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Intel's new "bonding" leave for new moms and dads will have a big impact in Oregon, simply because the company has 17,500 employees here. But it isn't likely to lead to others' adopting similar plans -- few organizations have the scale and resources to make it work.
(AP photo)
By George Rede and Mike Rogoway
The Oregonian/OregonLive
It's a perk that's the envy of new parents everywhere.
In addition to helping finance new moms' 13-week maternity leave, Intel made headlines this month when it promised an additional eight weeks of paid "bonding" time for all new parents, mothers and fathers alike.
"The underlying interest was to strengthen families at Intel and also to support our renewed commitment to diversity and inclusion," said Ogden Reid, an Intel vice president and director of the chipmaker's compensation and benefits.
Tech employees are among the most in-demand in Oregon and elsewhere, and Intel said its new program is designed to improve a parental benefits package that had, previously, been "average at best" relative to benefits offered by big tech companies.
"We are competing against the Apples and Microsofts and Googles and Qualcomms," Reid said. Silicon Valley is famous for lavish benefits, from catered meals and free beer to personal concierges that handle daily errands, like picking up dry cleaning.
Intel is unique in Oregon. It's huge, with 107,000 employees worldwide and 17,500 in the state. And it's hugely profitable, recording net income of nearly $12 billion last year.
History and trends in U.S. family leave
The federal
, enacted under President Bill Clinton, guarantees employees
12 weeks of unpaid leave
during any 12-month period to deal with a serious medical condition or to care for a parent, spouse or child.
Roughly one in five employers (
19 percent)
goes beyond the federal requirement and offers paid family leave, according to a 2014 employee benefits survey by the
.
About
12 percent
offer paid maternity and paternity leave, including paid adoption leave, according to the SHRM survey.
The Council of Economic Advisers, in a June 2014 report to the White House, cited a
of employers that found
11 percent
of private-sector workers have access to a formal paid leave policy, including just 4 percent of part-time workers.
California, New Jersey and Rhode Island
are the only states offering paid family leave, according to the
. All three fund their programs through employee-paid payroll taxes that replace a percentage of the worker’s wages and are administered through each state’s disability insurance program.
Washington state
also passed a paid family leave law in 2007, to take effect in 2009, but it has never been implemented for lack of a funding mechanism.
-- George Rede
Benefits packages like the one Intel is proposing are unlikely to migrate beyond a few thriving industries in Oregon, at least not anytime soon.
Smaller businesses say they can't afford the extras, and activists are making statewide paid sick days a higher priority than paid parental leave this legislative session.
Only three states – California, New Jersey and Rhode Island -- have paid family leave programs, and the United States continues to be an outlier, the only industrialized country that does not mandate paid maternity leave – a point President Obama made in his State of the Union address last week.
Against that backdrop, Intel distanced itself from U.S. rivals in announcing it would expand paid leave for new parents.
"Obviously, that got our attention. We'll definitely take a look at it," said Katie Crocker, benefits manager at Oregon Health & Science University, which employs 14,800. "It's really exciting to see leaves get more attention."
OHSU employees can subscribe to short-term disability insurance, which they can use to finance maternity leave.
That is similar to what Intel had already offered: the equivalent of a full salary during maternity leave to employees who spend up to $60 a month on short-term disability coverage. (The chipmaker is retaining that program as it adds the new bonding leave.)
Additionally, OHSU allows employees to carry over vacation time from year to year, so they can bank it for parental leave.
More comprehensive programs could get expensive in a hurry, Crocker said. Overall, Oregon's workforce is split just about evenly between men and women. At Intel, fewer than a third of its employees are female.
But two-thirds of OHSU's employees are women, and Crocker said a high proportion of those are of childbearing age and could therefore be eligible for expanded leave.
"A policy like that is going to hit us a little bit harder than at a place like Intel," she Crocker said. "Health care just seems to attract more females."
Highly profitable industries tend to compete more ardently for workers, which is a factor when it comes to a willingness to increase the cost of benefits.
Nike, like Intel and OHSU, finances maternity leave through short-term disability benefits. And it offers paid, five-week sabbaticals for employees once they've been with the company for 10 years.
Startups compete fervently for workers, too, but say they don't have the resources to match what Intel offers. Still, some – like Portland-based Puppet Labs -- help finance maternity leave through short-term disability programs.
Intel's scale does give it more flexibility, according to Reid, the benefits director.
"We're used to managing a lot of transition and movement of people," Reid said.
Since 1981, Intel has had a sabbatical program that permits employees to take eight paid weeks off after seven years. Recently, it amended that program to give workers the option of taking four weeks off after four years, with an eye toward making it more useful to new parents.
"Babies and families don't necessarily correspond to a seven-year clock," he said.
Intel obviously gives up some productivity when new parents are gone, but Reid said the company concluded it wouldn't lose much by paying for additional leave. The longer new parents can spend with their kids, he said, the better they feel about their jobs when they return.
"When they come back they're really comfortable and raring to go," Reid said.
**
Andrea Paluso, executive director of Family Forward Oregon, a Portland nonprofit that advocates for workplace flexibility and other policies to support working families, said she was thrilled by Intel's announcement. Similarly, she praised Laughing Planet Cafe's decision, announced Wednesday, to provide 12 weeks of paid parental leave for employees at its 14 stores in Oregon and Nevada.
"It's always great to see employers recognize the benefit of paid family leave for both female and male employees and to the bottom line," she said. But Intel's action won't be an immediate game-changer in making paid family leave a universal benefit.
"There are only a couple of states where all workers have access to some form of paid family leave and that's the direction we need to go," she said.
Oregon is among 11 states, along with the District of Columbia, that have family leave laws that go beyond the 12 weeks of unpaid leave required by the federal Family and Medical Leave Act, either by expanding the amount of leave available leave or the eligibility criteria. The Oregon law covers workers at companies with 25 or more employees, compared to the federal threshold of 50 or more.
In California, the first state to offer paid leave in 2004, a new mother can get up to 6 weeks of recovery time after giving birth, plus 6 weeks of additional family leave for a total of 12 weeks of paid parenting leave. While on leave, the employee receives 55 percent of usual pay, up to $1,075 per week in 2014.
In New Jersey, an employee receives as much as two-thirds of wages, up to $524 a week, for six weeks. Rhode Island's program, begun last year, provides about 60 percent of wages, up to $752 a week for four weeks.
All three states levy a payroll tax on employees and administer claims and benefits through their state disability-insurance program. The funding mechanism used by all three states is similar to what is found in most other countries, Paluso said, and could be a model for Oregon.
In his State of the Union address last week, President Obama said a proposed $50 million fund in the U.S. Department of Labor's budget would provide grants to help cover start-up costs for states to adopt their own programs.
However, there are no plans by Fair Shot for All, a new coalition seeking to raise the minimum wage and improve workplace benefits, to introduce a paid family leave bill this legislative session, Paluso said.
"Right now we are focusing on ensuring that all workers in Oregon have access to up to seven paid sick days a year to care for themselves or their kids or other family members when they're sick," she said.
Given that more than 40 percent of private sector workers still don't have a single day of paid sick time, it's hard to have a conversation about paid parental leave, she said.
***
Although Oregon employers are unlikely to immediately follow Intel's lead, there's reason to believe more generous family leave benefits are on the horizon, said Rich Meneghello, a Portland labor lawyer who counsels employers.
Rich Meneghello
"The landscape nationally and in Oregon is pushing toward a more generous family-friendly and employee-friendly workplace," he said. "There's a trend of employees expecting more, and I think the trend will continue as some of these more progressive programs are pushed."
"You might see this being the new normal 10 years from now," he added. "Whether it's ultimately sustainable remains to be seen. Resources will have to be shifted around if employers are paying more for benefits."
As millennials comprise a larger percentage of the workforce, they may be willing to give ground on certain benefits they care less about – parking or health insurance, for instance – in order to receive parental leave, child care subsidies or more paid time off with fewer restrictions, he said.
"I think we're seeing a shift to workers wanting to control their own destiny," Meneghello said. "They see the value of work-life balance as more important than higher salaries or a large bonus or perks at the workplace. I think we're heading toward
(an a la carte) selection of benefits."
-- George Rede and Mike Rogoway
grede@oregonian.com
503-294-4004
@georgerede
503-294-7699; @rogoway