Twenty-five years later, a long way to go for small businesses on paid leave

WASHINGTON, DC – Small business owners say that a national paid leave program remains a priority, according to a new report released today. Today marks the 25th anniversary of the Family and Medical Leave Act (FMLA), which outlined only unpaid leave for U.S. workers.

“On this anniversary, we’re fighting for a comprehensive paid leave insurance program in Oregon because small business owners need it,” said Don Hudson, Sea Horses LLC in Portland, Oregon. “At some point we all need to take time off from a job to recover from a serious illness, care for a family member, or bond with a child. We small business owners, in particular those of us who are also fathers, must have improved paid leave. We often have to forgo parental leave and take shorter periods of family leave, if we can at all, to manage our businesses.”

The report, The View From Main Street: Paid Family & Medical Leave, is based on 1,777 surveys conducted by the Main Street Alliance in 2017 with business owners across the country. Nearly two-thirds of those surveyed said they support a federal paid leave insurance pool. Absent a federal policy, some states have passed paid leave stopgap measures.

“The New Jersey Family Leave Insurance Program means small business owners and their employees don’t have to choose between their health or the well-being of their family and their business or job,” said Jerome Montes, State Director for New Jersey Main Street Alliance. “We have business owners who have been able to retain valuable employees through both difficult circumstances and happy life events, like the birth of a child, because of our state’s paid leave program.”

Key Findings

  • Of the small business owners surveyed, 85% did not offer paid family and medical leave (PFML), while 15% did, up from 13% in 2015.
  • Of those surveyed, 46% cited administrative responsibilities as the reason why they couldn’t offer paid leave, while 26% cited the lack of available plans.
  • An overwhelming 79% of business owners who currently do not offer PFML said a social insurance program would be the primary incentive to offer paid leave.
  • The vast majority, 81%, suggested an inclusive family definition be used to cover the range of family configurations and care responsibilities that business owners and their employees face.

Good for Business

Research and polling has shown that affordable, universal paid family and medical leave helps small businesses grow, compete, and care for their employees. Yet the United States continues to have one of the least generous paid leave policies in the world. Only 14% of the workforce has paid leave through their employer, and fewer than 40% have personal medical leave through an employer-provided disability program.

The lack of a national paid leave policy not only harms employees, but also puts small business owners at a considerable disadvantage. Small businesses often have trouble matching the more generous leave benefits offered by large employers, making it harder for them to compete. Moreover, without paid leave, businesses can face disruptive and costly turnover, particularly of female employees. One review of multiple studies of turnover costs estimated the median cost to replace a worker was about 21 percent of annual salary.

Finally, and perhaps most critically, without paid leave, small business owners themselves have no protection in case of an illness or caregiving need. A single accident or a medical emergency could plunge them into financial free fall.

“Our economy and small businesses suffer without a federal paid leave policy,” said Amanda Ballantyne, National Director of Main Street Alliance. “While the Family and Medical Leave Act was an important first step, after 25 years, the majority of working people in the US still don’t have paid leave. It’s common sense that we catch up to the rest of the world and set up a paid leave insurance system that protects small business owners and their employees.”