Netflix and the paid family leave debate

The on-demand media provider Netflix Inc. made the surprise announcement last month that it will provide its employees with one year of paid, unlimited leave policy following the birth of a child. Call the frenzied media response “maternity-leave madness,” except that it applies to men and women alike. Some saw the policy as an encouraging step forward for working parents, while others declared that the “unlimited” nature of the leave will cause guilty employees taking less time off than they would otherwise.

Yet there is little discussion of Netflix’s failure to extend this policy to their non-salaried, low-skilled workers who labor at the company’s DVD distribution centers. Such a policy in many ways mirrors what is happening nationally: the exclusion of workers who have the fewest resources and would most benefit from such policies.

U.S. federal law mandates 12 weeks unpaid leave through the Family and Medical Leave Act, yet 40 percent of U.S. workers are ineligible for this benefit. According to the U.S. Bureau of Labor Statistics, only 12 percent of private-sector workers have access to paid parental leave. Among the lowest earners, that number drops to 4 percent. So Netflix, in extending its policy exclusively to its salaried employees, is adhering to a national phenomenon: Having the resources to take adequate time off after the birth of a child, with all the benefits for parent and baby alike, is becoming the exclusive domain of the professional class.

That leaves too many workers forced to go back to work too quickly because they cannot afford to take the time off as unpaid leave. But rushing back to work has consequences. Studies show that insufficient maternity and paternity leave is associated with lower rates of immunization and health visits for the new child, lower rates of breastfeeding, and an increased risk of depression for the mother. And accumulating evidence is increasingly showing that such poor care early in life can have negative effects on that child’s skills, health, and development far into the future, costing our society and hampering our economy.

In contrast, access to paid leave raises the likelihood that a new mother will remain in the labor market, and continue to contribute to the economy’s productivity overall. And, a parent’s ability to care full-time for their baby during those early months has a lasting impact on the health and development of their child.

And, as many of these tech companies have discovered, paid parental leave can make it easier to recruit and retain talented workers, which is good for their bottom line. But wealthy companies like Netflix are not the norm. Many smaller businesses cannot afford such an expense, and covering an employee’s salary while they are on leave for an extended amount of time could be disastrous for small companies with modest annual profits. That is where government policy comes in. Many other countries finance their parental leave systems through their social security systems. Among U.S. states, California, Rhode Island, and New Jersey have extended their temporary disability insurance programs to provide paid leave for new parents, although not at full salary.

These programs benefit employers and employees alike. A survey of California employers by Center for Economic and Policy Research’s Eileen Appelbaum and Ruth Milkman of CUNY Graduate Center overwhelmingly reports no noticeable or a positive effect on profitability, turnover, and morale. And a study done by the Council of Economic Advisors at the White House finds that paid family leave as implemented there and in Rhode island and New Jersey “can benefit employers by improving their ability to recruit and retain talent, lowering costly worker turnover and minimizing loss of firm-specific skills and human capital, as well as boosting morale and worker productivity.”

At the state level, paid leave also reduces the burden on government assistance programs. Women who take paid family leave in the year after their child’s birth are less likely to rely on welfare or supplemental nutrition assistance. There is no reason to think that a national program would not boast similar results.

Netflix’s new policy is undoubtedly in response to a growing sentiment among many working Americans that it feels impossible to balance work and family life. But, at Netflix and nationally, policies that could alleviate that stress are concentrated among the economic elites. This imbalance will increase income inequality and hurt the country’s future economic potential overall. Company-based solutions, while an encouraging first step, will not ensure our long-term success. Updating our policies to allow everybody, rich and poor, to balance work and caregiving responsibilities will strengthen families and our economy alike.


September 1, 2015


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