The majority of Americans go without an essential employee perk, and it's costing them billions of dollars

Parent with Child on Shoulders
Time spent with your kids shouldn't be a luxury you can't afford. Flickr / Geoffrey Froment

Becoming a new parent is a huge undertaking, and the situation becomes infinitely more challenging for parents who are forced to take unpaid family leave.

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What's perhaps most frustrating is how often the world ignores research illustrating how beneficial paid parental leave can be not just for parents but also for children, society, and companies.

Some companies are taking note, including Netflix, the Bill & Melinda Gates Foundation, and Etsy, which offer generous paid parental-leave policies.

But while extended paid leave for new parents is a hot trend for major companies, most people don't work in these companies or at the executive level, and only about 21% of American companies offer paid maternity leave, according to the Society for Human Resource Management.

Under the Family and Medical Leave Act of 1993, qualifying American parents are guaranteed 12 weeks of family leave to care for a new child.

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While the law requires companies with 50 or more employees to provide new parents with 12 weeks of leave, it doesn't require this leave to be paid. In fact, the US is one of just two countries that doesn't ensure any paid time off for new moms, according to a report from the International Labor Organization. The other: Papua New Guinea.

The US's unpaid family leave is also restricted to full-time employees who have been with the company for more than a year, which, applies to only about 60% of workers in the US.

As a new study from the Center for American Progress illustrates, the lack of support for new parents in the US is costing families significantly.

According to the progressive research organization's most recent analysis, working families in the US lose out on $20.6 billion a year in potential wages because of a lack of access to paid family and medical leave. This is in addition to the $8.3 billion a year in lost wages stemming from a lack of access to affordable childcare.

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The report says the lost wages "occur when individuals are forced to take unpaid leave, quit working, or reduce their work hours because they cannot access childcare or paid leave." The lost wages are not just harming American families — they also take money away from local communities and the businesses that rely on consumer spending, the report says.

The US Department of Agriculture finds that new parents spend, on average, about $70 a month for baby clothes and diapers and more than $120 a month on baby food and formula. And big-ticket items like furniture and medical expenses add up quickly. Without the guarantee of paid leave while caring for a child, many new parents are faced with the choice between economic hardship and returning to work prematurely.

Pampers diapers, a product distributed by Procter & Gamble, is pictured on sale at a Ralphs grocery store in Pasadena, California January 21, 2014. REUTERS/Mario Anzuoni
A box of Pampers diapers sells for $24.99 at a grocery store in Pasadena, California. Thomson Reuters

According to a 2012 report from the US Department of Labor on family and medical leave, about 15% of people who were not paid or who received partial pay while on leave turned to public assistance for help. About 60% of workers who took this leave reported it was difficult making ends meet, and almost half reported they would have taken longer leave if more pay had been available.

"Support for motherhood shouldn't be a matter of luck; it should be a matter of course," YouTube CEO Susan Wojcicki wrote in an op-ed article for The Wall Street Journal. "Paid maternity leave is good for mothers, families, and business. America should have the good sense to join nearly every other country in providing it."

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Wojcicki said the rate at which new moms left Google fell by 50% when in 2007 the company increased paid maternity leave to 18 weeks from 12 weeks. "Mothers were able to take the time they needed to bond with their babies and return to their jobs feeling confident and ready," she wrote. "And it's much better for Google's bottom line — to avoid costly turnover, and to retain the valued expertise, skills, and perspective of our employees who are mothers."

Andrew Bosworth, Facebook's vice president of the 600-person ads and pages team who welcomed his son Archer Americus in November 2014, previously told Business Insider that people often feared being away and losing traction, but in his experience the opposite effect happened after returning from parental leave.

"I'm probably doing better work in less time," he says. "I hear that repeated often among my peers and among my reports, which is nice. And I think there's some value there that's hard to capture."

In 2004, California became the first state to implement a paid-family-leave policy that enables most Californians to receive 55% of their usual salary (up to $1,104 a week) for a maximum of six weeks.

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Since then, New Jersey and Rhode Island have actualized similar programs. The law enacting New York's family-leave program will be phased in come January 2018.

mom working from home
Moms are more likely to return to work after taking paid maternity leave. Shutterstock

According to a report from the President's Council of Economic Advisers, more than 90% of employers affected by California's paid family-leave initiative reported either positive or no noticeable effect on profitability, turnover, and morale.

Another study, from the Center for Women and Work at Rutgers University, found that women who had taken advantage of New Jersey's paid-family-leave policy were far more likely than mothers who hadn't to be working nine to 12 months after the birth of their child.

The study also found these women to be 39% less likely to receive public assistance and 40% less likely to receive food stamps in the year after a child's birth compared with those who didn't take any leave.

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A study of European leave policies by the University of North Carolina found that paid-leave programs could substantially reduce infant mortality rates and better a child's overall health.

And research out of The Institute for the Study of Labor in Bonn, Germany, indicates higher education, IQ, and income levels in adulthood for children of mothers who used maternity leave — the biggest effect comes for children from lower-educated households. The researchers cited this as a significant discussion for policymakers to have, as it could reduce the existing gap in education and income in the US.

newborn baby
Babies are healthier when their parents can afford to take care of them. Flickr/Nana B Agyei

There's plenty of evidence that supports the effectiveness of paid paternity leave, too.

A study by Boston College's Center for Work & Family found that 86% of men surveyed said they wouldn't use paternity leave or parental leave unless they were paid at least 70% of their normal salaries.

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But research out of Israel shows the more leave men take to care for children when they're young, the more the fathers undergo changes in the brain that make them better suited to parenting. And a study by two Columbia University Social Work professors found that fathers who take two or more weeks off after their child is born are more involved in their child's care nine months later. Simply put, paid paternity leave can help foster better father-child relationships.

And the more leave fathers take, the more mothers' incomes increase. In Sweden, where fathers must take at least two months off before the child is 8 years old to receive the government benefits, researchers saw mothers' incomes increase almost 7% for every month of paternity leave their husbands took.

As President Barack Obama said during one of his weekly addresses in 2014: "Family leave, childcare, flexibility — these aren't frills. They're basic needs. They shouldn't be bonuses – they should be the bottom line."

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