Association for Public Policy Analysis & Management

New York is one of only 5 states in the US with provision for Temporary Disability Insurance that provides cash benefits to employees in case of injuries or illness off the job, including pregnancy. Proposed policies make three important changes with the potential to impact families’ economic security – increase in the wage replacement rate from half to two-thirds of a worker’s weekly wage; increase in the maximum weekly benefit amount from 170$ to 50% of New York State’s average weekly wage and requiring all covered employers to provide 12 weeks of leave to bond with a new child or care for an ill family member.

Prior research shows that when paid leave is introduced or benefits made more generous, there is relatively higher utilization among disadvantaged groups. US employment surveys show that only 5% of private industry workers with wages in the lowest quartile of the wage distribution, report having access to paid family leave. The proportion increases over the wage distribution. National employment surveys also find variation in prevalence of unmet need for leave by gender, race, marital status, family status and income level. Given the substantial variation in average earnings and demographic compositions of residents across NYC boroughs, this paper explores whether the proposed policy, by allowing people to claim the leaves they would not have been able to afford previously, will disproportionately benefit disadvantaged residents, thereby addressing some of the inequity in access to the benefits of family leave.

I use data from various household and labor market surveys, census and administrative data, as well as review prior research to provide borough-level estimates of Coverage, Claims, Cash Benefits and Costs of implementing the new policy. Increase in TDI claims is estimated using data from American Community Survey, Social Security Administration, and Bureau of Labor Statistics National Compensation Survey, by comparing each borough’s average resident wages with the distribution of wage earners by level of net compensation and estimated rates of short term disability insurance for the given wage quartile. New claims are estimated by first estimating the need for leave among covered residents using data on demographic characteristics across the five boroughs of New York City (ACS) and data on fertility rates, family composition and health status of the elderly resident population (Rockefeller Institute of government). Then using prior research on the rates of unmet need for leave for bonding and family care, due to lack of affordability (FMLA Survey 2012) and composition of the covered residents (estimated earlier), the total unmet need for leave in each borough that can now be claimed are estimated.

Results suggest that implementation of this policy will disproportionately benefit relatively disadvantaged groups. Residents of the outer boroughs are estimated to be able to increase utilization of family leave by 40%, compared to a 25% increase in utilization for Manhattan residents. Bronx residents are estimated to experience the most relative gain, with a 43% increase in utilization of family leaves among covered residents.