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What Netflix’s new maternity leave policy doesn’t tell us about inequality

Disparities usually show up across firms, not within them.

Netflix HQ, protest site. (AP Photo/Paul Sakuma, File)
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Activists gathered today at Netflix's corporate headquarters in Los Gatos, Calif., to protest a new workforce policy: Granting unlimited paid maternity leave to the relatively well-compensated workers on its digital side, but not the line workers who stuff DVDs into envelopes.

While the new policy was greeted last month with a lot of fanfare and positive press, groups like the Working Families Party and NARAL Pro-Choice America have decried it as an egregious example of technology-driven inequality. As the industry attempts to shake its guy-heavy image by recruiting and retaining women, Netflix announced an incredibly generous benefit for new mothers in hard-to-fill positions -- but left out the blue collar workers who are easier to replace. Tens of thousands of people signed petitions protesting the decision.

The disparity is a nationwide issue. The more you're paid in America, the more likely you are to get paid time off. According to the Bureau of Labor Statistics, only 22 percent of workers in professions whose average wages fall in the bottom tenth of the earnings distribution had access to paid sick days, while 86 percent of workers in the top tenth of earnings enjoyed that benefit. The pattern is similar for paid holidays and vacation. The lesson: Salaries are only one part of the growing disparity in how well American workers fare, especially when it comes to accommodations for raising kids.

"We’re in a time when the dialogue about inequality is growing, and this ties into some of the underlying reasons about how inequality manifests," says Vicki Shabo, vice president at the National Partnership for Women and Families.

But when it comes to attacking the root causes of unequal access to paid leave, however, the Netflix protesters might have picked the wrong bad guy. The real question is whether the economy-wide disparity is being driven by companies that treat members of their labor force differently -- like Netflix -- or by the fact that some companies tend to offer all their employees benefits while others don't. As it turns out, the situation at Netflix is rather rare.

According to a 2012 survey for the Department of Labor, only 17.6 percent of employers offer paid maternity leave to all their employees, while 72.6 percent of employers offer it to none. Netflix-type employers make up just 7.5 percent of the total, offering  it to "some" or "most" of their workers (incidentally, Wal-Mart is one of them; those numbers don't reflect the number of employees at each type of employer).

That squares with what we know about economic inequality generally: Most of it comes from differences in pays between firms, not within them.

Now, some of this may be because not many companies have both a salaried and an hourly workforce, like Netflix. Many have outsourced to contractors their production-oriented functions, like warehouses and shipping, where workers don't have access to paid leave. A few companies are starting to ask that their contractors offer some paid leave as well, like Microsoft, but that's still a pretty uncommon practice.

While many still find it troubling that lower-paid workers get less paid leave than higher-paid ones, the financial calculus is clear. As competition for tech talent has heated up in places like Silicon Valley, generous leave policies have become a recruiting tool for in-demand professionals -- but aren't necessary to find people who can work a production line.

It can also be hard to keep a factory or a fast food restaurant moving when people have large amounts of paid time off to play with, says Bruce Elliott, manager of compensation and benefits for the Society of Human Resource Management.

"Staffing levels need to be maintained in order to meet production quotas," Elliott says. "The reality is, given the type of work that they do, it probably isn’t realistic" to offer unlimited leave to hourly workers.

But there's something else at play, too. While firms might lure new recruits with months of time off, very few end up actually taking advantage of the perk.

"We are so bad at this as a country," says Elliott. "About three quarters of us end up leaving vacation on the table. As a country, we work very very hard, and it seems to be cultural."

So while disparities in paid leave policies are dramatic on paper, the chasm might not be so wide if you were to look at the amount of time off people actually use. The pressure to advance a career by working all the time can be intense in salaried positions at higher rungs on the corporate ladder, rendering those generous leave policies moot.

That's also why the kind of paid leave mandates that don't exist in the United States would make the biggest difference for low-income workers: Not just because they're currently the least likely to have access to leave, but also because hourly employees are more likely to actually use it.