High Wire Act: Balancing Families & Jobs at Precarious Points

The Role of Work-Leave in New Zealand and the US

Prepared by Jodie Levin-Epstein | June 2004

with funding from the sponsors of the Ian Axford (New Zealand) Fellowships in Public Policy

Jodie Levin-Epstein is a Deputy Director and Senior Policy Analyst with the Center for Law and Social Policy (CLASP) in Washington, D.C. She has established CLASP's Project on Reproductive Health, Adolescents and Welfare, a project that explores the intersection of welfare and other low-income social programs with fertility and health. She is also involved in organizational capacity issues. Jodi was based at the Ministry of Social Policy in Wellington where she explored how New Zealand and U.S. social policies promote a balance between work and family, particularly for sole parents including those receiving welfare.

Executive Summary

High Wire Act: Balancing Families and Jobs at Precarious Points examines two work-leave policies: parental leave and sick days' leave. It considers the implications of these policies, both for families and for businesses, in New Zealand and the United States.

In New Zealand, national laws establish a minimum for Paid Parental Leave (around the birth or adoption of a child) and for paid sick leave (for those days when a worker or worker's family member is sick). The United States has no such federal laws. In the United States, the Family Medical Leave Act (FMLA) provides for 12 weeks of unpaid leave for some employees to take time at the birth or adoption of a child and to address their own or family members' serious health conditions. The FMLA addresses serious illness and it is not intended to be used for sick days now and then; this paper is particularly focused on New Zealand's paid-leave law that covers sick days.

Government policy can influence the relationship between families and employers and provide a net beneath the high wire on which some families and some businesses balance when employees take leave.

Work-leave can be precarious for both families and businesses. The time around the birth of a child and days of sickness is stressful for all working parents; however, if the time off from work is unpaid, the challenge of such moments is even greater for families with lower incomes. Time taken out of the workforce can sometimes trigger poverty and more generally will influence future earnings capacity. Businesses have an economic stake in the absences of workers. Companies must make adjustments to accommodate worker absences. This can be stressful for any company but, for some businesses, particularly those that are smaller, it may be more difficult than others.

High Wire Act identifies key research that addresses four fundamental questions:

§ Why Does Work-Leave Matter?
§ What Are the N.Z. and US Work-Leave Policies?
§ Why Compare Work-Leave in New Zealand and the United States?
§ Who Has Taken Up Work-Leave?

The four questions raise considerations with almost Talmudic depth. For example, while research demonstrates that parental leave can be valuable to the well-being of families, the business bottom line, and an ageing society's need for workers, it fails to inform us about the ideal length of parental leave when all of these elements are considered together. How long can a job stay protected without hurting business operations? How long can a parent be absent from the workforce without harming long-term earnings, and is shared caring between parents the best way to address earnings capacity? What length of leave is best for a child's development? How do different 'family friendly' policies impact on these three considerations? What is the right cost-benefit calculus for different kinds of businesses? How can businesses weigh immediate returns against those that are longer term?

While many questions remain unanswered or insufficiently nuanced, the data make clear that, without statutory policy, some workers would not receive adequate, or any, access to work-leave. This happens when the businesses that employ these workers do not voluntarily provide these benefits. The workers in these firms tend to be, but are not necessarily limited to, those who earn lower wages.

High-Wire Act follows the four questions with:

§ What Stakeholders Say About Work-Leave; and
§ Policy Considerations.

To gain a better understanding of how New Zealand's statutory parental and sick days' leave provisions are perceived and experienced at the ground level, interviews were conducted with New Zealand solo mothers, lower-wage workers, and employers with fewer than 50 employees. Virtually all of the interviewed businesses support government's role in establishing Paid Parental Leave and, most particularly, in funding it through general tax revenues. Both because the law is new and because parental leave is relatively infrequent, few of the interviewed businesses had yet implemented it; and some were misinformed about certain provisions. There is also worry about a pending government proposal to expand eligibility to more workers. Yet, while not without concern about how to manage a worker's absence, a number of the employers believed the paid leave would help retain workers. Solo mothers, many of whom planned to return to their employers, valued the parental leave income. Nevertheless, most found that the drop in income translated into housing dislocation. Information about the interaction of certain benefit programmes was not readily available; in contrast, the application process and payment procedures were fairly seamless for these mothers. The interviewed businesses also supported government's role in defining a minimum standard for sick days' leave. Interviewed employers and employees alike felt paid sick days were necessary to address the need for wages when someone is sick; they also felt that sometimes an employee or employees would abuse the sick days' leave. Interviewed employers are generally worried about new restrictions on their ability to require certification of sickness. The businesses which provide higher wages tend to provide more sick days' leave.

The stakeholder interviews, along with the research related to the four questions, suggest that New Zealand has established important work-leave schemes. The Government has made significant strides in its work-leave policy. The analysis and the interviews also indicate that New Zealand's policies, to be on the cutting edge, should be subject to on-going review.

Consideration should be given in New Zealand to policies in which the Government would:

Paid Parental Leave

· Establish "use or lose" paid-leave weeks for partners as a step towards a society in which caring and earning are equitably shared.
· Ensure Paid Parental Leave is integrated into the Working for Families Initiative so that low-wage workers can access appropriate benefits.
· Identify potential mechanisms to "top up" payments for low and moderate income families so that any loss of income while on parental leave is less severe.
· Continue building business community awareness of how PPL rules work since many smaller enterprises have few opportunities to implement PPL.
· Develop greater public and private capacity to link employers with short-term job seekers so that employee absence is less of a burden.
· Allow payments to parents who acknowledge no intention to return to jobs so that employers can hire replacement staff sooner.
· Develop a Paid Parental Leave research agenda to address the nuances of the current scheme and future options.
· Issue a report card on Paid Parental Leave so that the public and Government can readily appreciate such issues as the number of families that do and do not benefit from the scheme, the views of implementing business, and how New Zealand compares to other OECD nations.
· Ensure Work-Leave is on the agendas of appropriate government initiatives such as the Families Commission in order that work-life balance (including work-leave) does not get crowded out by other government policy and messages such as 'make work pay'.
· Examine international experience with general revenue financing of PPL so that New Zealand's use of taxpayer funds can be compared with the few countries which finance parental leave in the same way.

Sick Days' Leave

· Ascertain whether medical certificates are achieving the expected check and balance regarding verification of absences.
· Assess if employer worries about documentation restrictions materialise into a real problem in which employees abuse the restriction.
· Consider a pro-rata approach to sick day's leave which treats full-time and part-time workers differently.
· Collect best-practice approaches to sick leave so that employers can have valuable tips.

Consideration should be given in the United States to lessons from New Zealand's experience, including:

Parental Leave

· A public-private partnership can enhance business engagement in policy debates around parental leave.
· General revenue financing of parental leave can eliminate a business objection and foster legislation.
· Parental leave is a relatively rare occurrence for most small firms and this could enhance acceptance of leave.
· Management of employee absence during parental leave, whether paid or unpaid, is rarely easy to manage, yet small firms have managed it.
· General revenue financing of parental leave could enhance the likelihood of a longer period of leave.
Sick Days' Leave

· A national US sick days' leave law should be established to provide a minimum standard that applies to all size enterprises.
· A national US sick days' leave law should provide for a meaningful illness verification process.
· A national US sick days' leave law should provide for an illness verification process that considers workers' ability to pay for verification.
· A national US sick days' leave law should provide for carry-over of unused days, up to a cap.

New Zealand and the United States are different in many respects but they share a fundamental economic truth: they both must operate in a manner in which every worker counts. Policies that enable working parents to work-and to parent-are a vital part of that framework.

Table of contents

Acknowledgments
Executive Summary
Introduction

Part 1: Why does Work-Leave matter?

Part 2: What are the New Zealand and US Work-Leave Policies?

Part 3: Why compare Work-Leave Policies in New Zealand and the US?

Part 4: Who has taken up Work-Leave?

Part 5: What stakeholders say about Work-Leave

Part 6: Policy considerations

Part 7: Conclusions

Bibliography

High Wire Act: Balancing Families & Jobs at Precarious Points:

levin-epsteinj.pdf (335k)