Trump, touting the Republican tax cut law, is taking credit for new worker-friendly policies from some of America’s largest corporations, including one-time bonus payments and paid leaves. Starbucks and Walmart, for example, recently announced they are adding paid leave benefits or expanding long-standing paid leave policies. Of course, with today’s low unemployment rate and tight labor market, many low-paying employers have had to increase wages and benefits in order to get and keep workers. Wages went up 7.1 percent for workers in the bottom quarter of the pay ladder in the last three years. Starbucks noted it had been considering improving paternity benefits for some time. Walmart, with 4,752 stores, was likely planning its paid maternity leave well before their recent announcement.
Whatever motivated Starbucks and other companies to introduce new pro-employee benefits, crediting the tax bill certainly scores points with President Trump. The president is counting on these announcements to gin up support for an unpopular tax law that provides massive tax breaks for Starbucks and nearly all other corporations. Starbucks hasn’t announced how large the windfall will be as its tax rate falls from 33 percent in 2017 to 21 percent in 2018. But tax cuts for corporations swamp the benefits received by their workers. For example, the increases in workers’ pay and charitable contributions announced by Wells Fargo amount to just 5 percent of the bank’s total estimated gain from the tax bill. And most large companies are giving nothing to employees.
Taxpayers will foot part of the cost of Starbucks’ and other companies’ new paid leave policies. A provision in the tax law says companies that provide employees earning less than $72,000 a year at least two weeks of paid leave get a credit on their taxes of up to a quarter of that cost. Proponents argue the tax break will encourage small businesses to provide paid leave to employees. But it is mainly big, successful companies like Starbucks who will receive subsidies for something they were already doing or going to do. Because the credit is small and is not paid until the end of the year, it is much less viable for smaller employers.
While many Starbucks and Walmart employees are rightly celebrating the advance in paid leave, unequal access to paid parental leaves is the norm in the U.S., unlike all other modern economies. Workers who need such leaves the most are least likely to have them. Only six percent of employees at the bottom quarter of the pay ladder have access to paid family leave while those in the top quarter are four times as likely to have it. Shockingly, even three-quarters of high-paid workers lack access to paid family leave to bond with a new baby or care for a seriously ill parent or spouse.
Walmart’s recent expansion of paid leave benefits mirrors the two-tiered system of paid leaves at Amazon, Starbucks, Ikea, and Nordstrom. Walmart announced it would offer paid leave benefits of 10 weeks for birth mothers and six weeks for nonbirthing parents. The catch is, the benefit is only for full-time workers. Part-timers get no paid parental leave. And, according to OUR Walmart, about 60 percent of Walmart associates work part-time.
America can do better. Five states and the District of Columbia have already enacted paid family and medical leave programs. Here is how they work: employees (and in some states employers) contribute small amounts of money to create an insurance pool that allows people to draw a significant portion of their wage during family and medical leave. No employer has to pay the full cost of leaves for his or her workers and no worker has to go without pay when a new baby arrives or a medical emergency strikes. These are paving the way for a federal program that can help all families in the U.S.
Eileen Appelbaum is Co-Director of the Center for Economic and Policy Research and co-author of "Unfinished Business: Paid Family Leave in California and the Future of U.S. Work-Family Policy."