Paid family medical leave has become a hot topic recently. This is fairly impressive given that the news cycle includes blood thirsty terrorists bent on destroying our way of life (ISIL) and Donald Trump. As a cardiologist that runs a very tiny practice in Philadelphia, I have to confess I have never really thought about paid family medical leave. That is, until about 8 months ago, when I was informed that the only other physician in my practice, a part time internist, was pregnant. I was fairly happy on hearing the news, but my mind quickly turned to dealing with the practicalities of 'coverage' while she was out. She had been working in the office for about two years and had a small but steadily growing practice. The practice would have to be closed to new patients, and I would cover any medical issues that would arise on her established patients.
The economics as it relates to the practice are not desirable. She had a fledgeling practice, and there are a number of competitors in the area. Patients looking for a new physician during those months that the practice was not available, were likely lost to the practice forever. Established patients who were expecting to see her, but could not, may be lost to a practice where there was more coverage/resources evident. As a very busy cardiologist with my own panel of patients it would be impossible to simply add her panel of patients to mine for the months she was off. Essentially, this meant no revenue for the months she was out. The fixed costs related to malpractice, the electronic medical record, marketing on zocdoc, stay constant however. Regardless of the short term loss of productivity and loss of revenue, I did offer one month of paid maternity leave. At the end of the day, successful small businesses are like families and everyone is invested in each others success. Not being cognizant or empathetic to members of your family is a bad idea in the long run for many reasons. So, if a company can afford it, I think paid family medical leave is an important benefit to offer. Even if you aren't doing it to be 'nice' in many industries, it is necessary to be competitive, especially when employees are highly skilled.
There is of course a cost to any benefit that is provided. This statement, I fear, is lost and almost never mentioned in the discussions about family medical leave. All I heard on a recent NPR broadcast on the matter was that kids are better off when their father's can take off. Its the usual soft social science that makes me roll my eyes. Thank you for telling me that children do better if their parents spend more time with them. The message is that hopefully we as a civilized society will wake up to the benefits of paid family medical leave. Of course, and I think irresponsibly, there is no mention of what the cost of this benefit would be.
When looking at cost, it is instructive to look at the cost of the current family medical leave act (FMLA) act (guaranteeing at least 12 weeks of unpaid leave to certain employees under certain conditions) that went into effect in 1993. The employment policy foundation estimated direct costs of FMLA leave in 2004 to be $21 billion dollars. The cost analysis accounted for the cost of lost productivity ($4.8 billion), healthcare ($5.9 billion), replacement labor ($10.3 billion). This does not account for indirect costs of an additional $11 billion that employers spent in an effort to comply with FMLA regulations. The total cost of FMLA in 2004 was thus estimated to be $32 billion dollars.
This is the cost of unpaid medical leave. Mandating paid medical leave would necessarily be even more expensive. Using the recently proposed Washington D.C proposal for paid family medical leave, the admittedly 'center-right' american action forum estimates a yearly cost of $300 billion to $1.9 trillion. Even more troubling, the proposed 0.5-1% tax on workers salaries to pay for this program would fall alarmingly short. Covering a full 16 weeks of paid medical leave would require an almost 4% payroll tax.
Again, my stance on paid family medical leave is fairly clear. If I am able to, I want to be able to provide some form of this to my employees. Perhaps we as a society think it important enough to establish a federal/state fund that pays for this. Great. Just be ready to pay for it.