Businesses Must Improve Their Family Policies—For ‘Distressed Babies’ and All Workers


Policymakers across the country are starting to strengthen their support for a range of pro-family policies, including flexible schedules, paid sick days, and paid family leave. The New York State Assembly, for example, voted on Wednesday in favor of paid family leave, offering workers paid time off to care for an infant or ill relatives. If the bill is signed by Gov. Andrew Cuomo, New York will become the fourth state to offer paid family leave, behind California, New Jersey, and Rhode Island.

The state assembly’s vote on paid family leave comes just a week after the New York City Council expanded access to paid sick days. New York City joins San Francisco, Washington, D.C., Portland, Seattle, and Philadelphia as the only cities in the nation with paid sick leave ordinances.

This seeming increase in support for family policy among lawmakers is encouraging, but what about the commitment of the private sector? The past several decades have shown an overall decline in paid leave and similar pro-family policies, and today a mere 11 percent of private sector workers have access to policies like paid leave. All of this reveals that private sector support for family policy is still lacking—even though such policy has been shown to be good for business.

Responding to the New York City Council’s vote to strengthen access to paid sick days, the National Partnership for Women and Families released a statement correctly noting that the vote “to strengthen the city’s already historic paid sick days law is a testament to lawmakers’ strong commitment to workers, families, public health and businesses in the city.

While New York Gov. Andrew Cuomo and New York Mayor Bill de Blasio are expected to sign the respective paid family leave and paid sick day bills, real progress in achieving workplaces that enable work-family balance requires more commitment from employers, including in the blue state of New York.

A recent, stark example of employers’ lack of commitment to pro-family policies occurred several weeks ago, when Tim Armstrong, chairman and CEO of New York City-based AOL, said the following about changes to the employee 401(k) plan during a staff conference call:

We had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general. And those are the things that add up into our benefits cost. So when we had the final decision about what benefits to cut because of the increased healthcare costs, we made the decision, and I made the decision, to basically change the 401(k) plan.

Armstrong’s comments did not concern family leave policy; rather, he was commenting on the need to change his company’s 401(k) benefits to offset two high-cost health-care procedures his employees needed. However, the sentiment Armstrong expressed reflects the tension between the pursuit of profit and employer-supported family policies in general. Armstrong was commenting on the cost of his workers’ health care when they faced serious complications in their pregnancies—and specifically, the fact that these complications encroached on profits. He expressed this frustration even though his workers had actually paid their health-care premiums so that they’d be covered in such an event. He held this view even though his company is profitable, with revenues of $2.3 billion in 2013. Armstrong himself earns more than $12 million per year.

To his credit, following public outrage about his comments, Armstrong restored the company’s previous 401(k) benefits and publicly apologized.

In terms of having a pro-family environment, AOL has been listed as among the 100 best companies for working mothers for offering “lactation rooms, backup dependent care and expansive parenting programs and leaves.” Armstrong’s recent comments notwithstanding, AOL is not generally considered a bad guy. Yet Armstrong’s comments show the perceived dissonance between being a profitable company and being a pro-family workplace, as well as a generally flippant attitude toward employees’ struggles.

One of the employees who Armstrong referred to is the husband of Deanna Fei, who expressed her disapproval of Armstrong’s comments at Slate. “I take issue with how he reduced my daughter to a ‘distressed baby’ who cost the company too much money,” said Fei, whose child was born four months early after emergency surgery. “How he blamed the saving of her life for his decision to scale back employee benefits. How he exposed the most searing experience of our lives, one that my husband and I still struggle to discuss with anyone but each other, for no other purpose than an absurd justification for corporate cost-cutting.”

A basic tenet of modern-day capitalism is that companies should limit or decrease costs as much as possible for the purpose of increasing profit. In line with this basic value, employers have no legal obligation to offer paid leave, health care, 401(k)s, or other benefits except when mandated to do so by policies like New York City’s new bill. Employer-sponsored paid family and medical leave in particular is very rare.

While local and national policies can help change these statistics, advocates believe that greater support from the private sector is critical as well. In fact, private sector resistance to more pro-family policy is bad for both workers and business over the long run.

“Business owners play a key role in confirming that family-friendly workplace policies like paid sick days and paid family and medical leave are win-win for employees and employers,” Vicki Shabo, director of work and family programs at the National Partnership, told RH Reality Check.

“Win-win” is right: Paid leave in particular is a policy that has been shown to have a positive impact for business. For example, California’s paid family leave program was the first in the nation to be enacted in 2002. In addition to improving families’ economic security overall, enabling women to increase their working hours after returning from leave “with a concomitant increase in earnings,” the California paid family leave program has been found to reduce employee turnover and associated costs.

In addition, research from the Journal of the American Medical Association found:

[F]amily leave programs, in general, benefit businesses, and the pay-off for providing leave may exceed the cost of not providing it. In a study based on 2001-2002 data, loss of workforce productivity due to common pain conditions was estimated to cost $61.2 billion annually in the US with 76.6% of those costs attributed to loss of productivity from workers who report to work while in pain.

This research speaks to the importance of paid sick days, so that workers can take care of themselves while they or their families are ill, and then be productive once they return to work.

There are some employers that understand these benefits. Clothing designer and retailer Eileen Fisher is known for its strong family policy, and has also been described as “perennially profitable.” Costco is also known for stronger worker policies, and the Costco CEO’s endorsement of minimum wage hikes last year actually led to an increase in profits. Yahoo! CEO Marissa Mayer doubled her employees’ maternity and paternity leave policies last year. While Yahoo!, like many tech companies, is not profitable, it is performing very well in terms of revenue.

Armstrong ‘s “distressed babies” sentiment is not one that will disappear any time soon, but the business leaders that do understand the benefits of pro-family policies can begin to lead the conversation.

As Shabo said, “By adding their voices to discussions about the need for these policies, business owners clearly demonstrate that the big business lobby’s opposition to common sense measures like these doesn’t reflect the views of all business owners in America, especially those small business owners and corporations that understand that higher wages and supportive workplace policies are good for business.”

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