The Case for Offering Paid Leave: Benefits to the Employer, Employee, and Society

By H. Kristl Davison and Scott Blackburn

During the COVID-19 pandemic, employees have worried about themselves or their family members becoming ill, and many had to choose between taking time off or retaining their jobs. Given these extreme circumstances coupled with low unemployment rates, we propose that employers should look at paid leave as a way to recruit and retain employees. Specifically, employees need sick leave for their own illnesses, family/personal leave to care for their family members, and vacation leave to reduce the effects of burnout. Such leave needs to be paid as many employees (especially lower-level, often essential workers) cannot afford to take unpaid time off.

Why Employees Need Paid Leave from their Employers

First, paid leave is not mandated by the U.S. government, in sharp contrast to other developed countries. For example, the U.S. does not guarantee vacation time whereas the EU guarantees a minimum of 20 paid vacation days yearly. The U.S. is only one of 11 countries that do not guarantee paid sick leave, whereas 76% of countries offer at least six weeks of paid sick leave. Finally, the U.S. is the only country (out of 43) in the Organization for Economic Cooperation and Development and European Union that does not mandate any paid leave for new parents.

Given these legislative gaps in the U.S., it is up to employers to voluntarily offer paid leave. Paid vacation is one of the most common forms (available to 77% of U.S. civilian workers), yet access to paid vacation varies by job and industry (e.g., from 22% of teachers to 93% of professional and technical service employees). With respect to sick leave, about three-fourths of private industry employees have paid sick leave available, but it also varies by job and industry (e.g., 59% for service occupations vs. 92% for management, professional, and related occupations). Additionally, only 25-50% of U.S. employers offer paid family leave, also varying by job and industry. Thus, many employees, particularly low-wage and part-time workers, are left out when it comes to having the protections of paid leave.

Second, higher salaries and other work-life balance policies and practices are no substitutes for paid leave. Employers may offer higher salaries or subsidize childcare, but with quality childcare in short supply, employees still have trouble finding caregiving. Flexibility in hours is impractical in industries that have shifts or mandatory overtime (e.g., nursing, manufacturing, service). Thus, many workers may be expected to work when they or their family members are ill, and they may be unable to afford to take unpaid time off or fear losing their jobs if they do so.

Why Employers Should Offer Paid Leave

In a tight labor market, paid leave can help differentiate one’s company from competitors in ways that salary alone cannot. For example, paid leave helps employees manage their work-life balance, which is a desired attribute by job seekers. Good leave policies can also enhance the employer’s reputation, helping to attract and build trust with employees. Moreover, paid leave is not that expensive—some estimates suggest that organizations pay a weekly average of $6.87 per worker for paid leave, but on average gain $12.32 via increased productivity and reduced turnover. Finally, paid leave programs can help support DEI initiatives, as working women, minorities, low-wage employees, and less-educated employees are less likely to have paid leave.

Designing Paid Leave Programs

Employers should consider offering a traditional paid leave system with distinct categories (i.e., vacation, sick, and family/personal leave). Although paid time off (PTO) banks provide more flexibility, too much flexibility can lead employees to make bad choices (such as mentally allocating all PTO to “vacation” and attending work when ill). In deciding amount of leave to offer, employers who operate in multiple states or countries might institute standard policies based on the most generous laws where their operations are.

Conclusion

Despite the costs of paid leave, it can provide increased productivity and morale, greater job satisfaction, and lower job turnover. Additionally, leave policies may help a pay strategy to be inimitable by competitors and thus serve as a competitive advantage. Many employers can compete on base salary to attract and retain talent, but employee-friendly benefits such as leave policies are not as replicable, and are highly desired by employees.

Article Details
The Case for Offering Paid Leave: Benefits to the Employer, Employee, and Society
H. Kristl Davison and Adam Scott Blackburn
First Published October 4, 2022
DOI: 10.1177/08863687221131728
Compensation & Benefits Review

About the Authors