In case you missed it, the Wall Street Journal aggressively claimed today that employers are cutting paid parental leave access. Their article is based on a June 2022 employer survey conducted by SHRM. Naturally, as leaders in the paid parental leave space, these claims raised more than a few eyebrows - especially since it doesn’t jibe with our experience. So we dug a bit deeper.

From the article itself, “leave benefits tied with retirement savings and planning benefits this year in employer-ranked importance, according to SHRM's survey, with 82% of employers deeming them "very important" or "extremely important. Only healthcare benefits, at 88%, ranked higher.” (emphasis added) It’s hard for us to believe many companies are trimming or outright cutting their paid maternity and paternity leave policies, when companies say they’re so vital. The survey says 18% of companies cut them. We doubt this conclusion because it’s coming at a time when we see more and more employers adding paid parental leave - and reaching out to Parento to do so.

As one of the most requested and demanded policies, employers cutting paid parental leave would result in way more press coverage, significant resignations, disruptions of certain industries, and the further alienation of working moms. Basically, we all would have heard about this before.

You know paid parental leave is hot when national retailers, trucking companies, warehousing firms, restaurants, and other industries not known for generous rewards packages or family-friendly policies are coming to Parento for help adding paid parental leave.

The article’s authors and the SHRM survey they cite says companies cut back on paid parental leave post pandemic, but it’s unlikely that these are the typical child bonding leave policies we think of when we hear “paid maternity leave.” If policies were cut, I’d bet these policies were likely temporary additional time off requests/days people could take if a kid were sick with COVID. Or, more likely, there was some change in survey methodology or respondent pool that drove the drop. Most likely the latter because the 2022 survey had 3,129 respondents, 20% more than the 2020 report (2,504 HR respondents).

The vast majority of those 600+ new respondents were likely from companies with less than 100 employees because 90% of companies in the US have less than 100 employees. Smaller firms are much, much less likely to offer paid parental leave in the first place without an insurance product, so we’d expect there to be a major drop in the % of companies offering paid parental leave when they’re added to the mix. Other benefits or rewards that small companies are less likely to offer also dropped substantially in the survey, such as wellness benefits.

The percent of companies that said they offer paid parental leave dropped by 18%, and if the 20% increase in respondents were primarily small companies, and statistically they would be because 90% are, then it’s not entirely surprising that we’d see a large percentage drop in the number of companies offering paid parental leave. Basically a bunch more small companies responding to the survey would naturally make it look like fewer companies offer paid parental leave even when no one is cutting it.

What Parento Sees

Our benefits broker partners have consistently told us that paid parental leave is one of the most frequently discussed topics with their employers this year. We’re surprised to hear of firms cutting back their paid parental leave policies. Though, the article makes it seem like companies with very generous policies are trimming their policies. If there’s any trend it’s 16-20 week policies that are getting cut back; it doesn’t appear firms with 8-12 week policies are cutting them. 

We’re fielding a record number of requests for our program and paid parental leave insurance. Notably, these requests aren’t coming from tech and the most generous industries. No, they’re coming from mainstream businesses, and often not white collar industries.

Without access to the raw data and SHRM’s methodology, there will always be questions and doubts on how these results were reached. We don’t believe for a second that 18% of companies cut their paid parental leave policies entirely. On top of a large in-flux of companies that of course don’t offer paid parental leave, perhaps old surveys considered short-term disability insurance equivalent to a paid maternity leave policy so companies said yes. Perhaps the question was open ended and vague? Perhaps the survey asked employers to consider paid parental leave and caregiver leave as one? This ambiguity leaves room for skewed, or at least misinterpreted, data. And as any mom will tell you, a policy that barely covers the cost of diapers (a la disability) isn’t paid maternity leave.

Now, in the context of a tight labor market, it’s unsurprising a few companies concerned about employees being away from the office too long might trim really generous policies. However, this comes back to the same question we ask companies with this concern: “Would you rather your employee be gone 3 to 4 months, or gone permanently?”

We’d love SHRM to release the raw data to help us understand why there was such a substantial change. Critically, the survey didn’t ask if a company cut their paid parental leave policy, just if they offered it. So, the authors of the article inferred that this meant companies were widely cutting these policies, when it’s more likely a change in methodology or the makeup of survey respondents. At the bottom of the article, the Mercer partner surveyed said 73% of companies were looking to add paid parental leave in 2023. That jives with our experience.

With how valuable and desired it is, with the number of companies adding paid parental leave, 2023 will be the year of paid parental leave. So many companies are adding it, we’ll probably see the highest rates of employees jumping ship over paid parental leave. When a competitor offers it, you have to, and that will accelerate companies adding paid parental leave, not cut it.