Evaluation of the California Paid Family Leave Program
Executive Summary
We conducted an evaluation of California’s Paid Family Leave (PFL) Program from 2004-2018 using data from the California Employment Development Department, U.S. Census Bureau, U.S. Centers for Disease Control, and the California Department of Public Health.
Our work focused on PFL program utilization and how it has changed over time, the impact of PFL on labor force participation, and the impact of PFL on firms, particularly firm labor costs and exit rates.
KEY FINDINGS
• PFL participation has grown, especially among men
• PFL use is concentrated among large firms
• Suggestive evidence that PFL has increased employment among new mothers
• Reductions in labor costs for small firms when workers use PFL
• PFL does not appear to increase firm exit rates (i.e., firms ceasing operations)
ADDITIONAL FINDINGS
PFL Program Utilization
• PFL program participation has grown on average 5% per year from 2004-2018.
• Total authorized spending for the program in 2018 was $951 million, equivalent to 0.5% of the state’s total budget. (PFL does not rely on state funds, but instead is funded with worker payroll contributions.)
• Bonding claims account for roughly 90% of all PFL claims.
• Male participation and time off in the PFL program have steadily increased over time. If trends continue, the number of men participating in PFL will be the same as women in 2025.
Impact of PFL on Employment
• Employment of new mothers, relative to their female counterparts, increased following the introduction of PFL. The effect is driven by new mothers ages 30 and older. In particular, for new mothers ages 30-34, employment increased approximately 8%. There is no change in the
employment of fathers.
• The observed increase in employment of new mothers may be due to the PFL program itself, as well as other factors such as more family-friendly workplace norms or policies. Our analysis does not allow us to disentangle these effects.
• There is no evidence that PFL reduced the employment of either new mothers or new fathers.
Firms Affected by PFL
• Use of PFL is concentrated among large firms. Just 7% of firms employing 25 or fewer workers ever had any worker use PFL, compared to 93% of firms employing 250 or more workers.
• Among firms that have PFL use, smaller firms are less likely to have workers using PFL in any quarter. Firms employing 25 or fewer workers with PFL use have workers using PFL in 6% of all quarters, or roughly once every four years, compared to 55% of all quarters for firms employing 250 or more workers.
• PFL use varies by industry with the most use in public administration (62% of all firms), utilities (25%), education services (23%), manufacturing (22%), mining (21%), and management of companies and enterprises (21%). These are generally industries with higher wages.
Impact on Firm Labor Costs and Exit Rates
• PFL does not appear to increase firm exit rates. Firms that have PFL use are not more likely to cease operations within one year of having any worker use PFL.
• Small firms experience a reduction in labor costs when workers use PFL. Firms employing 25 or fewer workers experience, on average, a 14% decrease in per worker labor costs when workers use PFL.