Is paid parental leave on the chopping block? 

Recently, some employers made headlines when it was revealed that they are reducing their paid parental leave benefits. Those reports run counter to the rapid expansion we’ve seen in paid parental leave benefits over the last decade. According to Mercer’s Absence and Disability Survey, the percent of employers offering paid parental leave for child bonding jumped from about 25% in 2015 to nearly 75% in 2024. What are we to make of these cuts in paid parental leave benefits? Are we going to see a reversal of the trend to expand paid parental leave? What should we anticipate?

Benefit budgets under pressure

Reductions in paid parental leave benefits are not the only benefits-related news making headlines. Rapidly rising medical costs are straining employer budgets. According to Mercer’s National Survey of Employer-Sponsored Health Plans, employers initially faced an average increase in medical plan cost of more than 9% in 2026. After plan design changes, the projected average increase was reduced to 6.7% — but that’s still far higher than inflation. In Mercer’s recent survey of 161 CFOs, one-third listed health benefit costs as a “top 3” concern. Further, when asked about the impact of health benefit cost growth, 38% of CFOs said their organizations had cut spending on other benefits as a result — the most common response noted in the survey. With all benefits under scrutiny for savings opportunities due to rising health costs, it’s not surprising that some employers would cut paid parental leave.

The return on investment  for paid parental leave may be hard to prove — which can make generous policies vulnerable to scrutiny. When employers add parental leave, they typically roll it out broadly across the enterprise rather than piloting it in one business unit and keeping another as a control, which makes ROI measurement difficult. Without a control group, there may not be solid evidence that parental leave improved retention or helped recruit key talent. In a cost-cutting review, soft measures are easier targets than hard line-items — which puts parental leave squarely in the crosshairs if a CFO demands quantifiable benefit value.

Here are three questions about paid parental leave that HR and Benefits leaders should be prepared to answer.

Q1: What return are we getting on our investment in paid parental leave?

Measuring the value of a paid parental leave policy may be difficult. Employers often point to research that shows reductions in turnover due to paid parental leave benefits. Studies have shown that state paid family leave programs have increased income security for low paid employees after the birth of a child. However, most employers are not tracking their paid parental leave experience in a way that enables them to  determine what benefits they are experiencing from their policies. Employers should be prepared to demonstrate the value of their paid parental leave before finance comes calling.

On the broader topic of paid leave, Mercer’s research shows employees place high value on benefits that provide financial stability, flexibility and career growth. The 2026 Inside Employees’ Minds survey found workload/life balance and pace-of-life/free time among the top unmet needs. Seventy percent believe paid time off supports mental health and family care needs.

Mercer’s 2026 Global Talent Trends research also underscores that many employees would trade pay for better benefits: examples include higher-quality medical care, increased retirement contributions, and flexible work schedules. Unlimited PTO and other time-off supports rank meaningfully in employees’ preference sets. Surveying employees to understand how they value paid parental leave will help employers determine where the policy fits into their total rewards strategy.

Q2: How does our program compare to industry benchmarks?

As noted, paid parental leave has become mainstream, offered by nearly three-quarters of employers. Most programs pay 100% of salary, and the median amount of leave offered is six weeks. For employers that offer more paid parental leave than is typical in their industry or among peer companies, what is the advantage of having a policy that exceeds benchmarks? What percent of eligible employees are using all of the time available to them? If the maximum duration were reduced, how many employees would be impacted? Employers need to be prepared to answer these questions and more to justify the current paid parental leave policy.

Q3: If we cut our paid parental leave benefits, how much will we save?

Cutting paid parental leave is not a simple, line-item dollar-for-dollar cost savings the way reduction in other benefits are. For many companies — especially those with mostly salaried workforces — productivity loss during parental leave is not equivalent to a direct cash outlay. Replacing or covering someone’s work may be handled through redistribution, temporary backfill, or delay of non-critical projects. Shrinking parental leave might reduce a labelled benefit expense, but it won’t necessarily translate into proportional savings in operating output or deliverables.

Another reason that cutting paid parental leave benefits won’t save a ton of money is because, in many states, the employer’s paid parental leave benefit is simply topping up a mandated state paid family leave benefit. In those states, reducing the employer’s benefit will only reduce the value of the top up. Does that modest savings justify the perception of the benefit reduction by employees? Before cutting paid parental leave benefits, employers should make sure they  are optimizing the coordination of their paid parental leave benefits with state mandated benefits. Maximizing the value of state-mandated benefits, including the potential role of private plans, where permitted, may generate valuable savings that avoids the need to cut paid parental leave benefits.

Practical implications for employers considering cuts to paid parental leave

• Avoid reflexively cutting paid leave to meet a short-term budget target. The direct cost savings may be smaller than expected, and the indirect costs — lost trust, lower engagement, higher turnover and potentially headline risk – can be meaningful and harder to reverse.
• Make sure you know how your paid parental leave policies stack up in comparison to peer companies. Understand where your policies are relative to where you want them to be. If your policy is above benchmark, be prepared to defend that positioning.
• If leadership insists on reductions, look for smarter ways to control spend — targeted eligibility rules, staged benefits, or improved integration with state mandated programs — rather than blunt, across-the-board rollbacks.
• Invest in measurement up front. If your organization is considering changes, build in rigorous evaluation (pilot programs where feasible) so future decisions are evidence-based rather than speculative.
• Consider total reward tradeoffs. Employees often prefer some benefits over pure pay increases. If cuts are unavoidable, communicate how the broader total-rewards package still supports flexibility, health, and financial security — and consider compensating reductions with other meaningful supports.

Paid parental leave is now a standard part of employer total rewards. It’s easy to pick on paid parental leave when budgets tighten because the ROI isn’t always captured in neat financial metrics. That doesn’t mean employers should immediately trim these programs. Instead, take a careful approach: measure where you can, prioritize programs that clearly drive business goals, and weigh the real — and sometimes hidden — costs of eroding a benefit that employees increasingly view as essential.