Closing the Racial Wealth Gap: Paid Family and Medical Leave in Minnesota

The Center for Economic Inclusion is committed to building inclusive and equitable economies that work for everyone. This Policy series explores policies and practices that will help close the racial wealth gap in Minnesota and across the nation.

By Sarah Milnar , Senior Consultant

Under a bill advanced by a state Senate committee last week, Minnesota would join 11 states and the District of Colombia in providing paid family and medical leave for workers across the state.

The policy would provide up to 12 weeks of paid time off for employees to bond with a new child, care for an ill or aging family member, or recover from their own health condition—all situations that most of us will find ourselves in over the course of our lives.

Paid leave serves as a critical guardrail that prevents working families—particularly low-income families and families of color—from falling into financial hardship. A paid leave policy is a critical step in closing the racial wealth gap and building an economy that works for everyone.

Here are three reasons why paid leave in Minnesota matters and what employers can do to help:

1) Low-wage workers are less likely to have access to paid leave

Last year, fewer than 1 in 4 workers in the United States had access to paid family leave, according to Bureau of Labor Statistics data. The few that do have access to paid leave typically sit in higher-paid jobs.

Comparatively, workers in lower-wage jobs are less likely to have access to paid leave, according to the Bureau of Labor Statistics’ National Compensation Survey .

This means that workers in the jobs America deemed essential during the COVID-19 pandemic—grocery store workers, delivery drivers, home health aides—may fall into the group that cannot access paid leave through their employers. What’s more, these low-wage but essential jobs are more likely to be held by workers of color.

2) Unpaid leave is sometimes an option, but many cannot afford to take it

The Family Medical Leave Act (FMLA) provides protected time off for some qualifying workers who need extended leave; however, the time off is unpaid. Additionally, workplaces with fewer than 50 employees are not required to offer FMLA benefits at all.

Only about 56% of the workforce is eligible for FMLA. Women, Hispanic workers, mixed-race workers, single parents, and workers with lower levels of formal education are even less likely to be eligible, according to U.S. Department of Labor surveys .

National surveys also show that parents often do not take FMLA leave—even when they qualify and need to—because they cannot afford it. This challenge shows up prominently for low-income women, single mothers, and women of color, who are often the primary economic providers for their families.

According to analysis by the Center for American Progress , the share of breadwinning mothers has steadily increased, from 22% in 1980 to 41% in 2019. Women of color are most likely to be the breadwinners of their households, with 85% of Black mothers and 74% of Indigenous mothers being sole, primary, or co-breadwinners. Comparatively, only 63% of white mothers are sole, primary, or co-breadwinners in their households.

Even when caregiving needs are present, many women of color simply cannot afford to leave the labor force because their economic contributions are too important to their families.

3) Paid leave benefits all of us, especially women of color

According to research reviewed by the Kaiser Family Foundation , paid family and medical leave is associated with better outcomes for everyone: improved physical and mental health for new parents, decreased infant mortality, financial security for caregivers, and improved connections to the workforce. But these outcomes have an even greater impact for women of color.

California’s paid leave law—the first in the nation—that took effect in 2004 nearly doubled the amount of leave taken by new parents. And it increased benefits for non-white, low-income, less-educated women in particular, according to a study in the Journal of Policy Analysis and Management .

According to a Center for American Progress analysis , 6 in 10 leaves needed by Black women are either not taken or are taken without pay. Modeling also shows that Black women lose an estimated $3.9 billion each year due to lost wages while on leave. Given these disparities, providing access to paid leave and preventing lost wages can be transformational for families led by women of color when it comes to maintaining economic stability.

Even with state action, employers can do their part

The United States is the only industrialized nation in the world that does not have a federal paid leave program. This has led to a patchwork of leave policies passed at the state level. Although varied, these policies are essential absent a federal mandate.

While Minnesota’s program (SF2 ) is under consideration by the state Legislature, employers can do their part to support working families in maintaining economic stability.

A growing number of employers are seeing the value in developing or expanding their own paid family and medical leave policies for their employees. Paid leave policies could support employee retention and workforce connection in a tight labor market, buoy workers through the unknown long-term health effects of COVID-19, and help maintain economic stability for the families who need it most.

An analysis by the National Bureau of Economic Research of companies in states with paid leave laws found no reduction in employer ratings of employee performance when it came to attendance, commitment, cooperation, teamwork, and perhaps most importantly, productivity.

Even as the Legislature shapes paid leave in Minnesota, employers can begin to analyze their own leave policies to understand the following:

• Who benefits and who may be burdened?
• Who is eligible for leave?
• When is leave paid, and when is it unpaid?
• Who (by race, gender, age, tenure, salary band, full- or part-time status) is accessing this leave?
• What can you do to make paid leave benefits—and access to these benefits—more equitable? ?

It is possible to build an economy that works for everyone, and paid family and medical leave is a critical step in the right direction.?

For more information about Paid Family and Medical Leave legislation in Minnesota and the Center’s 2023 Policy Agenda, contact Isaac Russell, Director of Public Policy, [email protected].