The upcoming paid parental leave benefit for most federal employees will cost the government—and thus be of an equivalent value to employees—just under $1 billion a year in direct salary, OPM has said, while adding that the benefit “will likely improve the desirability of federal employment.”
The salary cost estimate was based on a projection of 51,000 births and 3,600 adoptions or foster placements annually among covered federal employees, based national data and the demographics of the federal workforce. OPM added that dollar estimates are complicated by the lack of data to project use of less than the full entitlement and the impact of employees taking paid parental leave instead of other forms of paid leave, such as annual or sick leave, that they otherwise would have substituted for unpaid Family and Medical Leave Act leave.
The analysis was required because the change is significant enough to warrant one under rule-making policies.
Regarding the impact on the workforce, OPM said this: “While it is difficult to demonstrate cause and effect when it comes to adopting one new employee benefit, there are surveys and other indications that a family-friendly paid parental leave policy can help make an employer more attractive to job seekers, increase job satisfaction, increase employee morale and engagement, increase the likelihood of a birth mother returning to work, and reduce turnover (i.e., increase retention).
“While some assert that paid parental leave will produce monetary benefits that offset gross transfers, we do not believe it is possible to attribute reductions in spending on recruitment efforts, training costs, and related effects to a single factor. This new benefit will likely improve the desirability of federal employment, and likely increase the quality of federal employees, leading to improved services for the general public.
“Reduced turnover can have a positive effect on agency productivity and reduce the burdens on other employees while reducing recruitment costs. At the same time, the use of paid parental leave may temporarily increase the burdens on other employees.”