If you own a business in Allegheny County, you’ve probably heard the news: a proposed 18 weeks of paid parental leave, every employer, no exemptions. You’re probably asking the same question every other business owner is asking: How can I afford this?
But it’s worth asking a different question: How much is not offering paid parental leave already costing my business?
Because for most small and mid-sized employers in this county, the right question reframes the entire conversation.
Three industries with the same pattern
Turnover in food services runs the highest across sectors at 80%, and costs add up fast. Taziki’s, a regional Alabama chain, calculated that the departure of each hourly worker costs them $5,000 and each manager $10,000. That turnover often happens when experienced workers have to choose between their job and starting a family. New Orleans-based LeBlanc Smith credits introducing paid parental leave with helping them retain 68% of their staff for more than two years by making it possible for their employees to have a family without quitting.
Dental practices, OB/GYN offices and outpatient clinics face the same problem. The employees are mostly female, concentrated in prime child-bearing years and not replaceable in weeks. When an experienced nurse or hygienist walks out because the math between their job and having a child doesn’t work, the practice loses revenue immediately. Forty percent of women quit in the first year after having a child, but offering paid parental leave reduces that to 12%.
Professional services is where the costs of turnover can really soar. Replacing specialized employees is typically 50% of the salary of the employee you’re replacing. That cost can stretch further once you account for onboarding new employees and rebuilding client relationships.
Law offices, accounting practices and banks are also where a quieter trend is showing up: Women are having children later. Allegheny County’s own natality data from 2020 shows a substantial share of births are now from women aged 35 and over, exactly the employees that companies have spent a decade developing into upper management positions. This group becomes the most expensive talent to lose and the one most likely to leave if your parental leave policy doesn’t measure up. Seventy-three percent of workers are likely to leave their current job for one with better benefits.
The math keeps adding up. The loss of skilled workers ultimately equals lost revenue, lost time replacing those employees and higher stress for employers.
Reframing a common perspective
It’s a fact: Most of your employees will have children, but the question is: Will they stay at your company when that happens?
In my years of working in finance, I saw firsthand the cost of turnover and replacing some of our best talent, because paid parental leave was seen as a perk and not what really is: a retention strategy. That’s why it’s important to reconsider what’s driving turnover at your organization and how much it will cost to replace your most valuable employees.
Consider a few questions: What’s your annual turnover rate? What’s your average cost per departure across recruiting, training, lost productivity and the other hidden costs companies absorb? And how many of those departures involved an employee leaving to start or grow a family, even if they didn’t tell you? Then look at what it would cost to offset that risk.
The gap between what paid parental leave costs to offer and what turnover costs to absorb is what I’ve spent the last decade working to solve in my own business.
Insurance-backed paid parental leave solutions now exist for small and mid-sized employers, so an unexpected leave turns into a predictable monthly premium, just like health or dental insurance. Often the cost of covering the entire company is less expensive than it would cost to replace a few employees each year. Employers can explore their options at alleghenyppl.com. Plus, many organizations are eligible for federal tax credits when they add a paid leave policy for meaningful additional savings.
The financial case for paid parental leave isn’t a hard one to make, when you really look at the numbers that matter.
Dirk Doebler is the founder and CEO of Parento, which helps companies build paid parental leave programs that retain talent and drive business results.