Prepared for Deb B. | Delivered June 10, 2020
Financial Impact Maternity Leave
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To determine the financial/business impact of female employees who do not return from maternity leave in the US. This information will help in supporting a new business to frame the problem their product is designed to solve.
Federal Employee Paid
Leave Act is a plan to give "federal employees
12 weeks of paid leave
after birthing, adopting or fostering a child." It is expected to cost approximately
in 2022, and
in 2023. However, it is estimated that the "program could save the government
in reduced employee turnover costs and prevent the departure of more than
from the federal workforce."
A recent article in Time, research conducted by the University of California Berkeley was cited which" found that, across industries, the average cost of replacing an employee was
. The average cost of replacing a white-collar professional exceeded
The article further states that "full-time female employees earned a median salary of
$788 per week
, in 2018" and that if "the overtime or
a business might incur in a new mom’s absence" were not taken in account, "providing her five weeks of
100% paid maternity leave
or eight weeks of
60% paid maternity
leave could end up being cheaper than losing her altogether."
According to Gallup, a conservative estimate of "the cost of replacing an individual employee can range from
one-half to two times
the employee's annual salary."
According to SHRM, each departure costs a business
of that employee's annual income of which
33% are hard costs
(recruiting, background checks, drug screens, temporary workers) and
67% are soft costs
(reduced productivity, interview time, lost knowledge).
to a CAP study, the turnover appears to vary according to the wage the employee earned. For high-turnover, low-paying jobs (less than $30,000 annually), the turnover is estimated to be
16% of the annual salary
. For mid-range jobs ($30,000
$50,000), the cost is
20% of the annual salary
and for executive positions, up to
213% of annual salary
Summary of Findings
During the initial hour of research, we focused on finding the turnover cost of maternity leave in the US.
We were able to find information on how much the government is saving by implementing maternity leave programs. With a saving of $50 million, this would imply that in 2021 the impact of maternity leave would have been $824 million ($50 million + $774 million).
Furthermore, we were able to find information on the cost of employees leaving a business.