In the United States, paid maternity leave is an extreme rarity.
In fact, just 17% of U.S. workers can access some amount of paid maternity or paternity leave, according to data from the U.S. Bureau of Labor Statistics. Most Americans have no choice but to take unpaid parental leave.
And with the average maternity leave lasting 10 weeks, that is quite some time to go without income while also dealing with the rigors of early parenthood.
Breeze, an online insurance broker, surveyed 1,000 American mothers who recently went on unpaid maternity leave to find out how they handled their finances.
The data provides insights that employers can use to decide whether or not they should offer paid maternity leave.
The study from Breeze found that 40% of mothers relied on a short-term disability insurance policy to help with finances while on unpaid maternity leave, compared to 35% of respondents who did not (25% opted not to answer).
Of the 35% that didn’t, 20% said they dug into emergency savings to get by while on unpaid leave, 17% took on credit card debt, 11% took on a side-job, and 9% took out a personal loan. Just 11% of respondents said they were able to handle expenses comfortably.
Longer-term, 34% from this same group said the time spent on unpaid maternity leave forced them to delay repaying student debt, while 32% delayed building a savings fund, and another 32% put off buying a home.
Finally, 51% of this group said they returned to work earlier than they would have liked due to financial reasons. Most of this cohort is now either “extremely” or “somewhat” worried this shortened maternity leave time will impact their child’s development.
So, what can employers take from this data?
The Reasons to Offer Paid Maternity Leave
It’s clear that unpaid maternity leave leads to both financial and mental stress for many mothers.
The biggest reason for employers to offer paid maternity leave would be to alleviate that stress to keep employers happy, which, in turn, should boost productivity and commitment.
One study found that happy employees are up to 20% more productive than unhappy employees.
Second, offering paid maternity leave to employees would be an extraordinary benefit that would keep your company extremely competitive when it comes to hiring. The Breeze study found that 57% of respondents would give an advantage to any prospective employer that offered paid maternity leave.
If a prospective employee is given two similar job offers, but one offers paid parental leave, and the other one doesn’t, which do you think they are more likely to take?
The Reasons to Not Offer Paid Maternity Leave
When it comes to the reasons not to offer paid maternity leave, the biggest and most convincing one is simple—cost.
For any employer, offering employees two months or more of paid parental leave can leave a big dent in the company’s balance books. That dent feels a lot worse when you consider no work was being done during this time off.
Additionally, most employers in the U.S. do not offer paid maternity leave, so why should any company? If the competitive advantage of providing paid maternity leave is minimal at best, why would an employer incur the cost?
Each employer is different. Their employees are different, their benefits are different, their structures are different, and their company policies and cultures are different.
Because of this, there is no right answer to employers offering paid maternity leave.
It comes down to each employer having to decide based on their company’s and their employees’ best interests. Consider the costs, the competitive advantages, and the consequences of paid or unpaid parental leave, and you’ll be in an excellent place to make a ruling.
Mike Brown is the Director of Communications at Breeze. His work has been featured in most major media outlets, including Bloomberg and The Wall Street Journal.