Paid parental leave: Employers can't win talent without it

Employers everywhere are facing a conundrum that requires a quick answer: how to attract and retain talent, improve employee well-being and promote an inclusive culture, without breaking their budgets. It’s an ongoing challenge that has taken on increasing urgency as younger generations seek more support from their employers.

For millions of employees – many of them parents to young children – the lines between work and personal life blurred during the pandemic. COVID-19 forced workers to make difficult decisions, and it’s a key cause of the Great Resignation – in 2021, an average of almost 4 million workers quit their jobs each month, according to the Bureau of Labor Statistics. From March through December 2021, the employee exodus was the largest on record. Can employers afford for turnover at this scale to continue?

Related: Hiring during the Great Resignation: It’s okay to think outside the box

The short answer is no. In addition to lingering pandemic-induced pressures, employers must compete in a strong market for talent. Job stress and economic uncertainty are prompting workers to seek improvement in their work/life balance, and that starts with more support from their current employer.

New benefits offer solutions

Workers today want employers to show them more than dollars and cents in compensation. Employees also want to know that their employers are socially conscious and looking out for their well-being. Diversity, equity and inclusion are increasingly important in workplace culture, and new benefit programs such as paid parental leave offer opportunities for employers to address all these concerns.

Paid parental leave can be a huge boost to employees’ perception of support from their employer, allowing them time and space to care for a child without the worry of losing income or making other difficult choices. These benefits can improve retention, as new parents are more likely to return if they have paid leave. And paid parental leave is more inclusive and equitable, because it applies to both parents equally (unlike short-term disability, which generally only applies to mothers giving birth). Extending paid parental leave benefits for the same period as the Family and Medical Leave Act of 1993, or even longer, can eliminate a considerable amount of the financial stress that workers can experience relating to the birth or adoption of a child.

An insurance product that reimburses employers for up to 16 weeks of fully paid parental leave per employee is now available in 20 states, making it easier than ever to offer this benefit to employees. This innovative product allows employers to customize a paid leave benefit that working parents value, while eliminating the financial uncertainties associated with offering paid parental leave.

Opportunity for paid parental leave

Paid parental leave presents an intriguing opportunity for benefit professionals to attract and retain younger generations of talent, for two reasons. Those segments have expressed interest in such benefits, and relatively few have access to paid leave.

Data from the Bureau of Labor Statistics, which has tracked paid family leave benefits almost annually since the passage of the FMLA, show the vast majority of private industry workers lack access to paid leave. In 2021, only 23% of private industry workers had access to paid family leave, and that is the highest percentage since 2005, according to BLS. State and local government employees similarly lack access, with only 26% of those workers offered paid family leave in 2021.

Under the FMLA, an eligible worker can take up to 12 weeks’ unpaid leave in a 12-month period, which can be a financial hardship, especially for younger workers planning to have families. However, not all workers are eligible for FMLA, because the law only applies to certain employers with 50 or more employees and sets further criteria for workers. According to the BLS, 89% of private industry workers had access to unpaid family leave in 2021.

Research shows younger workers are interested in new benefits, such as paid parental leave, to improve well-being. For example, MetLife’s 20th annual U.S. Employee Benefit Trends Study, released in March, found job satisfaction fell to its lowest point since 2002. MetLife analyzed a subset of the Millennial generation, which represents the largest cohort in the workplace – and found 74% of workers born between 1993 and 1998 want paid and unpaid leave benefits.

Talent acquisition is incredibly competitive for employers of all sizes, and especially among small and midsize organizations. Offering paid parental leave is far less expensive than losing an employee who might otherwise quit. Employers should consider the costs of replacing workers who leave because they lack access to paid leave when growing their families. Recruiting and training new talent is neither cheap nor easy. And once one employee quits because a workplace is unfriendly to parents, others are likely to follow. Paid parental leave is a better way to encourage workers to stay.

Alex Maffeo is the CEO and founder of Boost Insurance, which empowers any company to engage with their customers and increase sales by offering insurance through their own digital experience.