are the ones who can least afford to take time off without pay.

The state-level paid family leave programs in California, New Jersey, Rhode Island and New York state (as of last month) are notable in that they all aim for universal coverage, unlike both the FMLA and employer-provided leave programs. Regardless of employer size and whether workers are part- or full-time, virtually everyone employed in the private sector in these states is (or in the case of New York, will soon be) eligible for partially paid time off to bond with a new baby or care for a seriously ill family member. The FAMILY Act that is languishing in Congress would create a similarly universal program at the national level.