Many employers are reducing the amount of paid maternity and paternity leave they will provide.
According to new data from the Society for Human Resource Management, a trade association for HR professionals that surveyed 3,000 employers, the share of employers offering paid maternity leave beyond what is required by law fell to 35% this year, down from 53% in 2020.
Companies such as Hulu and some small to midsize businesses are cutting weeks from new parent benefits as some employers face inflation, anticipate a recession, and try to re-establish pre-recession norms.
Companies have also reduced paternity leave programs. According to the SHRM survey, the percentage of employers providing paid paternity leave fell from 44% in 2020 to 27% in 2022.
According to SHRM, the declines could be attributed to companies returning their leave policies to what they were in 2019 after extending more parental benefits to workers during the pandemic.
Many companies were dealing with hiring shortages in the two years leading up to the pandemic, so they rolled out enhanced perks, such as more time off, to attract new talent. Recognizing the stresses that many working parents faced during the Covid-19 era, many employers expanded benefits such as paid time off.
Some employers are now limiting the amount of paid leave they provide to new parents to the legally mandated minimums, which can range from nothing to eight or twelve weeks depending on the region. Eleven states, including California, Massachusetts, and New York, have laws requiring most employers to provide new parents with some paid leave; 39 states do not. Qualifying workers in the United States are entitled to up to 12 weeks of unpaid leave following the birth of a child under federal law.
Most employers understand the importance of parental leave in recruiting and retaining employees. As some companies reduce parental leave, others increase benefits, widening the gap between workers who have parental support at work and those who do not. According to SHRM’s survey, leave benefits tied with retirement savings and planning benefits this year in terms of employer-ranked importance, with 82% of employers deeming them “very important” or “extremely important.” Only healthcare benefits ranked higher, at 88%.
Devon Richey, a viewer-experience agent with Hulu, Walt Disney Co.’s streaming service, said parental leave has been on his mind as he and his wife weigh the costs of having a child. Hulu recently reduced its fully paid parental leave policy from 20 weeks to eight weeks. Employees can still take up to 24 weeks of leave to care for the arrival of a child in a 12-month period, depending on their individual circumstances, including the state in which they live and their eligibility for short-term disability benefits, according to company policy.
With less paid paternity leave available now, Mr. Richey believes the couple will have to start paying for full-time child care sooner.
“If my employer reduces my parental leave, how will I afford child care if I don’t get paid more?” He stated.
Child care, which includes nannies, preschools, and nursery schools, is one of the most expensive expenses for most American families. Due to a labor shortage at day care centers and summer camps, reductions and closures have occurred, leaving working parents scrambling or driving them out of the workforce entirely.
Certain industries provide more paid leave than others. According to SHRM data, more than half (54%) of professional, scientific, and technical employers provide paid maternity leave in addition to what is required by law, up from 52% in 2020. Approximately one-third of employers in construction, utilities, agriculture and mining, government, and education provide paid maternity leave.
According to SHRM data, nearly all employers surveyed, 99%, offer paid vacation, up from 98% in 2020. Similarly, 96% of employers provide paid sick leave, up from 95% over the same time period. Two-thirds of employers (67%), up from 66% two years ago, said they provide a bank of paid time off that covers both.
To differentiate themselves, some businesses are expanding their benefits. Ferring Pharmaceuticals, a biopharmaceutical company with over 700 employees in the United States, announced this summer that it would increase paid parental leave to 26 weeks, up from eight weeks previously.
According to Rich Fuerstenberg, senior partner at consulting firm Mercer LLC, the number of company-sponsored parental leaves has steadily increased in recent years. According to a recent Mercer survey of 451 employers with more than 500 employees, 70% plan to offer paid parental leave by 2023. He stated that in the event of an economic downturn, many companies would be more likely to cut other benefits first, such as 401(k) matches.
According to SHRM data, 18% of companies surveyed offered paid maternity leave prior to the 2008 recession. By 2009, that figure had fallen to 14%, with 7% of employers planning to reduce or eliminate paid maternity leave in the coming year.