Netflix now offers a year of paid parental leave to both mothers and fathers (Washington Post). Readers would not forgive me if I didn’t try to explore the economics of this.
Suppose that Jack and Jill are expecting their first baby and are hoping to have a family of four children as well as own their own business. Both are skilled software engineers. They both take jobs at Netflix, earning a combined $300,000 per year. The are just finding their way around the class libraries a month later, without much working code expected of either of them. Jill gives birth to Child #1. Jack and Jill then sell their expensive Silicon Valley house and move to Lake Tahoe, Nevada where they write code for their future startup company while also enjoying skiing and hiking. Child care is cheap up there so they can park the baby any time that they want (or most of the time) for minimal dollars (see the California and Nevada chapters of Real World Divorce, State Background sections, for the statewide averages).
When Child #1 is a year old, they return to work, renting a short-term stay apartment. A month into the job, however, Jill gives birth to Child #2. Back to Lake Tahoe for another year of work on the startup while collecting $300,000 per year. When they go back of course their employer needs to send them to some training programs to brush up their knowledge of the latest Java framework. (Because of course they are all so much better than straight JSP that you need to throw out your framework every year and start with a different one.) A month after they return to Netflix the second time, having done nothing but learn a new framework, Jill gives birth to Child #3, continuing the 13-month spacing. Back to Lake Tahoe for another year. They do this again with Child #4, return to work for two months and then quit to run their own company, whose product is now basically ready (about four years of development effort by two skilled programmers has gone into it). Netflix has paid them for 4.5 years, a total of $1.35 million plus benefits worth another $300,000? Netflix has received nothing in exchange for this cash. Jack and Jill have four healthy children, all of the intellectual capital investment that they needed for their startup, and perhaps $400,000 saved because they were being paid at Silicon Valley rates but spending at rural Nevada rates. Their stock option grants from 4.5 years earlier are now fully vested so, if the asset bubble continued to inflate, they might have another $1 million in stock option value.
Do readers see any reason why this wouldn’t work? I don’t see how Netflix could justify firing either Jack or Jill at any point. What kind of performance expectations could be imposed on workers who show up for just one month at a time? And how would the usual sluggish big company firing process work when people go out on parental leave before the company has time to put their on a performance improvement plan? If the goal of people who work for big Silicon Valley companies is to found or join a startup, why not let Netflix parental leave finance that goal?
- nytimes article on the idealist who established a minimum wage of $70,000 per year at his company (turns out that being an idealist in a world of realists can be challenging)