Jennifer Hyman’s company, Rent the Runway, may be known for letting customers borrow high-style clothing. But a week before Mother’s Day, the CEO of the apparel rental service grabbed attention for saying she offers the same benefits to even lower-wage hourly workers as she does to corporate staff.
“Over the years, I began to reflect on how the system that I and others had constructed may have been perpetuating deep-seated social problems,” she wrote in a op-ed piece Sunday in the New York Times, before describing how she equalized family leave and other benefits last month for workers, ranging from customer service to warehouse employees. “We know the grim statistics, such as … how people who make more than $75,000 a year are twice as likely as those who make less than $30,000 to get paid leave.”
Yet even while those numbers may be true, Hyman increasingly has some company. In the months leading up to Mother’s Day, more large companies have been boosting parental leave benefits to hourly or part-time workers.
In January, Walmart made a seismic announcement, saying it would extend the same parental leave it offers to corporate employees to its full-time cashiers and store workers. The next month, Starbucks said it would offer six weeks of paid parental leave for baristas who become new dads, a perk that only new mothers and adoptive or foster parents in the store had received before. In the months that followed, companies such as Lowe’s, CVS Health, Dollar General and Gap, among others, have all introduced or expanded parental leave benefits for hourly employees, though several limit it to those who work at least a certain number of hours per week.
Advocacy groups and human resources experts point to a tighter labor market, competitive pressure, demands from other employees and greater involvement by CEOs on social issues as reasons for the shift.
“The train keeps speeding up the track, so it’s almost like keeping up with the Joneses now,” said Mary Tavarozzi, a managing director of health and benefits at human resources consultancy Willis Towers Watson. “It’s not enough to just offer a lengthy paid leave to both salaried mothers and fathers, you have to also make sure that you’re covering your hourly workers.”
But they also warn that expansions often leave out part-time workers, sometimes pay out at lower levels that especially affect low-wage workers, and often land amid cultures where such perks haven’t traditionally been available and where workers may not be encouraged to use it.
“The worst thing you can do is put this in place and not let people use it,” said Carol Sladek, a partner who leads work-life consulting at Aon. “That’s worse than not offering it at all.”
The expanded benefits also should not suggest the issue of paid parental leave for hourly employees isn’t still a major problem. As Hyman cited in her op-ed, just 14 percent of civilian workers in the United States have access to paid family leave, and the United States remains the only high-income country in the world that does not mandate maternity leave nationally. Many hourly employees work part-time, or have trouble getting the hours they need to become benefits eligible.
“Fewer companies are leaving out that category of people hourly workers, which is fantastic and a big shift,” said Katie Bethell, founder of Paid Leave for the United States (PL+US), an advocacy nonprofit. “But they are still very much consistently leaving out part timers and we see that as a big problem.” A recent profile in Fortune Magazine pointed to advocacy work by Bethell’s group — as well as a shareholder group that filed proposals on the issue — as having an impact.
Still, she said, moves by retail behemoth Walmart may be prompting others to take a step. In discussions with employers, Bethell says, “We tell them what Walmart’s benefits are, and they say ‘well, we’ve got to do better than that.”
Several companies that have rolled out or expanded paid leave benefits for hourly workers in recent months tied the changes to the new tax law. Tavarozzi said a provision in the new law offers a tax credit to employers for offering paid family leave to workers who make less than $72,000 this year, which could prompt some to expand their benefits. But its modest benefit to employers and temporary nature – the credit is only guaranteed through 2019 – means many won’t take the bait. “Most employers know once you put in a program like this you can’t take it away.”
What’s more likely driving the change, she said, is the push by a number of states and municipalities to mandate paid family leave, some of which have specified covering hourly workers, resulting in a patchwork of benefits policies if employers don’t just adopt similar benefits for everyone.
“Every time a state or municipality suggests one of these, it inches employers toward just coming up with a national policy on their own,” Tavarozzi said. “It’s an administrative nightmare.”
Yet even while some companies have expanded their offerings, there are plenty who haven’t – or those that offer benefits but not at an equal level. Hourly paid, non-manager employees in McDonald’s company-owned stores do not receive paid leave benefits, and the restaurant giant said it could not provide information about benefits offered at the 90 percent of franchise-owned stores. At Home Depot, new mothers who work full-time and are paid hourly have access to six weeks of short-term disability leave, paid at 60 percent of their pay (50 percent if part-time), while salaried workers get 100 percent of their pay. A spokesman said it is reviewing the program.
When Starbucks rolled out paid parental leave for new fathers who work in its cafes, it gave them access to six weeks, compared with 12 weeks for corporate employees. (Before that, only new mothers and adoptive parents in the field had gotten time off; new mothers who are corporate employees get 18 weeks of paid leave.) Starbucks spokesperson Reggie Borges said that unlike other companies, Starbucks’ benefit does not have a waiting period and is available to those who work just 20 hours a week. “The way our company looks at benefits is holistic,” he said. “We have very different employees or partners that have varying levels of needs or requests.”
Aon’s Sladek said paid leave hasn’t been traditionally been offered to hourly workers because unlike professional workers, whose colleagues can pick up the slack while they’re gone, customer service agents, fast-food workers and retail clerks often need replacing while out on leave. And traditionally, there’s simply not as much competition for cushy benefits packages as there are among white-collar workforces.
But that’s starting to change, she said, as companies see backlash when they’re not equal in their offerings, pointing to what happened when Netflix initially extended a generous paid family leave perk to salaried and not hourly workers back in 2015. “There’s so much press about this benefit, so much energy around it – it does have that social element to it.”
Indeed, in her op-ed, Hyman said her decision had an upside for the morale of corporate employees too. “I received more positive feedback about these changes from my corporate team than about any other leadership decision I have ever made,” she wrote. “It’s time for business leaders to step up and fulfill not only their fiduciary duty to shareholders, but also their moral duty to society to treat every worker equally.”
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