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How Should US Retailers Handle Parental and Paid Leave?
In the United States, the push for paid leave policies is gaining traction. Experts are delving into the reasons behind this momentum, exploring who stands to benefit and the efforts underway at both state and federal levels to address the issue.
Navigating the landscape of paid family leave in the U.S. can be daunting for many who will have to do their own research and then negotiate their paid leave requests. For this reason, access remains inconsistent across the nation.
Only 27% of private sector workers have access to paid family leave, according to the U.S. Bureau of Labor Statistics (BLS), though larger employers are increasingly offering these benefits to attract and retain talent. Despite this, there is still no federal program for paid leave, leaving many workers reliant on the three-decades-old Family and Medical Leave Act (FMLA), which provides unpaid leave for certain circumstances.Â
State Senator Erika Geiss shared her personal motivation for proposing legislation to provide Michiganders with paid family leave. Drawing from her own experiences caring for a child with a rare form of cancer, she proposed a bill that serves as a state-level replacement for the outdated federal FMLA.
According to Geiss, the FMLA may have worked 30 years ago, but she insisted that “the state of work today and the state of our society and our communities need something better.” She emphasized that paid leave policies extend beyond just parental leave, encompassing situations such as medical leave, caregiving responsibilities, and addressing domestic violence situations.
Despite strong public support, the U.S. remains the only high-income country without guaranteed paid leave by federal law.
States play a crucial role in paving the way for federal policy changes, with some already implementing their own paid leave programs. These programs vary in eligibility criteria and funding mechanisms, highlighting the ongoing efforts to address the diverse needs of workers across different states.
Historically, according to the BLS, “low-income workers, who are disproportionately Black and Brown women, were less likely to have access” to paid leave benefits. Efforts to expand access to paid leave aim to reduce gender and racial inequities while promoting economic prosperity for all.
Opposition to paid leave policies often comes from large corporations, citing concerns about costs and profitability. However, research suggests that implementing paid leave policies can lead to higher employee morale and retention rates.
4 Weeks of Paid Leave Isn’t Enough
Currently, though no federal law in the U.S. is providing paid family or medical leave, “important proposals have been advanced, such as one that passed in the U.S. House of Representatives as part of the Build Back Better Act, and the Family and Medical Insurance Leave (FAMILY) Act, which has been revised and reintroduced for the 118th Congress,” according to The Center for American Progress.
Research from various corners of the globe emphasizes the importance of sufficient paid leave, indicating that a mere four weeks falls short of delivering optimal benefits.
While 109 countries offer paternal leave, with 47 providing over four weeks, several wealthy nations extend leave beyond a year.
Globally, paid leave is typically funded through social insurance, similar to existing state programs. The absence of paid leave leaves many relying on insufficient short-term disability insurance, particularly impacting women, people of color, and low-income earners.
Internationally, ample evidence supports longer maternity leave durations for optimal maternal and child health outcomes, urging the U.S. to reassess its policies.
Retailers Have Their Own Solutions for Paid Parental Leave
Aeon, one of Japan’s major retailers, is set to implement a comprehensive parental leave compensation scheme, aiming to boost male participation in taking time off for childcare.
In Japan, employees are currently entitled to 180 days of parental leave, receiving 67% of their monthly pay during this period, which reduces to 50% thereafter. Despite tax exemptions, this results in a significant drop in take-home pay, around 20%.
Under Aeon’s new plan, employees on parental leave will receive 100% of their after-tax take-home pay until their child turns 1. Upon returning to work, they’ll be compensated for the difference from the national parental leave program.
This initiative will extend to approximately 150 affiliated companies, covering hypermarkets and drugstores, with no age restrictions, and single-parent households are eligible. It’s estimated that around 50,000 individuals will qualify, with an initial projected cost to Aeon of over 1 billion yen ($6.8 million).
The Japanese government aims to increase the proportion of new fathers taking parental leave to 50% by fiscal year 2025 and 85% by fiscal year 2030. In contrast, only 17% of eligible men took parental leave in the last fiscal year, compared to 80% of eligible women.
Reasons for low male participation include concerns over reduced pay, cited by around 40% of male workers. To address this issue, various companies in Japan, such as Salesforce Japan and Mercari, have introduced enhanced parental leave benefits, resulting in a notable increase in male participation.
Among proactive American retailers, Starbucks offers parental leave for those who are benefits eligible plus other leave of absence options for those who aren’t. Paid time off varies by role, with retail staff receiving six weeks of paid leave and up to 12 weeks unpaid, while non-retail employees are eligible for up to 12 weeks of paid leave, with additional weeks for birth parents depending on delivery method.
Neiman Marcus Group celebrated Mother’s Day in 2022 by introducing new extended Paid Parental Leave and Paid Family Leave programs for associates, emphasizing inclusion and support for all types of parents. The Paid Parental Leave program offers 16 weeks of paid leave for welcoming a new child, alongside existing maternity leave, totaling up to 24 weeks. All associates qualify, regardless of full-time or part-time status.
Additionally, the company’s Paid Family Leave program provides two weeks of paid leave for caregiving responsibilities under FMLA guidelines. The company also supports adoption journeys with a $3,000 annual benefit for employees with at least one year of tenure. This initiative aligns with NMG’s commitment to fostering a culture of belonging and work-life integration, empowering associates with flexible policies.
Discussion Questions
How should the U.S. address the disparity in access to paid leave across states, particularly for marginalized communities, and what role should federal legislation play?
How can American retailers adapt their policies to support diverse caregiving responsibilities, considering global initiatives like Aeon’s comprehensive parental leave scheme?
What strategies should policymakers and businesses adopt to ensure that paid leave policies promote gender equity and optimize outcomes for maternal and child health?
Poll
Loading …BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
Lisa Goller
B2B Content Strategist
The disparities highlighted and the examples from global and domestic companies underline the significance of such policies for employee well-being and equity. Providing paid leave isn’t just about meeting a basic need for employees; it’s a strategic move towards building a supportive, loyal, and productive workforce. This approach not only aligns with global standards but also signals to employees that their well-being is valued, potentially driving higher job satisfaction and retention rates.
If you want to attract and retain good employees – at all levels – then you have to offer them good benefits. Parental leave is one of those. Interestingly, at Shoptalk I met two women who were currently pregnant: both their firms had excellent paid leave policies that were put in place voluntarily, which just shows what can be done!
Don’t forget flexibility for the multiple absences resulting from sick time coverage and the ongoing performance and sporting events. Supporting parenting goes far beyond the first months of a child’s life. Those pieces are every bit as important.
Today, 120 countries have legislated parental leave. The United States doesn’t make the list at all. As a country, it is embarrassing. What is wrong with our culture? So much for family values. I could rant further.
The biggest objection to family leave is the cost—a red herring by all means. If all advanced countries and companies can afford it, so can the U.S. International companies follow country laws and don’t seem to suffer their bottom line.
Yes, there is a “cost of doing business” associated with paid parental leave programs, but there is also a cost of not providing this benefit. Employee retention becomes an issue when other employers are offering extended parental leave, and replacing departed workers comes at a cost too. At a point where companies are pushing “back to the office,” stinting on parental leave is short-sighted.
We really do have the strangest health care system in the entire developed world. Periodically I think about this. And in the 80’s, when Japan was cleaning our business clock (though subsidized and also using principles of production we had rejected), we started really obsessing on productivity, which has become an over-used metric.
Pretend your workers are your family members. How would you treat them? Not to get too woo-woo on you, but the Tao Te Ching has a great couplet (Number 38) on the overall state of things:
“….when Tao is lost, there is goodness.
When goodness is lost, there is kindness.
When kindness is lost, there is justice.
When justice is lost, there is ritual….”
Just do the right thing.
“Strange” is the appropriate word. It almost seems that we designed it to be strange.
America’s punishing maternity policies are a scandal. (Only six weeks after a Caesarian section I returned to work, with the Washington Post and Swedish TV following me around.) Retail can and should lead the way in supporting its associates.
Six weeks! You’ve barely healed from a C-section or slept by that point.
The disparities in retail between companies that offer meaningful benefits and those that do not are more and more glaring. Interesting to note the correlation between those retailers who do not offer benefits or support for their employees and companies who continue to complain that they can’t find employees.
Retail is a people business. When retailers invest in their own people so they can do their best work, they gain an advantage in attracting and retaining talent. Expect Gen Z workers to be even more vocal in demanding parental and paid leave than previous cohorts.
Maternity and paternity leave should be seen as fundamental human rights. Even more importantly these programs need to reflect the reality of lived lives. Offering three months (12 weeks) of unpaid leave to a retail worker is – in many cases – not offering them anything at all. How many new parents can afford to go without their paychecks for 12 weeks? And, more importantly, why should they. The United States already has the highest rate of infant mortality of 13 high-income nations and a maternal mortality rate almost three times higher than peer-nations including Australia, Canada, France, Germany, Japan, the Netherlands, New Zealand, Norway, South Korea, Sweden, Switzerland, and the UK. This is a crime against mothers, fathers, and children. And of course the problems are even greater in emerging majority (aka minority) populations.
As to caregiving – as in paid daycare – it is almost universally too expensive for day workers and often nonexistent for afternoon and evening shift workers. Ask yourself, when is the last time you saw a 24 x 7 daycare facility? It’s a question lots of parents ask themselves every day.
As to gender equality, let’s be serious here. It’s 2024 and there is precious little gender equality. Does any sane person think this continues to go on by accident? No policy – by itself – is going to guarantee equality by gender, race, religion, ethnicity, sexual orientation, age, or any other metric. Don’t believe that? Just look at how voting laws continue to disenfranchise so many Americans.
If you want to solve a problem, the first step is to admit it exists.
Many staff find themselves in the “sandwich” with not just child-raising but also taking care of aging and dying parents. We lost both of my wife’s parents over the pandemic and it wasn’t quick – there were doctors’ and therapy visits; Dad had part of his leg amputated so needed a lot more help getting around; and of course at-home services are not widely available nor affordably priced. Gen X is going through this right now but Millennial staff will experience it soon enough. Employers with humane policies will definitely earn loyalty.
These are great initiatives, and needed. The only potential negative here is any increase in benefits or wages ALWAYS trickle down to the consumer. So these programs need to be rolled out with financial care, lest the cost structure overburdens your customers ability to bear the costs.
It’s simple. Just do something. At least start with 12 weeks paid or do as it was with my first son, 2005, in California. FMLA didn’t start until short-term disability stopped so I got 18 weeks with job protection and some pay. With my other two I had 8 wks of pay (2008 & 2010) and went back at 12 wks. Nor ready! By 18 wks, I was. But here we are 19 years later, and companies/states haven’t even adopted that. It’s despicable.
It’s not a coincidence that many retailers (and companies in general) have higher retention and stronger company culture when there are more comprehensive employee benefits. It’s really short-term pain for long-term gain but many don’t include the true cost of high turnover in their calculations. It’s a major point of difference to candidates, especially in this tight labor market.
When both parents have access to parental leave early in a child’s life, it establishes a more equal balance of caregiver responsibilities that extends throughout a child’s life. So not only is it important for employee morale and retention, but also enabling women more support for participating in the workforce long term.