Private Employers Project Cuts in Paid Leave, Highlighting Need For Legislative Action


Family-friendly workplace policies like paid sick days are among the lowest cost benefits employers can offer.  Yet, without legislative action, the recession will result in fewer workers able to balance the demands of work and family.  So shows an annual report on employee benefit programs released this week by the Society for Human Resource Professionals (SHRM)

Human resources professionals surveyed by SHRM reported that, on average, paid time off benefits amount to 11% of employers’ total payroll costs.  However, paid time off includes not just vacation, sick, and personal time, but a myriad of other benefits, from bereavement leave to paid time for volunteering.  Paid sick and maternity/paternity leave, then, amount to very small shares of total payroll costs.  As a result, these basic benefits necessary for work-family balance have been among the least touched by the recession thus far.

Projected Cuts in Paid Leave Programs: On the flip side, it is clear that workers who currently have paid leave benefits will begin losing them, even at organizations like those that participated in the SHRM survey, which invest in human resources and benefit packages.  While there was a small net increase (2%) in the number of employers providing paid leave this year, there will actually be a net decrease in 2011:  3% of employers indicated they intend to cut their paid sick leave or PTO program in the next twelve months, and no employers that do not currently offer the benefit intend to start doing so. 

Compellingly, it appears that organizational philosophy has more bearing on whether an employer provides paid sick leave than business finances.  The percentage of employers surveyed that offer the benefit is essentially constant among small, medium, and large employers, ranging from 82-84%.  Also, non-profits surveyed provide paid sick days more frequently (91%) than for-profit employers (78% for privately-held companies and 84% for publicly-traded companies) – despite the fact that non-profits operate on even tighter margins and experience similar uncertainty in their revenue sources during the recession, as well as increasing demand for their services.  

Note: Nationally, as surveys of the general public reveal, only 61% of workers enjoy paid sick leave benefits. The prevalence of the benefit is naturally higher among the organizations surveyed by SHRM than in the nation as a whole, both because it represents percentages of employers that offer the benefit rather than the percentage of workers who have access to it, and because organizations with human resources staff (ie, those that were surveyed) are more likely to offer voluntary benefit plans.

Need for Legislative Action: The report’s findings underscore the need for states to establish work-family balance policies, such as paid sick days and paid family leave, as a new set of labor standards that protect workers’ job security and their families’ financial stability.  For instance, by requiring employers to provide paid sick days, states can remove one competitive barrier between responsible businesses that already meet the standard and low-road employers that opt not to do so.  And by establishing paid family leave insurance programs, as California and New Jersey have, states can help level the playing field between employers by taking some costs off their books almost entirely.