Maternity and Family Leave: Paid or Unpaid? Plan For Pregnancy

The majority of Americans are not entitled to any paid family leave. Image Credit: Melbia, http://www.sxc.hu/photo/1205200

The majority of American families are not entitled to any paid family leave. Image by Melbia,

Budgeting for a new baby is often a careful balancing act, and working moms need to plan ahead to ensure they are financially prepared when the time to begin maternity leave arrives.

This is of particular importance in the US, which is one of only a few developed countries not to offer paid maternity or paternity leave.

Laws and Entitlements in the US

Here, expectant mothers are entitled to 12 weeks unpaid leave under the Family and Medical Leave Act of 1993. This leave of absence offers a guarantee of employment upon return to work at companies with more than 50 employees, and also covers adoption and long-term sickness.

The National Partnership for Women & Families estimates that FMLA is applicable to only around 50% of the workforce, leaving the remaining half with no rights to maternity leave at all. With the exception of California and New Jersey, which are the only states to have implemented maternity pay acts, there is no statutory financial aid available for new mothers who wish to take a break from their jobs in order to raise a baby.

Funding Maternity Leave

Individual private companies may choose to pay all or part of a new mother’s salary while she takes maternity leave, but this decision is taken purely at the individual firms’ discretion. One of the first steps when budgeting for maternity leave is to determine whether or not your employer offers such financial assistance. (If you’re not sure, just ask your human resources contact.)


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Recent statistics show that only 28.5% of working women received paid maternity leave in 2011; these figures are telling of the lack of financial reimbursement offered by the majority of firms. A further 18.4% relied on vacation or sick leave in order to continue to earn a wage whilst at home with baby.

Parental Leave Across the Globe

Overall, more than 50% of American women leave work to give birth with no income planned for their time away from employment. A stark contrast can be seen in New Zealand, for example, where new mothers receive 100% of their salary for 14 weeks, regardless of their employment status, a policy which eliminates financial insecurity for all parents nearing the birth of a child.

Most developed countries have maternity policies which settle somewhere between these two extremes. It is not uncommon for European women to receive statutory pay of 100% of their salaries, although this is often capped. In the UK, the level of pay is lower (90% of the average salary for 6 weeks, followed by 36 weeks at a lower, statutory rate, which is currently the equivalent of around $214.00).

As a result, over 80% of British women use the system, taking a career break of nine months (with the option to extend to one year, without pay for the final 13 weeks). When taken in comparison to the US, where nearly 60% of mothers with children under the age of one are working, the security this offers new mothers becomes increasingly apparent.

‘Expecting’ Little Financial Support? Plan Ahead

With little or no financial support available for new and expectant mothers in America, stringent financial planning and careful co-operation with employers is vital. Campaigns putting pressure on government to initiate employer or state-funded leave for new parents have been gathering momentum for several years, and campaigners such as the National Partnership for Women & Families continue to seek to put pressure on politicians by encouraging supporters of the campaign to sign an online petition.

Resources

National Partnership for Women & Families. Paid Leave. Accessed September 2013.

Catalyst. Family Leave – US, Canada, and Global. (2013). Accessed September 2013.

Shore, B. Maternity and Paternity Leave: The Small Print. BBC. Accessed September 2013.

U.S. Department of Labor. Family and Medical Leave Act. (1993). Accessed September 10, 2013.

© Copyright 2013 Amanda John: Finance, All rights Reserved. Written For: Decoded Pregnancy
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