Paid Parental Leave Work for Blue-Collar
In the rash of American companies to roll out generous parental leave policies over the past few weeks — Netflix! Goldman Sachs! Adobe! Microsoft! — Thursday’s announcement that McLean, Virginia-based Hilton Hotels would be giving new mothers 10 paid weeks off and fathers two weeks off got little press. Just another company seeking to jump on the PR bandwagon, one might conclude, perhaps laudable but not especially noteworthy.
Actually, though, Hilton was unusual. Most of the companies expanding their paid leave benefits are in finance or tech, seeking to attract and retain a highly-skilled female workforce. Netflix, now famously, didn’t extend its new unlimited leave policy to the bulk of its hourly workforce.
Hilton, on the other hand, has a lot of non-white-collar workers. Of the 40,000 people the new policy will cover, 75 percent are hourly, which usually means the lower-paid jobs in housekeeping, catering, and customer service that can be very physical. Returning to that kind of position after childbirth is harder than coming back to a desk job, and lower-earning workers don’t have as much of a financial cushion to take time off if it’s unpaid, so the new policy could really make a difference.
Hilton’s choice is also interesting because there’s less of a business case for extending maternity leave benefits to this kind of worker; the market is not as competitive for low-skilled jobs, so it’s less of a factor in attracting top talent. That’s partly why the percentage of workers with access to all kinds of time off in the hospitality and food services industries is lower than any other — three percent of workers get paid family leave versus 12 percent on average, for example.
Matt Schuyler, executive vice president of human resources for Hilton, says he hasn’t calculated the extra expense of offering the new benefit. He know the company will incur costs, but he also expects the move to pay dividends.
“Two phenomena are going to occur,” Schuyler says. “We’ll probably retain more of our workforce. And number two, we’re going to have workers who are even more enthused about servicing their guests, because they’re working for an employer who cares about their well-being.”
Of course, there are some reasons for skepticism. First of all, the new benefit won’t apply to the 20,000 Hilton employees who are covered by collective bargaining agreements. Many of those contracts already provide for either short-term disability or partially paid maternity leave. That mitigates the cost increase for Hilton, at least until the unions that don’t have that benefit in their contracts ask for parity when the agreements come up for re-negotiation.
Second, the company already offered partially paid maternity leave for a shorter period of time, depending on the position. So the increase isn’t as dramatic as it sounds at first.
And finally, the policy only covers workers at facilities Hilton owns or manages. That’s a small fraction of the 4,134 hotels owned by people who license the Hilton name. Schuyler says he can’t dictate the employment terms of Hilton’s franchisees, which inherently limits the new policy’s reach. Some franchisees may follow Hilton’s lead, but since most customers don’t make the distinction between company-owned and franchised locations, there’s no public pressure to do so.
The other important aspect to consider is what happens to the rising political push for paid leave mandates when companies like Hilton start to demonstrate that offering such policies is possible even for companies with large hourly workforces. On the one hand, Hilton now has less of an incentive to oppose such mandates, and others in the sector may follow suit in order to compete for employees. On the other, business lobby groups tend to use such actions as an argument that new laws aren’t necessary. Like those franchisees we were talking about.
“We celebrate Hilton’s decision as another great example of how our industry values the employees that make American hospitality such a success,” says Chip Rogers, chief executive of the Asian American Hotel Owners Alliance, one of the largest associations of franchisees in the country. “No government mandate was necessary. This should serve as a perfect illustration for lawmakers and bureaucrats alike; the owners and employees of the hospitality industry work quite well together.”
The Chamber of Commerce hasn’t put much energy into opposing paid leave laws lately, mostly because there’s little danger of anything happening on the federal level before the 2016 elections, despite some indication of bipartisan support for such a measure.
“We, of course, have no objections to any company providing a paid leave benefit consistent with their business needs and resources, but this does not bolster the case for mandating such a benefit across the board in a way that many employers would not be able to meet,” said chamber spokeswoman Blair Latoff Holmes.
