As more people in the workforce enter the “sandwich generation,” caring for their own children and older parents or relatives, access to equitable leave policies is becoming more and more desirable for employees. Despite this, only 9% of the largest U.S. companies currently offer parity of 12 weeks or more of paid parental leave to both caregivers, according to a recent JUST Capital report. In fact, research suggests that the percentage of companies offering paid parental leave has actually decreased in recent years.
One company that has prioritized its leave benefits is Morgan Stanley, which doubled down on parental leave in 2021. After analyzing results of a global employee survey and benchmarking peers, Morgan Stanley increased its parental leave to 16 weeks for all caregivers and four weeks of paid leave to care for a family member with a serious health condition, among other generous policies, such as a $75,000 maximum family building benefit to assist employees with the cost of adoption, surrogacy and fertility treatments. Previously the company offered primary caregivers 16 weeks of parental leave and non-primary caregivers six weeks of parental leave. This step forward to parity is critical to cultivating both gender and racial equity in the workplace.
JUST Capital recently spoke with Dr. David Stark, Morgan Stanley’s Chief Medical Officer and Global Head of Benefits, Analytics, and Technology Strategy, to learn more about how and why Morgan Stanley implemented its enhanced paid parental leave policy, as well as the impact on its workforce and company as a whole.
You increased your paid parental leave to 16 weeks for all caregivers – what prompted you to make this level of investment?
We made this change back in 2021. So, recall that the pandemic led to the caregiving crisis. We were seeing people leaving the workforce to take care of their kids or their parents or others in the home. This is on top of, you know, the “sandwich generation” being an issue, and I’m a part of that myself. We know that women were disproportionately being taken out of the workforce to shoulder those [caregiving] burdens. We were recognizing all of that. Additionally, in 2021, we did a global employee benefits survey, which was a really detailed and eye-opening survey. Overall, the vast majority of our employees were very happy with their benefits, but paid parental leave and family support were areas that were highlighted as opportunities for improvement. In fact, paid parental leave was the top driver that could promote increased satisfaction relative to other potential design changes we were considering.
The pandemic, the external environment, and our own surveying led us to benchmark our family support benefits against our peers, and then decide to prioritize the [family support] space for focus. What we learned is that our paid parental leave benefit had fallen behind our peers.
What did the progression of planning and rolling out of this benefit look like?
Using all of the [survey and benchmark insights], we developed a multi-year roadmap to enhance our family benefits – not just parental leave, but other support benefits. We addressed paid parental leave first. We thought that was where we could have the most significant impact.
We also looked for some quick wins that we could achieve relatively easily. For example, we put in place NICU and stillbirth leaves, and we eliminated a one year of service term requirement. We did that immediately while we took a little bit more time to redesign and socialize the more extensive expansion of parental leave enhancement. We also enhanced our family building benefit. We already had a pretty generous fertility benefit ($30,000 lifetime benefit) to support fertility regardless of infertility diagnosis, but we wanted to make that benefit more holistic. We expanded the benefit to provide a $75,000 lifetime maximum to support family-building across adoption, surrogacy, and fertility.
We expanded our paid parental leave to provide 16 weeks across the board for all parents, regardless of primary/non-primary [parent] and gender. In the U.S., we provide an additional six to eight weeks of disability leave for birth parents, resulting in a total of 22 to 24 weeks of parental leave.
How did you build the case for that level of support? What hurdles did you need to overcome?
Management was generally supportive of the change. It was obviously important to socialize the change within each of our business units, since the extended duration would have distinct and nuanced impacts on their respective organizations, resulting in the need to backfill roles and potentially impacting performance measures. This was actually happening amid a broader backdrop of the “great reshuffling” or the “great resignation.” James Gorman, our CEO, made a call to his operating committee at an off-site meeting that he felt strongly that we needed to renew the social contract with our workforce. That [prioritization] led to a very holistic look across the benefits space.
The general environment was very supportive of making these changes. It was viewed as an investment in maternal and infant health, long-term retention, and productivity upon returning to work. Those [investments] were weighed very favorably against the obvious, but relatively small, short-term issue of needing to backfill [roles held by employees on leave].
How do you respond to executives who say, paid parental leave is nice, but we can’t expand benefits in this economy?
Enhancing parental leave has low direct costs. It has a significant impact in terms of improving productivity, retention, and employee morale. Anecdotally, the feedback that we get from employees who’ve had the time to bond with their child, recover from giving birth, and support their partner in recovering from giving birth, is that [access to paid time] buys loyalty. And that’s almost immeasurable relative to the cost. It’s part of long-term thinking.
Oftentimes, frontline workers are not offered the same benefits as their corporate peers. How are you supporting not only corporate employees, but hourly employees or contract employees when it comes to parental leave?
Employees who work 20 hours or more, whether they’re hourly workers or salaried, are eligible for a full suite of benefits, and that includes paid parental leave.
As a global business, how do you approach benefits across different countries and territories?
That’s the fun part. Increasingly, through the pandemic and beyond, we have felt the need to provide more consistency globally across the board. We’ve actually worked very hard to first understand: What are the policies in the 40 countries where we operate? What’s the regulatory environment across all of our markets? What are local practices? And then we worked to establish, in this case, a global minimum standard to ensure consistency. That led to the 16 weeks [of paid parental leave] as a floor for all employees, and in certain markets, where regulations or local practices allow for more leave, we do that.
As a more general matter, delivering healthcare and other benefits globally is fascinating and challenging. The United States is probably the only country where employers are the principal providers or purchasers of healthcare on behalf of their employees. In most other countries, employees top up their national healthcare benefits with employer-sponsored plans. There’s obviously a lot of unevenness to navigate. We don’t strive to be equal across the board, we strive to be equitable across the board.
What benefits have you seen in your workforce in terms of recruitment, retention, wellbeing, productivity?
We are a year in, so, perhaps a little bit early for a formal evaluation, but we are quite rigorous about how we collect data to evaluate our programs and our offerings. On utilization, what we’re seeing is all parents are taking more time off for leave. One obvious question that could come up whenever an employer changes a policy or expands a leave is: are our employees actually taking advantage of it? I’m proud that our employees are. Birth parents are taking off, on average, five more weeks (+30%, from 16 to 21 weeks); non-birth parents are taking off four more weeks (+70%, from 6 weeks to 10 weeks). Additionally, non-birth parents are now deciding to take leave, whereas in the past so-called non primary parents (traditionally, the dads) might not be taking leave. Now, adjusting for headcount changes, we’re seeing about 15% more non-birth parents opting to take leave, which is great. Another component of the leave that we introduced was flexible leave, so you can take leave in up to three chunks over the year and can even start your leave before childbirth as well. My husband and I had our third kid in January, so I took off five weeks initially and I’ll take off two other chunks. That is what worked best for my family and my work. Of the non-birth parents who are taking parental leave, about 20% of them are opting to take advantage of our “flexible” leave policy, which allows parents to split their leave in up to three separate intervals.
What advice would you give an executive who wants to lead on this issue in their own company? What should they do first? What’s something to avoid doing?
We have quite a rigorous approach, and I’m very proud of how we developed our strategy around benefits design. I mentioned the dedicated benefits survey that we did back in 2021 – that was a global survey and which 35% of our entire workforce participated in – and it was quite extensive. In addition to that, we have our annual engagement survey where we ask about whether employees feel they have the resources they need to support their health and well-being. We also hold managers accountable. In their upward feedback of their managers, employees are asked whether their manager supports their health and well-being.
We also have a Global Wellbeing Board that we developed in the last two years, comprised of 16 senior leaders across the firm, like CEOs of business divisions. The responsibility of this board is senior accountability and ownership over our health and well-being strategy. I felt that this was important, because although HR/HR benefits traditionally has the role of developing and rolling out new programs and resources, health and well-being is a business imperative. It therefore requires involvement and buy-in from across the business. That’s been an excellent additional source, not just of leadership and visibility, but actually providing input into our strategy.
Complementing that top-down structure, we have a bottom up-structure: our Global Wellbeing Influencer Network that we also launched in the last year. This is essentially a grassroots network of employees, who have already demonstrated commitment and interest in supporting well-being issues. We’re giving them resources: awareness, programming resources, access to our programs, and a community to network through, so that they can be evangelists for our benefits and provide feedback both to HR and to the Global Wellbeing Board on our benefits. We have a lot of distinct modalities for collective sentiment around benefits.
We also look at hard data utilization, claims data, external benchmarking data, and market research. That all funnels into developing our multi-year strategy. This is a long-winded way of saying that we’re quite rigorous about using data to support the business case that we develop for any change in our benefits. And then ultimately, our job is to manage population health for our 83,000 employees in 40 countries. As a Chief Medical Officer, in addition to being a Global Head of Benefits, when I speak to management about the work that we’re doing, I’m speaking with this lens as a population health leader, not just as a benefits professional. I think that helps advance our case as well.
Given your role, how do you make the connection between increased paid leave and health?
I’m a physician, a pediatric neurologist by training. I have a background in biomedical data science, and biomedical informatics, so I’m serious when I say we were quite rigorous across all of our programs. There’s essentially four types of metrics that I care about: they are utilization, costs or affordability (both for employees and for the firm), employee experience, and then ultimately, health-specific outcomes.
Over time, we can actually do observational studies, where we look at different employee groups, those who have utilized a particular benefit, and those who have not. Then we look at outcomes of interest over time, whether that’s retention, productivity measures, or other performance measures that we have. Sometimes we rely on external measures for this as well. We know supporting mental health is the right thing to do, and so I’ve strongly made the case that we’re not always going to be able to demonstrate with hard metrics and ROI behind what we do. There are certain times where we have to say, “look, we already know this is the right thing to do. The evidence is out there. It’s been proven externally. Let’s not spend time arguing over whether it’s the right thing to do. Let’s agree and deploy internally, and then follow up over time.”
JUST Capital, in collaboration with partners, established the Corporate Care Network to advance the well-being of workers and demonstrate the long-term value of investment in workers. The Network is committed to driving increased access to care benefits, including paid leave and flexible work policies, and highlighting leaders in the space.
If you’re interested in gaining insights into how to improve on the issues that matter most to the American public, and learning how your company can get involved in the Network, please reach out to JUST Capital impact@justcapital.com.
Note: If you’re looking for the 2023 version of this list, click here.
This year, Women’s History Month also coincides with another milestone: the two-year mark of the COVID-19 pandemic. Over that time, the impact of the pandemic on women’s labor participation and career trajectories has been stark. Women have yet to recoup pre-pandemic employment rates, and are seeing declines in workforce participation as of late, while men inch closer to pre-COVID numbers.
Mothers who have worked throughout the pandemic have also experienced stalled growth and lower pay among other negative career impacts. A recent survey from CNBC and Momentive found 29% percent of women with children under 18 say their career has taken a setback in the last 12 months, compared to 18% of their peers with older or no children. The strain working mothers have come under during the pandemic has also prompted the U.S. Equal Opportunity Employment Commission to issue new guidance warning that discrimination against caregivers in the workplace may be unlawful.
The challenges working parents face are exacerbated by the ending of pandemic-era policies like the child tax credit and the lack of a national paid parental leave policy in the U.S. In the absence of federal policy, it is incumbent on corporate America to support working families and a more resilient workforce. Parental leave policies that are gender neutral and allow for an equal amount of paid time off for both caregivers are considered expert-recommended best practice. In addition to helping shift cultural norms to encourage working fathers to take paid leave, such policies can help support child development, women’s participation in the workforce, and family financial well-being, and serve the needs of LGBTQ parents.
Yet, the majority of the largest public U.S. companies don’t disclose that they have a paid parental leave policy. We took a look at disclosures among the 954 companies we analyzed for our 2022 Rankings and found 53% do not disclose and 47% do disclose a paid parental leave policy. In addition, 8% disclose a paid parental leave policy of at least 12 weeks for both primary and secondary caregivers.
Among those that do disclose, only five – HPE, Etsy, Dropbox, Netflix, and Lululemon Athletica – offer six months or more of paid leave for both primary and secondary caregivers. Read on below to explore additional details on their disclosures.
Ranked 2nd in its industry and 75th overall
Computer Services company based in Houston, Texas
A leader in its industry, HPE supports its working parents through its HPE Work That Fits Your Life policy. The policy includes 24 weeks of paid parental leave for both primary and secondary caregivers. The company also offers its employees the option to work part-time for 36 months after the birth or adoption of a child and has launched a return-to-work program to help parents and others who have been out of the workforce for at least one year.
Ranked 7th in its industry and 102nd overall
Retail company based in Brooklyn, New York
A consistent leader on gender equity, Etsy’s paid parental leave policy covers 26 weeks for both primary and secondary caregivers. Etsy’s policy gives employees the flexibility of taking this leave over a two-year period. The company also offers financial assistance with costs associated with adoption or surrogacy.
Ranked 15th in its industry and 246th overall
Software company based in San Francisco, California
Dropbox provides 24 weeks of paid parental leave for its global workforce, an industry-leading policy that applies to all parents whether they are birthing, non-birthing, or adoptive. The policy also offers employees the flexibility to return from leave on a part-time schedule to ease the transition back to work.
Ranked 4th in its industry and 142nd overall
Media company based on Los Gatos, California
Netflix offers the highest amount of paid parental leave of all Russell 1000 companies JUST ranks, at 52 weeks for both primary and secondary caregivers. The company also supports the family journeys of its workforce through its global family forming benefit, which provides fertility, surrogacy, and adoption assistance for employees and their partners regardless of marital status, sexual orientation, or gender.
15th in its industry and 543rd overall
Household goods and apparel company based in Seattle, Washington
Lululemon’s policy covers up to six months of paid parental leave for all levels of its workforce, with total paid time off determined by each employee’s tenure with the company. The policy is also gender neutral, and applies to maternity, paternity, and adoption leave.
Ian Sanders is a JUST Capital Research Intern, focusing on workers and wages.
(Bridget Badore/The Century Foundation)
One of the lingering challenges the pandemic brought to the forefront was the reliance working mothers have on child care policies, and how a lack of sufficient infrastructure can impact the economy. In March, only 57% of American women were working or looking for work, the lowest labor participation since 1988.
It’s been the impetus for a reconsideration of national child care policy on a level not seen in 50 years. On Thursday, the House voted to pass the child care and paid leave sections of the Democrats’ $3.5 trillion spending bill, which include higher wages for caregivers, universal pre-K for children ages 3 and 4, and 12 weeks of paid family and medical leave. To Julie Kashen, Director of Women’s Economic Justice at the progressive think tank the Century Foundation and one of the country’s foremost experts on the topic, this represents a shot at a generational shift in how the United States values caregivers and working parents.
“I really think we are closer to making major change than ever before,” she told JUST Capital this week.
Of course, the policies are part of a bill with support split down party lines, and on the business front, CEOs of America’s largest companies have taken different stances on how such policies should be funded. But aside from the political debate unfolding, we have found general support for the legislation, as well as for companies stepping in where the government isn’t. In our latest survey conducted with the Harris Poll, we found 78% of respondents supported a federal paid leave policy, and that the highest number of respondents (28%) said the federal or state government should play the primary role in providing child care.
In our discussion, Kashen detailed the evolution of the child care debate in America explained why she believes that regardless of partisan battles, it’s in businesses’ favor to support caregiving reform.
The following interview has been edited for length and clarity.
JUST Capital: As someone entrenched in this work, how have you seen the pandemic has change the way that people are talking about child care?
Julie Kashen: I think the pandemic really shone a spotlight on the fact that we have never invested in a care infrastructure that we’ve needed for decades. We’ve built our public policies and workplace policies around the assumption that there is a full-time caregiver at home, and that’s just not the reality, as the majority of parents are working, whether because they have to or they want to. With schools closed and child care programs closed, it became abundantly clear that somebody needs to be there to care for children. And when that’s not a possibility, work will be disrupted. There have been studies over time that have shown that not having reliable, steady child care leads to productivity disruptions for employers, but I think that became even more evident and gave employers more of a stake in this after the pandemic.
JUST: Can you guide me through why it has been so difficult to pass these kinds of policies on a national level even as society has changed so much over the past 50 years?
Kashen: It’s useful to go back a little further, to look at the fact that during WWII, Congress did enact a publicly funded child care policy because the incentive was for women to work at home while men were fighting abroad. They sunset the program when the war ended, and the incentive was women should go home and care for their children and give the jobs back to the men. So, when we wanted it, we were able to do it. And then in the ’70s, there was some very effective cultural messaging around this as an individual family responsibility, not a government responsibility.
What’s unsaid in that is the gender piece, that women should be the ones who are doing it, and the racial piece, that Black women should be working and white women should be at home caring for their children. If you look historically, Black women’s labor force participation, especially for mothers, has always been higher than white women’s. Then you had a lot of pop psychology, like Dr. Benjamin Spock putting out work that said it’s better for moms to be home with their kids, based on a kind of junk science. There was this guilt factor around the way things were supposed to be, and more and more pressure was put on individual families and individual women. The conversation turned away from the idea of government being a way to solve this. Meanwhile, we had kindergarten through 12th grade paid for, and that’s accepted as a public good, but anything before kindergarten was not. You had this dichotomy exist.
In the ’90s, the conversation was caught up in welfare, and if you wanted particularly Black women and low income women to work, you needed to do something about their child care needs. The Child Care and Development Block Grant was formed as part of the TANF, or Temporary Assistance for Needy Families, and it became tied to welfare while there was also a child and dependent care tax credit created that’s much more about serving middle class and wealthy families. So, basically, child care as an overall solution to gender, racial, or economic equity was not really the approach – it was approached as a work support.
Now we’re in this different moment where years of work have gotten people to see that perhaps child care and early education could be a public good. And when the sector collapsed along with so many other sectors during the pandemic, we saw government saying we’re going to come help bail out the airline industry and others, including the child care sector. And now we are able to have this conversation where Congress is considering legislation to guarantee eligible families child care, to put in the significant funds needed for higher quality care, which includes higher wages for those who are working in the industry. It’s really a transformative moment where we might be able to see the changes that we’ve needed all along.
JUST: Where does corporate America fit into this? The U.S. Chamber of Commerce and Business Roundtable have both come out in opposition to the spending bill, primarily because it entails a rise in the corporate tax rate. That said, you had leaders of some companies meet with Vice President Harris the other week to speak in support of child care policy, and you had around 300 companies come out in support of keeping paid leave in the budget.
Kashen: I think that as we break it down into the individual policies, we can get more support. We know, for example, that in 2019 the Council for a Strong America published a study that showed the U S was losing $57 billion a year in earnings, productivity, and revenue because of the lack of a child care system. So that has inspired folks, including the U.S. Chamber of Commerce, to really be talking about child care in a new way.
I think the general feeling, and it looks like your polling shows this, is that we are in a place where everybody needs to do their part in some way. Families need to partner with their employers and with the government to come together to solve these challenges. The pandemic reminded us of how interconnected we all are. And so even though we may fight about some of the details, I think that overall there’s support for these particular policies and there’s an understanding that it’s good for children and families, it’s good for racial and gender equity, and it happens to also be good for businesses and the economy. It’s rare for there to be these policies that really can be such a win for all.
JUST: You’re still hopeful that eventually something will pass.
Kashen: Yeah.
JUST: And what if it doesn’t?
Kashen: I’m not willing to go there! But look, December marks the 50th anniversary of the veto of the biggest opportunity that we had last time. Now is our chance.
JUST: In terms of looking at the actual child care infrastructure in the U.S., do you think it needs a complete overhaul, or is there a way to make more incremental changes to have it work better for families?
Kashen: We have a system in place that is a federal-state partnership where the federal government sets the parameters of the policy and then the states implement it. What we’re talking about doing is changing it so that instead of having limited funds leading to states having to resort to waiting lists and not serving all the children eligible, there will be the funding available to do it all better. And that means guaranteeing that every family that’s eligible gets the assistance because the money will be there for the providers of care through this program, getting fully reimbursed for the true cost of care. And so we’re building on what exists already, but we’re transforming it into something that is really going to serve millions of children and families around the country in much more meaningful ways.
JUST: And how do you see the, the role of center based care from the larger companies, like Bright Horizons and KinderCare, which work with many of the country’s largest corporations?
Kashen: We need all different forms of child care, but we need to be able to give parents maximum choice of what kind of care they’re using. Employers that have been able to do backup care and care onsite, I think that’s amazing, and we certainly want to see that type of thing continue. It’s not the solution for everyone, though. There are too many people left out if you rely only on that, but marrying what employers are already doing with this robust system of diverse options will be really powerful.
JUST: If you were to sit down with one of the CEOs considering these policies right now, what would your appeal be to them?
Kashen: Human capital is one of the most important parts of a company. Making sure that the people who work for you are able to care for their families makes them more productive, better employees, and it’s better for the overall business. And so investing public dollars in child care really helps create a more productive workforce and it can help with recruitment and retention among people who aren’t working or aren’t working as many hours as they could right now. And then think about your personal story – who cared for you when you were growing up and who cares for your children, and how might that relate to the people who work for you, and what they might need that’s the same or different than what you have or had?
JUST: Do you believe that it’s necessary for them to use their lobbying power to push for this legislation right now? Companies can tend to say they take care of their own employees and find that to be sufficient.
Kashen: I think that they do because I think there’s a lot of turnover today. You may end up missing out on some great future employees if we’re not collectively investing. And our GDP is influenced by this. If you can increase women’s labor force participation, you can increase the wages of child care workers – these things will directly impact our overall economic well-being. You can increase the consumer purchasing power of women. It does have ripple effects. It’s not just on individual companies.
