By Mike Brown*
OMAHA, Nebraska, USA (IDN) — Around the world, paid maternity leave is the norm. According to data from the International Labour Organization, African nations including Algeria, Benin, Cameroon, Senegal, Mali, and many more provide 14 weeks of paid maternity leave where 100% of wages are replaced.
In the Americas, Barbados, Colombia, Dominican Republic, Ecuador and others offer 12 weeks of paid maternity leave where 100% of wages are replaced.
In Asia, countries including Bangladesh, India, and Sri Lanka replace 100% of income for 12 weeks as part of their respective paid maternity leave policies.
And in Europe, Spain, the Netherlands, Austria, and some others have paid maternity leave policies that replace 100% of a mother’s income for 16 weeks.
Yet in the United States, the richest and most powerful nation in the world, a paid maternity leave program offered by the federal government does not exist.
In fact, of the 41 richest countries in the world, the US is the only one that does not offer any paid maternity leave according to Pew Research. In comparison, Estonia offers 86 weeks of paid maternity leave, while Bulgaria, Hungary, Japan, and Lithuania all offer over 60 weeks of paid maternity leave.
Interestingly, a separate study from Pew Research found 82% of Americans believe mothers should get paid maternity leave following the birth or adoption of their children.
Despite overwhelming public support for paid maternity leave in the US, just 17% of all US workers have access to paid maternity leave or paid paternity leave according to the U.S. Bureau of Labor Statistics.
And a new report from Breeze found many American mothers face immense financial struggles when they go on unpaid maternity leave, especially if they don’t have short-term disability insurance.
To Survive on Unpaid Maternity Leave, US Mothers Turn to Debt & Delay Financial Goals
The study from Breeze involved the surveying of 1,000 American mothers who went on unpaid maternity leave at some point over the last year.
To prepare for unpaid maternity leave, 40% of respondents took out short-term disability insurance ahead of time, while 35% did not, and 25% opted not to say.
But more on that later.
Amongst the 35% that did not take out disability insurance, 20% had to dig into emergency savings to cover costs while on unpaid maternity leave, 17% took on credit card debt, 11% took on a side-job, and 9% took out a personal loan.
Just 11% indicated they budgeted for the loss of income ahead of time so they were able to cover costs comfortably, while 21% leaned on their partner or spouse to cover the loss of income.
In summation, unpaid maternity leave puts many mothers in a financial squeeze for at least a couple of months, and they suffer short-term financial consequences like credit card debt as a result.
But thinking long term, the study also found unpaid maternity leave can leave mothers way behind on their lifetime financial goals.
For example, 34% of mothers had to delay paying off student loan debt as a result of unpaid maternity leave, while 32% both delayed building a savings and buying a home, and 29% put off buying a car.
Unpaid maternity leave puts American mothers in both a short-term and long-term financial bind, but is there a potential solution?
Could Disability Insurance Help?
As mentioned earlier, 40% of respondents said they took out short-term disability insurance before getting pregnant and going on unpaid maternity leave.
And 65% of them said their disability insurance policy provided adequate financial coverage while they were on unpaid maternity leave, while just 23% said the policy did not help, and 11% opted not to say.
In fact, the average short-term disability insurance policy taken out by survey respondents replaced 50% of the lost income, which is not spectacular but it is certainly better than receiving nothing at all.
And when these women were asked if they would take out another short-term disability insurance policy ahead of having another child, a combined 72% said yes.
When those mothers that did not take out disability insurance were asked why they did not do so, 33% knew nothing about it, 21% tried applying when it was too late, and 16% thought they’d be automatically eligible for a paid maternity leave program offered by either the government or their employer.
So, it appears that consumer education is a major hurdle when it comes to using disability insurance as a tool to mitigate the financial losses incurred during unpaid maternity leave.
Figuring Out a Way Forward
One last finding from the survey found that many mothers on unpaid leave return to work sooner than they would have liked due to financial reasons, and the majority from this group are concerned this early return will have a negative impact on their children’s development.
Not only are their financial ramifications of unpaid maternity leave, but social ones as well.
So, how does the US move forward in developing a solution to unpaid maternity leave?
It will take a combination of public and private forces coming together with their combined financial, logistical, and human resources to put together a plan that doesn’t strain the country’s checkbook but provides the necessary resources mothers need. [IDN-InDepthNews – 27 July 2021]
*Mike Brown is the Director of Communications at Breeze, a mission-driven insurtech helping people protect their income through disability insurance and other products.
Collage of pictures from Vital Record.
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