New Jersey has just enacted a family leave law that allows workers to spend up to six weeks bonding with their new babies or taking care of ailing relatives.

The bill has gotten wide praise from labor groups, which call it a “pro-family policy” but has led to much criticism from business groups who worry about its economic impact on the state’s ailing economy.

New Jersey is the third state in the nation to enact a family leave program for workers caring for sick family members, newborns and newly-adopted children. California implemented its program in 2004 while the state of Washington passed legislation last year.

According to New Jersey Gov. Jon Corizine, the program requires no contributions from employers and is 100 percent funded by an employee payroll deduction amounting to about $33 a year, or 64 cents a week. Participating workers will receive no more than two-thirds of their weekly pay, up to a maximum weekly benefit of $524 in 2008.

Larger companies must hold a job for the employee on leave. Companies with 50 or fewer workers will not have to hold a job.

The state estimates that approximately 38,000 individuals or about 1 percent of New Jersey’s workforce will collect benefits annually.

Yet, New Jersey Business & Industry Association President Philip Kirschner issued a statement that called the law “a paid leave mandate on businesses that are already struggling to survive a recession.” He predicts it will lead to lost jobs.

“This mandate will force businesses to pay for temporary workers, overtime, or lost productivity in their workplaces,” he added. “Many jobs simply won’t get done. It will be difficult for companies to find skilled temporary workers to fill positions, if they can find them at all. This will damage businesses’ relationship with their customers, and it will put them at a disadvantage with competitors in neighboring states that don’t have this mandate.”

He said that without this law, employers were able to balance work and family needs of employees. They used sick days, vacation days, flexible scheduling and other methods.

But Corizine said the new law will make New Jersey more competitive economically and the state’s AFL-CIO called the legislation, “much needed and long overdue policy for New Jersey’s working families.” The union hopes that other states, and eventually the federal government, will enact similar policies.

There is some merit in their arguments.

The legislation makes very good sense for employees. Parents need to be able to spend time bonding with newborns. It makes for healthier, stronger families. In addition, workers should not have to be forced to choose between quitting a job and taking care of an ill relative. In addition, if employees are forced to work while their minds are on an ill relative or a new baby, it’s questionable how much they will get done on the job.

It’s true that the New Jersey’s neighboring states do not have a similar law, and the new law can put New Jersey businesses at a competitive disadvantage. But that’s just one reason why the entire nation should enact a similar law.

Perhaps, the state could give businesses some kind of tax relief for money spent on hiring of temporary workers while the permanent workers are on leave.

Overall, though, having a humane workplace tends to encourage employee loyalty and employers may find in the long run they can retain employees more easily without having to increase salaries.

We have three states with a family leave program in place. Let’s watch what happens. It may be a model for the rest of the nation.