FMLA Policies Can Deter Firms With Economic Hardships From Hiring, Promoting Women

A new study led by the United States Census Bureau has found firms who must abide by federal family leave policies are less likely to hire and promote women while the organization is experiencing economic turmoil.

Firms in the United States with more than 50 employees working within a 75-mile radius are required to provide 12 weeks of unpaid, protected job leave for new parents through the Family and Medical Leave Act (FMLA). The law states that employees are guaranteed to remain employed upon return from their extended time off. However, these policies can inflict costs on employers who may need to hire temporary workers in place of employees on leave. There is also a possibility that employees on leave may not return to their job, requiring firms to hire and train a replacement.

The new Census Bureau study examined what happens to women’s labor market outcomes when FMLA abiding firms experience a “trade shock,” a shift in economic conditions due to changes in international trade. For their study, the authors researched firms that experienced hardships due to economic disruptions in trade with China.

The authors found FMLA abiding firms whose operations were adversely affected by changes in trade with China had less women employees, were less likely to promote women, and were more likely to separate from women employees compared to their male peers. These results were particularly shown among firms where none of the top three earners were women.

The authors believe their findings highlight the role of historical gender norms on women’s workplace opportunities. They suggest firms hire more women into senior level positions and develop flexible working conditions to establish a better work-life balance for women.