Full-Time Workers At CVS Will Get Paid Leave, But Is It Due To Tax Cuts?

Today, CVS announced it would start offering a parental leave program to full-time employees, as well as increasing pay to $11 an hour for hourly workers starting April 1. The program offers four fully-paid weeks off for new parents. The drugstore chain is joining a number of large American businesses — from Starbucks to Walmart to Lowe's — that have announced raises or bonuses and an expansion of benefits for their employees in recent weeks.

This trend of companies doling out cash and offering (or expanding) paid leave shares another commonality: Nearly all these large employers have attributed their ability to make these changes to the huge corporate tax break Republicans signed into law last month.

While small businesses haven't yet jumped on the bandwagon, it's worth wondering why it took a windfall from tax cuts for big business to finally give hourly workers a raise and provide paid leave. Of course companies have to weigh the cost of offering benefits very carefully. And while a great benefits package is essential for attracting top talent, until this year most employers reserved the best perks for their salaried corporate employees.

CVS laid out the numbers to explain its decision: The tax cuts will save the company $1.2 billion, part of which is funding the raises and new employee benefits which will cost the company $425 million a year.

It's more likely that it's a perfect storm of several things: The GOP tax bill and its corporate tax cuts have been deeply unpopular with the public, which is why these new benefits were initially seen as short-term PR stunts encouraged by conservative groups. Workers have been asking for higher pay: The Fight for $15 movement has been fighting for living wages, and saw minimum wage hikes in 18 states this year. The pressure to provide paid parental leave has been mounting, both for white collar workers and hourly workers. Instead of having to find money for these benefits out of their current operating budget, companies can just spend the extra money from the tax cuts on something that will be good for the company, their employees, with the bonus of good PR.

The one problem with all the hype is whether it will result in lasting positive changes for American workers and new parents. Many companies — Bank of America, American Airlines, AT&T, Chipotle, and Comcast among them — have opted to provide a $1,000 one-time bonuses instead of raising wages in the longterm. Walmart spent $700 million on employee benefits (citing tax cuts), but spent significantly more on buying back debt. It also announced major layoffs and store closings the same day it announced the new benefits.

The larger concern is the way the tax bill gives big tax breaks to wealthy Americans, sidelining middle class and poor Americans. When it was being debated, experts argued that corporate tax cuts — which fell from 35% to 21% — would not result in more hiring. But so far, higher pay, one time bonuses, and better benefits at some companies seems to be one positive side effect.

While it's great that large U.S. employers are expanding paid leave benefits, it's still no substitute for a national public policy that's truly inclusive. On that front, the news from Republicans haven't been so sunny: Politico recently reported on a proposal from Marco Rubio and Ivanka Trump that would allow parents to withdraw Social Security benefits, money from their retirement, to fund unpaid time following childbirth.