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Strategy: Parental leave is so rare in the US that Hobby Lobby's CEO didn't even know if he offered it

Last month, David Green, the CEO of the craft retailer Hobby Lobby, came to Business Insider’s office to promote a book called "Giving it All Away," in which he writes at length about generosity in business and in life.

Green is an evangelical Christian, and Hobby Lobby famously sued the US government so that it would stop paying for four contraceptives that Green believes cause abortions. He won.

When we asked him whether Hobby Lobby offers parental leave, he was stumped. "I don’t think so," Green said. "We offer a lot of things."

It turns out Hobby Lobby does not have a dedicated parental-leave plan. And it's not a surprise. Paid parental leave, already a rarity in the US, is even harder to find in the retail sector.

"It may be typical, but it’s certainly not acceptable when you think about what it is that working people need, and particularly people working retail at relatively low wages," said Vicki Shabo, vice president at the National Partnership for Women and Families, an advocacy organization.

But that’s beginning to change. A few retailers, such as Nordstrom and IKEA, recently announced high-profile parental-leave policies.

President Trump, prodded by his daughter Ivanka, reignited the debate over paid leave by setting aside money in his administration’s budget proposal, but a lot could change as Congress debates priorities. If it succeeds, it would be a big change for the US.

As of last year, just 13% of US workers received at least part of their paychecks for a period after a child is born. Mothers are more likely than fathers to receive paid time off, but that gap is narrowing. In retail, with a workforce that’s often part-time and paid hourly, only 7% of workers have access to paid parental leave.

"You can start to think why this would be if you start thinking of some rules employers could have regarding eligibility," Brian Giffords, research director at the Integrated Benefits Institute, told Business Insider. Many employers offer paid leave only to full-time workers, for instance. Some like Starbucks have tiers, where salaried white-collar workers have policies three times more generous than those offered to baristas.

In the lobby

A Hobby Lobby in Glen Allen, Virginia.play

A Hobby Lobby in Glen Allen, Virginia.

(Business Insider/Hayley Peterson)

At a Hobby Lobby in Glen Allen, Virginia, eight employees are stocking shelves. It’s a no-frills maze of craft supplies and knickknacks.

The store’s front-line workers are almost all women, and they range in age from 20s to near retirement age. One woman, who appeared to be in her 20s or 30s, said she was brand new and had no idea what the parental-leave policy was.

Another said vacation policies, one way to take a little time off after a pregnancy, vary by position and how long they’d worked at Hobby Lobby.

None of the women were willing to give their names, and all employees were quick to refer a reporter to a manager, who said to call customer service.

They also couldn’t recall having a colleague who’d been pregnant while working there.

Retail reproduction

Retail is a low-wage industry under immense pressure from online stores and changing shopping habits. The argument against providing paid leave is that it will cost companies money, encouraging them to close stores or replace as many employees as they can with automation like self-checkout lines.

A Hobby Lobby store.play

A Hobby Lobby store.

(Business Insider/Hayley Peterson)

Michael’s, another craft store, offers no paid leave. Costco wouldn’t say, but doesn’t list the benefit on its website. Walmart says full-time hourly workers get 6-8 weeks of paid maternity leave. The company says the majority of its workforce is full-time.

But for most retail workers, many of whom work part-time, taking time off for a new child is a combination of cobbling together whatever vacation days, sick time, and disability benefits they qualify for. After that, the Family Medical Leave Act provides for up to 12 weeks of unpaid time off without losing their jobs.

Hobby Lobby’s answer to all this is to pay more and close on Sundays, rather than offer more paid time off. It pays one of the highest wages in the industry, at a base rate of $15.70 an hour.

"That goes a long ways," Green, the CEO, said. "When you pay someone twice what you’re having to pay for them, there’s a lot of monies that can be used for a lot of various reasons."

But research shows offering paid maternity leave can have a big effect on the health of a mother and child. Mothers and children are about 10% less likely to die when the mother has time off. Mothers with leave are more likely to breastfeed, reducing illnesses. And they’re shown to bond better with their children. The US is one of only a few nations without a mandatory paid-leave program.

"The other three countries are not countries that the United States is thrilled to be ranked with," Jay Zagorsky, a research scientist at the Ohio State University, told Business Insider. The other countries are Swaziland, Lesotho, and Papua New Guinea.

Zagorsky looked at how paid parental-leave offerings have changed in the US over the past quarter century, and he found that paid time off for fathers is increasing rapidly.

Overall, the number of women on maternity leave has been flat since 1994. In that same period, the number of fathers taking leave averaged about 6,000 men per month. Now it’s about 22,000.

"That’s pretty dramatic," Zagorsky said. "However, we’re basically having about 4 million births each year, so saying that 22,000 men are on paternity leave is not a very big number."

Leave inequality

Yahoo CEO Marissa Mayer took two weeks off after giving birth.play

Yahoo CEO Marissa Mayer took two weeks off after giving birth.

(AP Photo)

Something happened recently. All of a sudden, US businesses and lawmakers are talking a lot about paid leave.

"Honestly, it seems like this issue of paid parental leave came out of nowhere," Giffords said. He and others say a few things started happening around 2014 to bring this issue to the forefront.

Yahoo hired Marissa Meyer as CEO, sparking a conversation about motherhood in business when she took only two weeks off after giving birth. She then doubled the company’s family leave.

And the economy recovered from the Great Recession (the recession that began in December 2007 and became the longest and deepest since the Great Depression of the 1930s). As it neared "full employment," employers — especially in competitive white-collar professions like technology — started one-upping one another with new perks.

"When the labor market is looking the most robust, this is where inequities start popping up in the labor market," Zagorsky said. "The best paid workers, the workers with the best benefits, start getting all sorts of eye-popping things."

Spotify, the music-streaming service based in Sweden, offers new mothers and fathers six full months of paid leave, even in the US.

Companies soon learned they could use generous fringe benefits to get positive press.

"When else do you see routine HR benefits rules showing up in press releases," Giffords said.

A few retailers have joined in. Starting on May 1, the high-end department store Nordstrom started giving new moms up to 12 weeks of paid leave. Spokeswoman Emily Sterken credited "feedback from our employees helped bring us to this new approach."

And at IKEA, US hourly workers now have up to four months paid leave. RaceTrac, a line of convenience stores, even offers eight weeks of paid time off to fathers who’ve worked for the chain at least a year.

Ivanka Trump is said to have influenced the administration's parental-leave proposal.play

Ivanka Trump is said to have influenced the administration's parental-leave proposal.

(Mark Wilson/Getty Images)

But in general, the most generous policies are in finance and technology, highly paid white-collar industries where competition for talent is strong, and women are historically under-represented.

In our interview, when asked whether he would consider offering paid leave for new mothers and fathers, CEO Green said he’d "look into it."

When we followed up, Hobby Lobby spokesman Bob Miller sent this statement: "The Company provides generous paid personal time off and vacation that all eligible employees may use for the birth or adoption of a child."

'Jarring juxtaposition'

President Trump’s budget proposal includes a new entitlement program: six weeks of paid leave, including for fathers and those who adopt. It’s expected to cost about $19 billion over a decade and be paid for by the states, which could increase taxes. It’s unclear if Trump can muster support for the program from congressional Republicans.

A small number of states, including California and New York, mandate some kind of paid leave. But Trump's proposal shows that parental leave is now a top issue.

And while policies are typically down in the weeds of a company’s human-resources department, often at a level most CEOs are not aware, the rise of the issue made Green’s familiarity with contraception but not parental leave more striking.

"It does have kind of a jarring juxtaposition," Giffords said. "Whether or not a company is going to include contraception in its healthcare policy is a reflection of an organization’s values and the values in its leadership."

And he said, for most companies, it’s a very small proportion of workers who take parental time off in a given year.

"This might not be a really expensive proposition," he said.

Additional reporting by Hayley Peterson in Virginia and Mary Hanbury in New York.

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