Pittsburgh Workers Get Parental Leave, and the Bosses Have to Pay for It

Pittsburgh’s Allegheny County passed one of the nation’s most generous parental leave mandates last month, putting businesses there on the hook for as much as 12 weeks of a worker’s full salary.

After Tuesday’s elections, employers around the country have reason to pay attention.

Democratic gains in Congress and statehouses are giving new momentum to paid leave and expanded child care, issues that featured prominently in political campaigns this year. Incoming governors in Wisconsin and Georgia ran on expanding early childhood education, while voters in Marin County, California, are on track to pass a tax increase that may raise up to $12.5 million a year to help more families afford child care.

For businesses, the question isn’t just whether those policies will advance, but how they’ll work and who will pay.

Allegheny County offers a glimpse of what’s at stake. Its new rule requires companies with at least 15 employees to provide 12 weeks of parental leave at full pay after the birth, adoption, stillbirth or placement of a child, capped at $4,200 per week. Unlike state paid-leave programs that spread costs through centralized insurance systems funded by taxes on workers and businesses, Allegheny leaves employers responsible for covering the benefits themselves.

That has alarmed many Pittsburgh-area small businesses and nonprofits. Many worry they’ll have to reduce hiring or cut services in order to comply.

“Having time available for parents to spend with their kids is important for us, but the challenge was that the full burden of this policy was put on the business,” said Mark Heinbockel, the executive director of mental-health charity Anchorpoint Counseling Ministry in McCandless Township. He said his organization may have to scale back services when an employee is on parental leave.

Len Semplice, the owner of Redbeard’s Sports Bar & Grill in Pittsburgh, said he believes in parental-leave policies, especially at large companies, and is open to plans overseen by the government. He said he’s considering raising prices to preserve an already slim profit margin. “I’m going to have to charge someone to make up the difference. It goes to the consumer in a way,” he added.

He also worries people will take advantage of the policy, working the bare minimum — six months or 625 hours — to qualify for the benefit and then not return after the leave period ends. “What guarantees they’re coming back?” Semplice asked.

Nonprofits that advocated both for and against the plan estimated the policy may cost employers between $170 million to $300 million, given projections that roughly 2% of the county’s workers might use it in a given year.

The fight may already be overtaken by Tuesday’s election. Democrats won control of Pennsylvania’s state Senate, giving the party control of both chambers and the governor’s office. That may revive a statewide paid-leave policy that passed the Democrat-controlled House this year and stalled in the Republican-led Senate. The state proposal would spread the cost through a payroll deduction-funded insurance system that could supersede the Pittsburgh-area plan.

“It’s our hope and intention to work with legislators across the aisle to get a statewide bill done because that’s ultimately what’s in the best interest of all Pennsylvanians,” said Alex Wallach Hanson, executive director of advocacy group PA United, which was among the main groups involved in advancing the Allegheny rule. While some in the business community might view such rules with trepidation, he says the resulting system provides clear economic benefits for companies of all sizes.

“There is a massive cost being borne by birthing parents and employers today without paid parental leave: through employee attrition, through employees coming back to work before they’re ready and performing at lower efficiency, people leaving jobs and not returning,” he said, adding that leave policies can help mitigate this uncertainty.

Shifting political winds are giving businesses reason to get involved in parental-leave and child-care laws. A New York City consortium, including online retailer Etsy Inc. and the Partnership for New York City, signed onto the NYC Child Care Business Council last month. Similar groups have also formed in New Jersey, Colorado, Vermont and North Carolina, and include companies such as American Airlines Group Inc. and PNC Financial Services Group Inc.

Representatives from many of those groups, as well as from Toyota Motor Corp., JBS Foods, and the US Chamber of Commerce, will meet in Colorado next week to discuss ways businesses can support workers with young families and better retain talent.

The prospect of more paid-leave mandates is also creating a market for companies that help employers cover the cost. In Allegheny County, businesses will be allowed to comply by purchasing private insurance. That may result in as much as $80 million a year in premiums countywide — and up to $20 billion nationally, if similar measures are passed across the US — estimated Dirk Doebler, the chief executive of Parento, which sells paid-leave plans to small- and mid-size businesses.

He says the costs may be more manageable than employers expect, with some companies likely to offset expenses by giving out smaller annual raises. A company with 20 employees who make about $50,000 a year would pay roughly $5,164 for a Parento policy designed to meet Allegheny’s requirements, Doebler said, though pricing may vary depending on workforce demographics.

Whether or not its policy is ultimately superseded by a state-wide one, Allegheny County’s efforts could remain instructive in places where state policies remain unlikely. “Those jurisdictions are going to leverage Allegheny County as a roadmap,” he said.