Paid family and medical leave is good for employers, too. Here’s why.

Business owners and public officials: What if I told you about an idea to help address the shortage of workers, give Pennsylvania a leg up in competing for talent, reduce turnover, and better protect your staff during daunting situations like the COVID-19 pandemic?

You’d probably say, “Tell me more.”

Finally, what if I told you the idea might cost businesses less than what is being spent right now on a big problem while providing a benefit of intense appeal to young employees?

You’d probably be whipping out a pen and saying, “Where do I sign?”

So, keep all that in mind when I tell you this: The idea is a government-run, paid family and medical leave program, one that has been tried in various forms to solid success in several other states — and is now proposed for Pennsylvania.

Here’s how the plan would work: All workers statewide contribute a small percentage of their pay to an insurance pool, overseen by the state government, which pays out claims to employees who qualify for paid leave. The pool also reimburses employers if they cover the claims as part of their short-term disability policies. Employers won’t have to contribute, but they will be expected to make the state’s family leave benefit available to all employees. (Of course, employers can even offer a more generous benefit if they wish.)

Yes, I know: For some of you, the term “government-run” is a showstopper, a cue to race for the exits, to slap a protective hand on your wallet.

But don’t let that reflex blind you to the documented reality.

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As founder and chair of Diversified Search Group, I’ve spent nearly 50 years identifying top executives and matching them with jobs where they can shine. The best of them have always been distinguished by their ability to go beyond the conventional wisdom, to look honestly at the data, and to embrace fresh ideas that the data support.

When it comes to paid leave, here’s what the data tell us: Paid leave programs save companies money, even when companies have to contribute to the programs.

First, they reduce or eliminate the cost already being borne by the roughly one-quarter of employers that now offer paid leave for one or more parents after the birth of their children.

Second, a shelfful of studies shows that paid leave for parents of newborns makes them significantly more likely to return to full-time work for the same employer.

I know from a lifetime of helping companies find new people for jobs that turnover is a huge expense — equal to at least one-fifth of the pay for a given position. How can turnover cost money? From recruiting, interviewing, moving, and training new employees, and hidden costs such as lost productivity and higher stress for those forced to fill in for long periods.

Third, studies also show that this benefit, which supports your workers and their loved ones during times of challenge or crisis, brings them back to the workplace with less stress and more loyalty, leading to greater productivity — and, therefore, profits. A 2019 study found that when manufacturing companies offered a paid leave program, their profits rose by more than 10%; in the tech sector, profit increase topped 25%. So you save money by retaining your employees, who — thanks to paid leave — are able to work hard and feel invested in the company.

You save money by retaining your employees.

Although some opponents of paid leave argue that the burden of filling in for workers outweighs the benefits, the Boston Consulting Group’s report “Why Paid Family Leave is Good Business” found that the opposite is true.

Here’s a factor that employers, particularly small businesses, should weigh heavily: competition for talent.

I’ve had a front-row seat many times as gifted managers tried to decide whether to move to a new job in a new state. These are complex decisions, with family issues often weighing heavily.

Pennsylvania is competing for business investment and talent against states that have set up paid leave programs, including our neighbors Delaware, Maryland, New York, and New Jersey. In those states, when crises hit — a premature birth, an ill relative, a military deployment, or an ailing parent — companies are better able to help their workers cope and rebound.

The pandemic has made workers more discerning and demanding about work-life balance and equity.

Given all that, it is time to pass a paid family leave bill in the Pennsylvania General Assembly, akin to the 2021 Family Care Act, which had strong bipartisan support. This measure would add an important arrow to the competitive quiver of Pennsylvania companies.

This is particularly true for small businesses that simply can’t afford to offer the perk on their own dime. That’s why seven out of 10 owners of those businesses told a Small Business Majority survey they favor a government-run paid leave program.

The Commonwealth of Pennsylvania needs a stronger competitive edge in recruiting the strongest candidates to staff the companies of this great state, and universal access to paid leave unquestionably puts our state in the game.

Judith von Seldeneck is the founder and chair of Diversified Search Group, an executive search group based in Philadelphia.