Patrick Clark

What Small Businesses Get Wrong About Maternity Leave

Woman and Baby

where female workers aren’t guaranteed at least some time off to care for newborn children, while only 5 percent of U.S. companies offer fully paid maternity leave.

Women employed by small businesses in the U.S. have it even worse. The Family Medical Leave Act provides workers 12 weeks of unpaid leave but exempts companies with fewer than 50 workers from complying. That means tens of millions of workers aren’t guaranteed time off after the birth of a child.

Small business owners who don’t offer paid leave and other benefits to new moms are making a mistake, according to a paper (PDF) published this week by the International Labour Association, an agency of the United Nations. They tend to overestimate the costs and underestimate potential gains, including happier workers, lower employee turnover, and less absenteeism. That reflects a pattern researchers observed in California and Australia, where small employers complained about the cost of new regulations governing maternity benefits—then later reported that offering paid leave seemed to boost productivity.

One reason small companies discount the value of maternity benefits, the paper says, is that they’re less likely to have pregnant workers. (That’s by virtue of having fewer workers, not because of their workers’ reproductive habits.) Big companies can gather enough data to estimate how many of their workers are likely to take maternity leave. That allows them to develop strategies for covering for absent workers and to study the advantages of offering more generous benefits. That may explain why financial firms are among the U.S. companies that offer the most time off to new moms.

Small businesses can’t match the human resources muscle of Wall Street banks, but they can use their inherent flexibility to improve conditions for new parents, says Suzan Lewis, a professor of organizational philosophy at Middlesex University Business School in London and one of the authors of the ILO paper. That means small companies should consider letting new parents work from home, complete tasks outside normal working hours, or even pool with other local businesses to offer child care. Says Lewis: “Research in Japan shows women leaving large organizations and going to small ones that don’t have formal policies but do offer more flexibility to new moms.”


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