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This is one surefire way to shore up the U.S. economy

The founder of Pipeline Equity talked to Senator Kirsten Gillibrand about how a national paid leave policy would impact the U.S. economy for decades to come.

This is one surefire way to shore up the U.S. economy
[Photo: FilippoBacci/Getty Images]
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In less than 12 months, the United States lost 32 years of progress toward gender equity in the labor markets.

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It’s no secret that the exorbitant 153% increase in women’s unpaid labor during the pandemic has contributed to this setback. The damage of which can be measured in the billions of dollars.

If the labor force participation rate among mothers persists post-COVID, the wages of U.S. families will shrink by $64.5 billion every year. The economic repercussions of this shrinkage will last generations. Unless we act now.

By mandating a national paid leave policy we can reverse the trend of women being forced out of the labor force and narrow the equity gaps inherent in our K-shaped recovery. Not only would national paid leave help the 71% of U.S. families who depend on working moms for their economic security, but it would also boost the economy at a time when we need it most. In fact, achieving gender equity in the labor markets (across all races and ethnicities) would expand the U.S. economy by $789 billion.

To better understand how a national paid leave policy can patch the holes in our pandemic-torn economy, I spoke with Washington’s leading voice on the issue: Senator Kirsten Gillibrand (a Democrat from New York). Here’s an edited version of our conversation.

Katica Roy: National paid leave is your signature policy effort. Why?

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Senator Kirsten Gillibrand: Paid leave is an important part of any economy for two reasons. First, it allows more people to thrive in the workplace. Second, it allows more children to thrive in early childhood education.

From the perspective of the child (i.e. our future labor force), the U.S. is home to millions of children who don’t have equitable access to opportunities in early childhood. National paid leave of up to three months, in conjunction with other measures such as guaranteed early childhood education, enables equity of opportunity for all children.

From the perspective of the worker, national paid leave allows employees to keep their positions without fear of penalty when life happens. The key factor here is ensuring workers are paid during their leave. Otherwise, we’re asking them to choose between getting a paycheck or attending to the needs of their loved ones. In many cases, this unfair compromise destroys peoples’ earning potential.

KR: Can you give an example of how a lack of paid leave impacts someone’s livelihood and the economy?

SKG: I once met a woman in upstate New York whose daughter was injured in a car accident. Her daughter needed to be in a wheelchair during her recovery, so this mom immediately took unpaid leave to care for her daughter. She didn’t have access to paid leave. The woman ended up losing three months of wages as well as her job, never to be employed in her field again and never returning to the wage level she had in this role.

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This woman’s lost wages not only impact her and her family, but they also impact her community through lower taxes and diminished consumer spending. The economy loses $20 billion a year due to a lack of paid leave. That’s money we could put back into the economy or the pockets of working American families. I believe establishing a national paid family leave program—something that exists in every industrialized country in the world—would fundamentally change our economy for the better.

KR: Fully 40% of U.S. families with children are headed by breadwinner moms. In Black households, that number jumps to 51%. What does it mean for these families when the main breadwinner doesn’t have access to paid leave?

SKG: We call this phenomenon the paradigm of the sticky floor. If you are the primary wage earner in your family and don’t have access to paid leave, any life event that happens (whether that be a new child or a sick parent) forces you into a bind. Either you care for your loved one or you bring home a paycheck. It’s a horrible choice many U.S. workers have to make, and it stunts the economy.

Since women are the primary (or default) caretakers, they are the ones to take off work to attend to the needs of their family members. Then, upon returning to the workforce, women face up to 7% lower wages and fewer opportunities for advancement.

For lower-income women who are the sole breadwinners, they never make it off the bottom rung of the ladder. They never have the chance to ascend through the ranks, accrue seniority, and earn higher pay. That’s why it’s called the sticky floor.

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KR: You were quick to act when the pandemic hit. In fact, by mid-March you had already put forth the Paid Leave Act. How did you foresee that the burden of unpaid labor would be so great when the pandemic hit?

SKG: It was clear from the beginning of the pandemic that national paid leave needed to be part of our response. Simply put, national paid leave provides the quickest, most efficient relief for the need of the moment. Imagine if every worker in the U.S. had access to paid leave at the time the pandemic hit. Employees wouldn’t have had to compromise their health and their families’ health for their jobs, and vice versa.

We eventually passed a temporary, COVID-specific national paid leave policy (the Families First Coronavirus Response Act) in March. But even that was too little. It’s estimated that the paid leave policy excluded anywhere from 68 million to 106 million private-sector workers.

KR: What changes do you hope to see during the Biden-Harris administration?

SKG: When Biden is president, my goal is to pass a national paid leave policy that all workers can participate in. I would create it as an earned benefit, asking people to buy in at an affordable price point (about $2 per week) that employers would match. When I asked business owners and executives across New York state if they would support this initiative, they overwhelmingly said yes. Ultimately, these employers understand the importance of taking care of employee stakeholders. Because when employees thrive, families, businesses, and the economy thrive.

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Katica Roy is the CEO and founder of Pipeline Equity