Families first: A comparative study of company responses to paid care leave programs in the COVID-19 pandemic

Abstract

Despite established positive associations of paid care leave (PCL) policies on labor market outcomes such as wage replacement and job continuity, the United States is a notable outlier as the only advanced nation without a federal paid leave program. Assuming PCL programs are costly, my study examines employer perceptions and responses to PCL regulations in the US during the COVID-19 pandemic in 2020. Using a policy experiment around the 500-employee cutoff associated with the Families First Coronavirus Response Act (FFCRA), logistic regressions are used on a newly-created dataset constructed from a survey administered to 306 business managers in New York and Boston. The analysis ultimately seeks to evaluate if PCL cost concerns predict 19 different business outcomes such as changes in headcount or employee benefits. In general, while 54.6 percent of firms report cost concerns with PCL laws, the results find firms with such concerns are more likely to engage in non-employee focused operational changes such as increases in prices instead of employee-oriented outcomes such as layoffs or wage decreases. Furthermore, the policy experiment yields that large companies are more likely to increase internal paid leave, while small companies are more likely to increase the number of independent contractors at the company. My study confirms companies react to government PCL regulation in dynamic ways, dependent on the unique circumstances and culture of each company.