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January 15 2015

Bloomberg Businessweek: Can the U.S. Ever Fix Its Messed-Up Maternity Leave System?

Bloomberg Businessweek

By Claire Suddath 

One week into her new job, Letitia Camire learned she was pregnant. It was 2011, and she’d just been hired as the office manager for United Tool & Machine, a small, family-owned tool and die company outside Boston. Her salary was $30,000 a year. Camire clicked with her co-workers immediately. Her boss, the owner and president, started asking her about long-term career goals. “They seemed so family-oriented,” says Camire, now 32. So when her morning sickness became noticeable (“I just sat at my desk looking like death warmed over”), she felt she owed her new work family an explanation. She was only a few weeks along when she walked into the president’s office one morning, shut the door, and told him she was pregnant.

“His face immediately changed,” she says. “The first words out of his mouth were, ‘You know you’re still on your 90-day probation period.’ So I pretty much knew what that meant.” A few weeks later, she was let go. The company told her it was a reorganization move, but she didn’t buy it. She knew that according to the 1978 Pregnancy Discrimination Act, firing or demoting an employee because she’s pregnant is illegal, but she also knew discrimination can be hard to prove. The U.S. Supreme Court recently considered the case of Peggy Young, a United Parcel Service employee who was forced into unpaid leave when she told her company she was pregnant and couldn’t carry packages heavier than 20 pounds. Young has lost in lower courts because UPS’s accommodation of disabilities not caused by workplace injuries is gender-neutral. The court will issue its decision later this year. “I didn’t have the financial resources to fight,” Camire says. United Tool & Machine says Camire was let go because her job was eliminated, and that the president was unaware she was pregnant at the time.

Camire soon found herself in the awkward position of interviewing for jobs while pregnant. She wasn’t showing yet, but she told recruiters anyway. “I just didn’t want to waste anyone’s time,” she says. Luckily, the Israel-based electronics company Orbotech had no qualms about hiring her. Camire was a new employee, though, so she didn’t qualify for the short-term disability insurance that it, like many companies, uses as a workaround to give maternity leave. Instead, she ran through her sick days and vacation time and relied on her husband’s salary to allow her to take nine weeks off, unpaid. “We put a lot of things on credit cards,” she says. They stopped going out to dinner. They streamlined their grocery budget, drove their cars as little as possible, and gave up—for a while, anyway—the idea of saving for retirement. “Financially, I probably should’ve been back even sooner than that,” Camire says. But she couldn’t find a local day care center that would take such a young baby.

 

Her story isn’t unusual. Unless you work for a company that voluntarily offers it, or in one of three states, paid maternity leave doesn’t exist in the U.S. A law called the Family and Medical Leave Act (FMLA) grants up to 12 weeks of unpaid leave every year, but it applies only to full-time workers at companies with 50 or more employees. About half of all working Americans are covered by FMLA. The other half—freelancers, contract workers, entrepreneurs, people who work at small businesses—are on their own. Paid leave is even rarer: Only 12 percent of American workers have access to it in the U.S., according to the Bureau of Labor Statistics.

This comes as a shock to a lot of young women. “Wait, what?” Kathryn, 33, says about the moment she realized the New York media startup she’d recently joined didn’t offer maternity leave. “I thought we had laws about this.” (Kathryn asked to have her last name withheld because of a nondisclosure agreement with her former company.)

Most new mothers are in their 20s or 30s, which means they grew up in a world of female Supreme Court justices, politicians, and astronauts. They have more college degrees than men, they entered the workforce in near-equal numbers, and they chose their careers assuming that having children wouldn’t mean losing money. Almost two-thirds of women with children under 6 work, about twice the rate of the previous generation. “I went to college and found something I loved. I got a job. I married and had babies and just assumed maternity leave was something that existed,” says Annalisa Spencer, 31, an electrical engineer in Salt Lake City who has three children, and got no leave for the third. “Nobody told me it would be like this.”

In 2013, Senator Kirsten Gillibrand (D-N.Y.) introduced legislation that would make employers offer new parents three months of paid leave at 66 percent of their salary, but the bill, the Family Act, has been stalled in Congress for more than a year. Even if it passes, it won’t fix a system that paints a huge segment of the workforce into a corner. In a country where the median household income is $53,000, 66 percent of a salary might not be enough to support a family. But the Family Act would drastically change the lives of many American workers. One of the reasons women make less than men—16¢ per dollar less, according to the Pew Research Center—is that they’re clustered in lower-paying fields, or in positions where they work fewer hours. Yet young women right out of college experience almost no gap at all. The discrepancy grows as they get older and advance—or fail to advance—in their careers. And the first bump in the road seems to happen right as they start to have children.
 
 
According to the United Nations’ International Labour Organization, there are only two countries in the world that don’t have some form of legally protected, partially paid time off for working women who’ve just had a baby: Papua New Guinea and the U.S.

The U.S. is also way behind the 78 countries that also offer leave to fathers. Forcing mothers back to work early can have consequences for children. When they’re on maternity leave, their children are more likely to be breast-fed and taken to the doctor for checkups. Studies have found that a year after having a baby, women who took at least a month of leave reported higher salary increases.

“We have these policies set up from the Mad Men era when dads worked and moms stayed at home. But that doesn’t reflect the American workforce anymore,” says Senator Gillibrand.

With no federal action, some states have stepped in. Five states pay new mothers through their disability insurance programs. In 2004, California passed the country’s first paid parental leave law, open to both mothers and fathers. There, new parents get up to six weeks off at 55 percent of their current paycheck, up to about $1,000 a week. Since then, New Jersey and Rhode Island have followed.

The policies vary widely across industries and pay grades. A BLS survey of “business, management, and finance” workers—basically, those in white-collar jobs—found that 26 percent of them get paid leave. At many Silicon Valley companies, which compete for talent, new parents have it made. Facebook offers a little more than four months to everyone. Google offers five for mothers and three for fathers or new adoptive parents. The company developed its policy a few years ago when it noticed that many new mothers were quitting their jobs. After it added two more months and offering full pay, the number of new mothers who left the company dropped by half.

Some older companies also have generous policies. Goldman Sachs offers four paid months, and General Electric offers two months to moms and two weeks to dads or other parents. Waitresses and sales clerks are often out of luck; only 6 percent of service workers get anything at all. That means the ability to adjust to parenthood, learn to breast-feed, and manage a newborn becomes a luxury only certain people can afford. “We have these policies set up from the Mad Men era when dads worked and moms stayed at home. But that doesn’t reflect the American workforce anymore,” says Gillibrand, who as partner at the Manhattan law firm Boies, Schiller & Flexner wrote the firm’s maternity leave policy in 2002.

Recently, some companies have started to offer leave to fathers. This decreases the likelihood that an employer will shy away from hiring young women, and it de-stigmatizes the idea that new dads need time off, too. In the 10 years since California adopted its policy, the number of requests submitted by men has gone up each year and stands at 26 percent. In general, the amount of time they take off is much shorter, typically no more than a week or two. And as children age, the cost of day care and nannies starts to squeeze families’ income, sometimes prompting one of the parents to go part-time or decide to stay home. Even today, that person is usually the mother.

 

In most places, the only parent offered time off is the mother; she qualifies for short-term disability insurance after she physically gives birth. That’s what Spencer, the electrical engineer in Utah, used when she got six weeks at half pay after she had her first child. (She skipped payments on her 401(k) to take another six unpaid.) By the time her third child came along, she had dropped down to part-time so she wouldn’t have to pay so much for rising day care costs, which meant she didn’t get any maternity leave at all. “I’m hourly now, so it’s not like I’m getting paid for time I’m not working,” she says. She spent her last maternity leave working from home.

Even women in high-income positions have trouble figuring out how the patchwork of policies applies to them. “I have three months of paid leave, 46 days of unused vacation time that I saved up, and then the six weeks that California offers, but I don’t know if it runs concurrently with my vacation time. It was very confusing. For a while I didn’t even know what day my leave officially ended,” Jeanette Barzelay, a civil litigation attorney in San Francisco, told me. Because Barzelay lives in California, she’s covered under the state’s paid-leave law.

Despite the confusing system, Barzelay did take a lot of time off—six months, partially paid. But most people, even in California, aren’t that lucky. Colleen, a fast-talking 44-year-old television director in Los Angeles, didn’t use California’s paid leave when she had her second child in 2008 because it doesn’t include job protection. For years, she has worked 65- to 70-hour weeks with studios such as Walt Disney and Nickelodeon. (Colleen asked to have her last name withheld because she doesn’t want to jeopardize her relationship with the studios.) She’s highly paid, but as with most production workers in Hollywood, her contracts for TV shows run from week to week. Because she’s a contract employee, FMLA doesn’t cover her, and California’s law, which does, doesn’t require studios to let her keep her job. “There’s this kind of unwritten, unspoken thought that you could be replaced at any moment,” she says. So when a TV studio asked her to return to work three weeks after having a C-section, she had to show up. “I told them I needed to recover from major surgery before I go back to running around on set all day. They were like, ‘Umm, we really need you back,’ ” she says. “I wasn’t in a position to argue with them.”

Gillibrand’s bill would apply to every company, no matter what size, and would keep people like Camire from having to rely on credit cards or people like Colleen from working right after a C-section. It includes fathers, adoptive parents, and same-sex parents and would be paid through a new payroll tax of two-tenths of 1 percent. It’s endorsed by groups such as the National Partnership for Women and Families and the Small Business Majority. The U.S. Chamber of Commerce and the National Restaurant Association, which have historically opposed paid leave, haven’t come out against it. Furthermore, polls suggest that paid family leave is overwhelmingly supported by men and women across the political spectrum.

So why is the Family Act at a standstill? Gillibrand says Congress doesn’t think it’s important enough. “The issue isn’t being raised because too many of the members of Congress were never affected by it,” she says, pointing out that 80 percent of Congress is older and male. “They’re not primary caregivers. Most members of Congress are affluent and are able to afford help or able to support their [wives]. It’s not a problem for most of them.” Hillary Clinton has also admitted that while she supports paid leave, it’s a political battle the U.S. isn’t ready to fight. “I don’t think, politically, we could get it [passed] now,” she said in a CNN town hall meeting last June.

Washington won’t be able to ignore this forever. “You’re finally starting to see momentum on this issue,” says Debra Ness, president of the National Partnership for Women and Families. Over the past decade, Ness has noticed that young parents are becoming increasingly angry at the lack of employer support when they start to have children. “This will be part of the conversation during the next election,” she says. “The sleeping giant is waking up.”

 

Before it was passed, California’s law was vehemently opposed by manufacturing and small-business associations, which argued that it would be too hard for companies with just a few employees to handle someone’s six-week absence. The California Chamber of Commerce called it a “job killer.” To get it passed, lawmakers agreed to fund the law by taxing people’s paychecks, not businesses. As a result, a 2011 survey found that 91 percent of California business owners said the law either helped or had no effect on their profitability. The National Bureau of Economic Research found that California women in low-wage jobs were more than three times as likely to take some sort of maternity leave under the law, and returned to their old jobs in higher numbers. Over time their wages were higher, too. “Businesses in California don’t seem to be reporting a strong negative effect. I haven’t seen evidence of a significant downside,” says Christopher Ruhm, a professor of public policy and economics at the University of Virginia.

Gillibrand’s bill is a sweeping piece of legislation that would, as Carrie Lukas, the managing director of the conservative Independent Women’s Forum, puts it, “rewrite employment contracts for every working American.” Lukas is against the act because she’s “worried about the way it’ll change women’s employment prospects. It’s written in gender-neutral language, but every employer in their right mind knows who’s going to take advantage of these benefits.” As hard as it might be for paid-leave advocates to accept, she has a point. That’s exactly what happened in Sweden.
 
In any discussion of parental leave, Sweden is the promised land. Parents are given 16 months of paid leave, two of which are reserved just for fathers, and they can divide the rest however they like until their child is 8 years old. While on leave, the government pays 80 percent of the parent’s income, even if she’s self-employed.

“We’ve got it so good here,” says Christine Demsteader, a single mother living in Stockholm. She runs her own communications company but still took 16 months off when her only child was born a few years ago. “The thing is, we have only one system for doing things: Women take a year off, then they go back to work and the kid goes into day care,” she says. “You don’t have another option.”

“And it’s understood that a woman who becomes a mother cannot have the same career as a man,” adds her friend Lisa Rydberg, who’d run over to Demsteader’s house when she heard that an American journalist was calling.

A year after having a baby, women who took at least a month of leave reported higher salary increases

For all Sweden’s efforts at gender equality, men still make about 35 percent more than women, according to a 2012 Swedish government report. And although the top five spots on the World Economic Forum’s Global Gender Gap index are all held by Nordic countries, their percentage of female chief executive officers is no higher than the 5 percent achieved by Fortune 500 companies in the U.S. “I just know I’d get a promotion three years later than a colleague who is a man,” says Rydberg. “That’s how it is.”

Intentionally or not, Sweden seems to have routed women onto the “mommy track,” a slower, less demanding career path for women with children. In the U.S. it often comes under the guise of the purposefully vague term “caregiver status,” which companies use when offering reduced hours and a lower salary to parents who need flexibility. In academia, universities will often pause the so-called tenure clock for female professors who take time off to have children. Some of these policies can be helpful. But they also have the side effect of segregating those who use them into positions where they’re just not expected to advance.

Most women try to get around this by gaming the system. A biology professor at the University of Pittsburgh planned her pregnancy so that she’d give birth during the summer, when she already had time off. (Unpaid, of course.) Colleen the TV director tried to have her kids between TV seasons; she succeeded two out of three times. Of course, this method assumes a woman gets pregnant only when she wants to, she has a healthy pregnancy and delivery, and her baby doesn’t need special care. “I had this one window when I had to have the baby,” Kate Lytton, a ballet teacher in Akron, told me. Lytton had her daughter in July and took six weeks off unpaid, but could do that only because classes weren’t in session. “When she was a week late, I worried she’d cut into my leave time.”

In fields without a seasonal break, women put off having children until they’re in a senior position, then cross their fingers and hope it’s not too late. “The standard practice for women in law is to make partner first and then start a family,” says Chelsea Petersen, a partner at the law firm Perkins Coie in Seattle. Nine years ago she was 34 and a midlevel associate at the firm, which is exactly the wrong time—professionally—to have kids. “That’s when you’re really working hard, trying to prove yourself. But with my age, I couldn’t wait another seven years,” she says. A year after having her first and only child, Petersen found herself crying in a fetal position on the floor of her office, suffering from exhaustion. “Days would go by where I wouldn’t have eaten a real meal or taken care of myself for five minutes,” she says. Over the years, Perkins Coie has extended its leave policy to cover fathers and created a support group for working parents. Still, Petersen can count at least 10 women in her department who’ve left, many because the demands on their time were too much. As far as she knows, she’s the only one who had a baby, made partner, and stayed full-time.

Not everyone can work as hard as Petersen. Or even wants to. “Listen, I know Sheryl Sandberg wants me to lean in,” Colleen told me. In her book Lean In and her 2010 TED Talk, the Facebook COO urged women to accept promotions or go for new jobs even when they knew they might be pregnant soon. “Well, OK, Sheryl, I think that’s a really great notion,” Colleen says. “But it’s different for us. It just flat out is. There is nothing we can do about it, because biologically it’s like, well, you’re having babies now.”

Luckily, there is some middle ground between the American patchwork and Swedish sabbatical—and the best example of it is Canada. “Unlike the Scandinavian countries, Canada’s tax rate isn’t radically different from the U.S.,” says Ruhm at the University of Virginia, which means any program it has could conceivably be implemented in the U.S. “I’ve become an incrementalist—try something small, see if it’s working, and then tweak it. That’s what Canada does.” Canada passed its first national maternity leave law in 1971 and has been adjusting it ever since. In 2000 it lengthened its available leave from six months to a year. About four months of that is reserved for mothers; the rest is available to all parents. They receive 55 percent of their salary (up to an income limit), paid through the country’s unemployment insurance program, and are guaranteed their jobs when they go back to work.

Gillibrand’s Family Act looks a lot like Canada’s model. And because it has never been debated or amended—the Senate Finance Committee has been quietly ignoring it for more than a year—it hasn’t yet been muddied up with loopholes or concessions. It won’t turn working motherhood into anything resembling “easy.” But it may be the closest thing to a workable solution.
 
 
Nine weeks after Camire had her baby, a daughter she named Catherine, she went back to work at Orbotech. “I was like, thank God I get to talk to someone other than a lump!” she laughs. She stayed at the company for two years, where she oversaw sales and shipping. In 2013 she became pregnant with her second child. This time, Camire qualified for the company’s short-term disability pay, which allowed her six weeks off at two-thirds of her salary. (FMLA provided another six, unpaid.) Then she started thinking about the future. Day care costs for her children would run about $25,000 a year in Boston. When she factored in gas, meals, and other costs, the amount of money she’d be able to provide for her family was laughably small. So three months before she was supposed to go on maternity leave, Camire told her manager she wouldn’t be coming back.

“The company was completely shocked,” she says. Sure, she could’ve taken the leave and then refused to come back afterward, but Camire didn’t want to do that. “I would’ve burned bridges personally and professionally. That sat heavily on me.”

For the next few years, she’ll stay at home. Her son, Charlie, is 7 months old. Catherine is almost 3. Camire’s days are filled with diapers and bottles and nap times that never seem to align. In some ways, raising a child while working was easier, she says. “At day care, I had someone to help me figure out the developmental milestones. They’d send a note saying, y’know, Catherine takes an 8-ounce bottle now instead of 6. With Charlie, I have to figure that out on my own.” She misses Orbotech sometimes and plans to go back to work in a few years once the kids are in school. She just hopes no one minds the long employment gap on her résumé.

 

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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