The blog of the Urban Institute
May 7, 2020

How Paid Medical Leave Can Support Worker Health and Economic Security

The COVID-19 pandemic has highlighted significant gaps in supports for workers, especially those earning low wages. Many workers lack access to paid sick, medical, and caregiving leave, and taking weeks off to address a health condition without wage replacement can be difficult and even financially catastrophic.

US Bureau of Labor Statistics reports (PDF) show only 20 percent of workers in the lowest wage quartile had access to short-term disability benefits in 2019, compared with 54 percent of workers in the highest wage quartile. To better understand the impact of and the gaps in paid medical leave for workers, we’ve examined the evidence base for paid medical leave in partnership with the Washington Center for Equitable Growth. 

Why paid medical leave is important to economic stability

Data from state programs show paid time off to address a personal medical condition is the most frequently used type of paid leave. Paid medical leave allows someone to take more time off than paid sick days, usually lasting weeks or months. Yet paid medical leave has received less policy and research attention than parental and family caregiving leave, though this may be changing in response to the recent pandemic.

Many health conditions, including COVID-19, that require a worker to take leave unexpectedly can also create an urgent threat to their economic stability. Research shows 41 percent of families do not have enough emergency funding to cover an unexpected $2,000 expense. For these workers, the wage replacement from paid medical leave can help reduce income volatility.

To better support workers, policymakers should consider creating a well-designed program that includes return-to-work services in addition to wage replacement. This type of program could improve return-to-work rates after taking leave, support greater labor supply and long-term labor force participation, and reduce productivity loses caused by “presenteeism,” or having employees come to work without the full capacity to perform their normal duties.

Why paid medical leave is important to overall health

Evidence suggests there are several mechanisms through which paid medical leave may also positively impact health outcomes. Access to paid time off could improve health management, enable earlier treatment, increase health care use, improve income stability, and reduce financial stress. For example, research on the earned income tax credit and the Social Security Disability Insurance program finds that the income support provided by these programs leads to improved health outcomes.

In addition to individual health effects, paid medical leave, like paid sick leave, may contribute to greater public health. Evidence on paid sick leave shows it helps sick workers stay home, seek medical treatment, and reduce the spread of contagious diseases—even while reducing overall absenteeism.

Research on paid sick leave has often focused on influenza and influenza-like illnesses that are fairly short in duration. But with the emergence of COVID-19, which can require weeks to months of treatment and recovery in serious cases, paid medical leave could play an important role in supporting both individual and public health.

Expanding access to paid medical leave

Currently, workers in six states have access to paid medical leave through state-based programs, with three more states and the District of Columbia scheduled to begin paying benefits over the next three years. In addition, about 42 percent of private sector workers have access to paid medical leave in the form of short-term disability insurance. But four out of five low-wage workers, including many workers deemed essential, do not have access to short-term disability benefits.

Federal policymakers took the historic step of providing emergency federal paid sick leave to millions of workers with the Families First Coronavirus Response Act. But the act did not include paid medical leave longer than two weeks to address a worker’s own illness or that of a family member if they contract COVID-19.

By not expanding paid medical leave, research suggests policymakers are forgoing an opportunity to improve both economic and health outcomes for workers during the pandemic. Over the longer term, debates over comprehensive paid family and medical leave should consider the emerging evidence that shows paid time off for workers with serious medical conditions, combined with evidence-based return to work services, is a key element to supporting workers’ health, public health, and economic security.

Heather Hodgson, 46, has tested positive for COVID-19 and is currently quarantining herself at her townhome on April 1, 2020 in Wheat Ridge, Colorado. (Photo by RJ Sangosti/MediaNews Group/The Denver Post via Getty Images)

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As an organization, the Urban Institute does not take positions on issues. Experts are independent and empowered to share their evidence-based views and recommendations shaped by research.