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Why Everyone Is on Parental Leave Right Now
Quick thoughts on a new record high
The number of employees out on maternity/paternity leave jumped to a record 606,000 in October 2023. That’s nearly 90,000 more than in June 2023, the previous all-time high.
This isn’t a huge surprise. Because the number of employed people increases over time, the number of employees out on parental leave should routinely set new all-time highs. But even in percentage terms, October saw the highest share of total employees out on parental leave in a single month.
Why did this happen?
I wish we could point to a large increase in births, but that seems unlikely. In June 2023 (the most recent month with available data), there were 302,000 births. That’s 4,000 fewer than in June 2022, and births are down 1.2% through the first six months of 2023 compared to the same period of 2022.
The third quarter does tend to account for the largest share of births, and while I doubt that there was a particularly large increase in total births since June, it seems likely that the past three or four months set a record for births by employed parents with access to paternity/maternity leave.
The share of organizations offering paid maternity leave jumped from 35% in 2022 to 40% in 2023, while the share offering paid paternity increased from 27% to 32%. Those are both all-time highs (with the exception of 2020, when parental leave access spiked because no one could find childcare).
This is what happens when there aren’t enough workers, which is very much the case right now. Employers have to compete to attract workers, and that means more generous benefit packages.
This is also the natural outcome of an increasingly female workforce. Just short of half of the labor force is currently female (47.0%), slightly below the all-time high set in 2019. Because more companies offer maternity leave than paternity leave, a higher share of women in the workforce means more workers with access to parental leave.
Why does this matter?
On the one hand, it doesn’t. Fewer than 0.4% of employed persons were out of work for paternity/maternity leave in October. Over the past two decades, the average share was more than 0.2%, so we’re talking about an increase of less than 0.2 percentage points. For context, the number of people on vacation at any given time ranges from roughly 3.5x to 20x greater than the number on parental leave.
On the other hand, falling fertility rates have put us in a demographic bind, and that bind is increasingly uncomfortable as more Baby Boomers retire and have to be supported by a relatively smaller tax base. To the extent that more generous parental leave policies increase fertility and labor force participation, this bodes well for long term fiscal health.
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