Amid all the praise for Netflix’s announcement earlier this week that it would offer its employees "unlimited" maternity and paternity leave, the Silicon Valley company neglected to mention something: Not all workers are created equal.
Employees in Netflix’s declining, but very profitable, DVD division aren’t covered by the new policy, which permits new parents to take up to 12 months leave at their own discretion, company spokeswoman Anne Marie Squeo confirmed to The Huffington Post late on Wednesday.
Explaining why the company's DVD workers, many of whom are paid hourly, wouldn’t be covered, Squeo would only say that the two sides of the business are run differently. “Streaming and DVD are totally separate parts of our business with different staff, support, etc. We report revenue, net income, etc. separately for each quarterly,” she wrote in an email.
Netflix employs about 2,189 full-time employees, according to its 2014 annual report. The company also has about 261 part-time and temporary workers, primarily on the DVD side -- though supervisors and managers are salaried workers. The report doesn’t break out employees by division.
The benefit split within the company highlights a growing and nagging divide in the U.S. economy -- between hot, in-demand tech workers and managers who get showered with fat salaries and benefits and, well ... other workers who are not so hot.
Most of Netflix’s DVD workers aren’t highly sought-after, high-skilled engineers. They were told on Wednesday that they’d be stuck with their own parental leave policy, according to one DVD-side employee who wished to remain anonymous to protect his job. The employee, who works overnight in one of the Netflix “hubs,” where DVDs are sorted and shipped, said the policy includes one month of fully-paid leave, plus a longer-term leave of absence for partial pay. Netflix declined to confirm these details.
“We just get the raw end of things now since streaming is bigger,” said the DVD worker, adding that he still really likes his job and feels it pays well. He said workers in the DVD division no longer get stock options, either, but salaried employees can take advantage of the company’s legendary unlimited vacation benefit.
“Benefits and compensation in capitalism are like any other commodity. The rarer the skills you bring, the more people offer for those skills,” Ken Matos, a senior researcher at the Families and Work Institute, told HuffPost in an email. “These announcements are as much PR as anything else, and as you can see, tend to leave out important details about who gets what.”
Virgin announced a similarly sweet-sounding paternity leave package earlier this year: one year off for new dads. As with Netflix, the new benefit didn’t cover everyone at the company -- only a small slice of Virgin’s dads.
Some workers are harder to hire and retain than others. With Silicon Valley booming these days, attracting and retaining tech talent is increasingly a challenge. That’s why you see tech companies falling over themselves to offer bigger salaries and better parental leave benefits, at least to a select group of employees.
Just a couple of days after Netflix’s announcement, Microsoft announced it would increase maternity leave benefits for its workers. Meanwhile, at the other end of the spectrum, fast-food, retail and even child care workers are fighting to make $15 an hour -- never mind paid maternity leave.
In its 2014 annual report, Netflix acknowledges that losing certain employees would hurt the company’s business. ”In our industry, there is substantial and continuous competition for highly-skilled business, product development, technical and other personnel.”
The benefit split between workers at Netflix is reminiscent of the one at Amazon, where hourly warehouse workers have sued the company for nickel-and-diming them over break time pay.
Treating workers differently always presents a risk, Scott Dobroski, a career trends analyst at salary site Glassdoor, told Huffpost. "It can signal to the entire workforce, even those privileged, that one employee is perhaps more valued than another." Netflix should take care to message its explanation for the different benefits packages internally, he said.
Revenues and subscribers on the company’s DVD side have been declining for years, easily dwarfed by the huge and growing streaming business, which has 65 million global subscribers. Still, the DVD division, with its 5.3 million subscribers, brought in $765 million in revenue in 2014, with a fat 48 percent profit margin. Those profits fuel the streaming side, which took in $4.7 billion in revenue over the same period, but had a slimmer 16 percent profit margin, because the company spends to grow that side of the business.
The DVD side worker told HuffPost that some of his colleagues are hourly workers, making between $12 and $15 an hour. A manager’s salary can go as high as $90,000 a year and possibly higher, depending on location, he said.
Meanwhile, engineers at Netflix can make as much as $328,000 a year, according to self-reported data on salary website Glassdoor.com.
Federal law requires large employers to offer 12 weeks of unpaid family leave, but paid leave is a perk that’s mostly left to companies to dole out at their discretion. And since the financial crisis, many are now offering less paid leave than before.
Between 2008 and 2014, new fathers' paternity leave benefits actually shrank, as did the amount of paid leave for new mothers (beyond disability benefits), according to a Families and Work Institute report on about 1,000 employers.
Yet there are signs that things are looking up: Over the past year, a slew of companies have announced increases in maternity and paternity leave, including Nestlé, Vodafone, Johnson & Johnson and Blackstone. Even the U.S. Navy did so in May.
Still, as long as the country leaves the benefit up to companies to dole out, many workers will be left out of the party.
Correction: a previous version of this story stated that Netflix's DVD division brought in $7.66 million in revenue. The correct amount is $765 million.