The Rush Toward Paid Parental Leave: Why Now?

As Hilton joins other employers offering the perk, experts explore reasons behind the sudden interest

By Dana Wilkie Sep 29, 2015
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Working parents have been around for a long time. And it’s likely that any one of them could have told you that juggling a job while caring for an infant or newly adopted child can be mentally and physically exhausting.

So why, just over the past few months, has there been a rush of companies offering paid parental leave, when it’s something working parents would almost certainly have welcomed decades ago?

The reasons are manifold: The benefit helps attract and keep talented workers at a time when certain talent is in short supply; Millennials, who are starting to have children, are demanding it; the number of two-earner households is on the rise, and men and women in those homes in particular find the perk alluring; and today’s employees tend to be more concerned with work/life balance than workers in decades past.

“Company executives must recognize that they need to do more to keep up with the demand for job satisfaction,” said Jodi Chavez, senior vice president at Accounting Principals, a professional services staffing firm. “HR is likely encouraging company executives to offer programs and activities that promote employee loyalty.” 

Hilton Hotels is the latest company to join those that have announced that parents will get paid time off to care for new children. The hotel giant follows the leads of Netflix, Microsoft, Adobe and Goldman Sachs.

Millennials Lead the Way

Millennials—those born between 1982 and 2000—are currently the fastest growing segment of the workforce; in just 10 years, 75 percent of the workforce will be from the Millennial generation. Millennials are starting to have children, and according to a recent survey by Ernst & Young (EY), this generation is almost twice as likely as the Baby Boomers to work full time and to have a spouse or partner who works full time.

Perhaps as a result, the survey found that Millennials around the world are more likely than other generations to cite paid parental leave as an important benefit. 

“It could be argued that this generation is inciting a workplace revolution,” said Maria Black, president of ADP TotalSource, a human resources outsourcing firm. “Therefore, implementing family-friendly policies has become increasingly important for companies that want to recruit and retain” Millennial talent.

According to the EY study, Millennials value workplace flexibility and paid parental leave more than other generations and, when these benefits are offered, are more likely than other generations to:

  • Join a company.
  • Stay with a company.
  • Recommend that company to others.
  • Be engaged and happy employees.
  • Work longer hours.

However, Ithaca College professor Stephen Sweet, visiting scholar at the Center on Aging & Work at Boston College, warned against believing that many Millennials are in a position to turn down jobs—or leave them—so they can find another job with better benefits (like paid parental leave).

“Yes, some will leave if they do not have lots of great options, but this argument should not be overgeneralized to account for a generation’s experiences or inclinations,” he said. “The overwhelming majority of Millennials are not in a position to leave current positions for greener pastures because the pastures do not exist, or the risk of leaving a current position is too great. Consider, for example, the high proportions of young adults still living with their parents and the amount of debt they have acquired pursuing college educations.” 

More Mothers Plan to Keep Working

Offering paid parental leave may be a way to retain female workers at a time when increasing numbers of women plan to work while raising children.

“Modern women who are mothers are seeking a balance between work and their personal lives, and women who plan to become mothers will factor in these types of benefits when making career decisions,” Chavez said. “Parental leave benefits help open opportunities for women in the workforce, offering the flexibility that might lead some women to consider an offer they might have previously turned down to put family life first.”

And work/life balance is increasingly important to both men and women. According to a recent survey by Accounting Principals, 25 percent of respondents hoped to find a new job in 2015 because of the lack of work/life balance at their current job.

The Talent Shortage

Much has been made of the talent shortage in today’s job market, particularly in high-tech industries or where sources of labor are scarce.

“We are now in a candidate-driven environment, and employers need to focus on retaining the talent they have before their employees decide to go elsewhere in search of more attractive benefits,” Chavez said. “Parental leave benefits are one perk that we find really resonates” with job seekers.

While it may be true that paid parental leave may lure and keep workers in select, high-skilled jobs, that may not be the case for low-wage, hourly jobs, or in industries that require less-advanced skills.

Hilton’s announcement—that it will give working mothers (both full and part time) 10 paid weeks off to care for newborns and fathers two weeks off—is probably just an exception for the industry, Sweet said. He added that right now there’s not much of a business case for extending this benefit to those working in the food service or retail industries, where there are few labor shortages.

“We should not expect that as Netflix offers paid parental leave, that Target and Wal-Mart will do likewise, as they are not marking their organizational expectations in the same way,” he said.

And paid parental leave is still too rare a perk to inspire a large talent loss anywhere, Sweet said.

Regrettably, paid family leave and access to flexible work options are not as widely available as is commonly suggested in many media and some academic accounts,” he said. “Paid family leave remains a rarity in the American workplace, whereas it’s a given in nearly all other advanced economies.”

So in what cases might more companies be convinced to offer paid parental leave? Likely when an industry leader—like a Netflix or Microsoft—takes the lead, Sweet said.

“Companies model their practices to conform to what their closest competition or peer organizations are doing,” he said. “This can explain, for example, why when one company starts offering paid parental leave, a few other similar companies do so as well.”

Dana Wilkie is an online editor/manager for SHRM.

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