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. 

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caring for a child with a rare form of cancer, she proposed a bill that serves as a state-level replacement for the outdated federal FMLA.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.