Carolyn Davis insists she’s a terrible public speaker. “Oh, my goodness, it’s like being on the chopping block!” says Davis, an associate at Walmart’s New Bern, N.C., store. It took hours of practice, encouragement from coworkers, and “determination,” she says, to get her ready to address 15,000 people at the University of Arkansas’s Bud Walton Arena last June.
The occasion was Walmart’s annual investors’ meeting, which traditionally draws a huge crowd to the retailer’s Bentonville, Ark., headquarters. Few in the audience had blue-collar jobs like Davis’s; she spends her workdays tracking inventory and stocking shelves. Still, as a shareholder, Davis, who goes by Cat, had a right to speak. She’s also a mother of two, and she had come to deliver a petition—signed by more than 100,000 associates—to urge Walmart to give workers like her the same family-leave benefits that executives get.
She made the same ask in the arena in a three-minute speech. Full-time associates who became mothers got six- to eight-weeks’ leave at 50% to 60% pay—not much to live on for people whose jobs typically paid $10 to $15 an hour. On the other hand, “Walmart’s female executives receive 10 weeks of paid family leave” at full salary, she explained to the audience in her warm Carolina drawl. “Let’s do the same for our hourly associates—women and men.”
A thousand miles from New Bern, Mary Pat Tifft, a 30-year Walmart veteran in Kenosha, Wis., had similar concerns on her mind. Tifft says the company has strayed from its roots: “They used to be very pro-associate and very pro-family, and they’ve totally gotten away from that.” Paid leave wasn’t the only problem. Store managers used to schedule around the needs of families, she says. Then scheduling became automated and “customer first”—making it difficult for new parents to control when they would be home with their kids.
In protest, Tifft last December filed a shareholder resolution calling on Walmart to evaluate the risks inherent in providing unequal paid leave. The mother and grandmother admits she isn’t fluent in lawyer-speak—“It’s a lot of legal mumbo jumbo,” Tifft says of her own filing, which labor activists coached her on—but she understands that shareholder protests get attention when employee complaints might not.
In January, Walmart triumphantly and unexpectedly announced a new parental-leave policy: 10 paid weeks for all full-time birth mothers, and six weeks at full pay for other new parents. Seemingly overnight, Walmart—America’s largest private employer, with 1.5 million U.S. associates—became the vanguard for family leave for blue-collar workers. “The timing was a little bit uncanny,” says Tifft, dryly. And other service-economy giants quickly fell in line: In the first few months of 2018, Starbucks, Lowe’s, CVS, TJX, Dollar General, Chipotle, and Gap Inc. all bolstered paid-leave policies for hourly employees.
For these workers and their advocates, these changes were monumental—extending to hourly-wage earners a benefit associated with the economic elite. Between them, the companies involved employ about 2.8 million people. And unlike the male-dominated tech companies that made a splash in Silicon Valley’s recent paid-leave arms race, their rank-and-file workers are predominantly female—Walmart’s workforce, for example, is 55% women. That matters because women still shoulder most child-rearing and caregiving duties in the U.S., making the lack of paid leave an impediment to their financial security and careers—and a major contributor to the gender pay gap.
An important swath of corporate America has reached a tipping point on family leave seemingly overnight. But beneath the veneer of press releases is a years-long, dedicated effort—led by investors, coordinated by activists, and implemented by employees themselves. One of that campaign’s major catalysts is Paid Leave for the United States (PL+US), a two-year-old nonprofit that uses grass-roots tactics and savvy collaboration with shareholders to help workers win better benefits. Over the past year, PL+US has been organizing hourly workers at retailers including Walmart, Starbucks, Target, and Walgreens—as well as advising white-collar employees at companies ranging from Lyft to JPMorgan Chase. Says PL+US founder and executive director Katie Bethell (No. 17 on this year’s World’s Greatest Leaders list): “We are organizing a cubicle army.”
The change at Walmart, a retail bellwether, is the kind of victory this army craves. Since March 2017, PL+US had been working with OUR Walmart, a program of the Organization United for Respect—a nonprofit that coordinates employee activism at the company. It was OUR Walmart that coached Cat Davis and Mary Pat Tifft, and PL+US that connected Tifft with investors who helped her draw up her shareholder resolution. Eddie Iny, OUR Walmart’s campaigns director, says the combination of PL+US’s expertise with employee activism was “the total package” that pushed family leave forward on the company’s agenda.
Other factors are motivating these benefit changes, of course, from a tight labor market to the windfall created by recent tax cuts. Executives at the companies generally downplay or dismiss the influence of employee activism in their decision-making. Jackie Telfair, Walmart’s senior vice president in charge of employee benefits, says the company had been looking at the paid-leave issue “for a long time but hadn’t been able to fully commit until tax reform allowed us to make investments.” Tifft’s proposal, she says, influenced management “no more than hearing from other associates.” But activists like Bethell believe their work has been crucial, channeling workers’ frustrations to nudge employers to act faster. And there’s frustration to harness on every rung of the economic ladder: When it comes to meager family leave, Bethell says, “I have yet to meet a person who’s given birth who’s not pissed off.”
The U.S. is the only industrialized country without a paid-leave policy at the national level. The federal Family and Medical Leave Act, passed 25 years ago, provides for only 12 weeks of unpaid leave (and only for employees at larger companies with longer tenure). There are family-leave laws in force in four states—a fifth, Washington, will have one in January 2019—and a handful of cities, but as of March 2017 only 13% of private-sector workers could get paid time off through their employers, according to the Bureau of Labor Statistics.
Not having paid leave “fundamentally harms women’s economic potential,” Sen. Kirsten Gillibrand (D-N.Y.) tells Fortune. Gillibrand is cosponsor of the FAMILY Act, a bill that would establish federally mandated paid leave. “Every time she has a family event, a woman has the decision to make: whether to quit her job.” But while the push for a legislative solution is moving slowly at best, family-leave advocates see encouraging signs on the corporate front. The experiences of companies with more generous policies suggest that the advantages might outweigh the associated expenses. A 2017 study by consulting firm BCG, for example, found evidence that paid-leave policies were helping companies boost employee retention, reduce turnover costs, and diversify their leadership.
Economic factors are also swinging in employees’ favor. When Walmart broadened its family-leave policies, CEO Doug McMillon cited the recently passed corporate tax cut as their primary driver. But Walmart also faces pressure from both historically low unemployment and changing human resources needs, says Craig Rowley, a senior client partner at HR consultancy Korn Ferry who specializes in retail. As jobs, thanks to automation, become less about stocking shelves and more about high-touch customer service, Walmart needs associates that it can train and retain. Turnover of those skilled employees is becoming a greater concern—hence the better benefits. (The company also recently raised its minimum starting wage to $11 per hour, from $9.)
Still, it’s striking that a company famous for its low-cost modus operandi was the first in its cohort to introduce a gold-plated leave benefit. And that’s where PL+US’s fingerprints are visible. If employees are the troops in Katie Bethell’s “cubicle army,” PL+US is the general: arming, strategizing, and boosting morale. When it partners with employee groups, it helps them identify workers who are willing to speak up and provides them with research, toolkits, template policy proposals, and coaching on how to approach management.
Influencing the benefits policy at Walmart was about playing a longer game, says Bethell. One of her goals is to change public perception about what constitutes comprehensive family leave. “When I started PL+US, I was looking at lists of best places to work for moms—and they were providing six weeks of paid leave,” Bethell recalls. In the European Union, 14 weeks is the bare minimum; most countries mandate more. “I was like, ‘We are never going to win if the expectations are so, so low.’ ” That made it particularly sweet when Walmart birth moms won a 10-week benefit.
Bethell, 38, honed her organizing skills at Change.org and MomsRising.org, where she mobilized voters behind paid-leave laws in New Jersey and Washington, D.C., as well as the federal Lilly Ledbetter Fair Pay Act, which prohibits gender-based wage discrimination. “She has the characteristic that’s shared by great entrepreneurs, which is that she has this radical vision of how the world can be different,” says Swati Mylavarapu, founder of investment fund Incite Ventures and a PL+US board member. Bethell’s current “radical vision”? Paid family leave for all working Americans.
PL+US has a valuable ally in pursuit of that goal: a group of activist investment funds with nearly $7 billion under management collectively, led by Zevin Asset Management, a Boston-based fund whose founder is known for leading campaigns for divestment from apartheid-era South Africa. This summer, the Zevin group launched a campaign to persuade four major employers to change their family-leave policies: Yum Brands, CVS, Starbucks, and Walmart. The last two were especially strategic choices, designed to pressure other employers to follow suit, says Pat Miguel Tomaino, Zevin’s director of socially responsible investing. Walmart provided a floor (“No one wants to be below Walmart,” Tomaino says), and Starbucks was an aspirational ceiling—a company whose reputation for generous benefits would push rivals to match it.
Even people who have never met Niko Walker know him as “Niko from Starbucks.” He was a barista in Los Angeles (he has since quit to go to school) and a vocal public advocate for the company, which supported him through and helped pay for his gender transition. That’s why Walker was particularly surprised to learn last year that, if he were to have children, he would get no paid parental leave. At the time, birth and adoptive mothers at Starbucks stores received six weeks of fully paid leave—but fathers were left out.
What happened next is a case study in PL+US’s multipronged approach. In June, the group published Left Out, a report that called out companies, including Starbucks, for having inequitable leave policies; publications like the Washington Post and Slate ran with the story. The nonprofit also reached out to Starbucks employees; later in the summer, PL+US flew Walker and other workers to Starbucks’ Seattle headquarters to talk about family leave with executives. The new wrinkle came in September—when the Zevin investor group filed what it says is the first-ever shareholder proposal related to paid leave.
The SEC prohibits bringing up “ordinary business” in a shareholder proposal, and simply insisting that a company provide certain benefits would stray into that territory. So the Zevin resolution requested that the coffee giant “evaluate the risk of employment discrimination that may result from Starbucks’ approach to paid family leave.” The investors argued that Starbucks’ policy could be construed as discriminatory to male and LGBTQ workers, exposing the company to lawsuits, harming the brand, and hurting shareholders. The concerns Zevin raised aren’t unwarranted: In the past year alone, JPMorgan Chase and Estée Lauder have been embroiled in legal battles over whether their paltry paternity-leave policies are discriminatory.
The Zevin group had little leverage: They owned only a tiny fraction of the roughly $80 billion worth of Starbucks shares outstanding. But Eleanor Bloxham, CEO of the Value Alliance and Corporate Governance Alliance, an organization that helps boards of directors improve corporate practices, points out that resolutions from smaller players can become a major nuisance if they receive media attention. “At that point, it’s not about small investor and large corporation—it’s about public perception.” And PL+US, which by then had put out four widely shared reports about the inadequacy of corporate family-leave policies, had shown it had the power to magnify that perception. (Walmart’s Telfair says she didn’t know what PL+US was a year ago. She does now, thanks to questions from and reporting by the media.)
Starbucks made a move before things escalated. The company announced in January that, going forward, parents of both genders would receive six weeks of paid parental leave. Ron Crawford, Starbucks’ vice president of global benefits, tells Fortune that the new policy had been in the works for over a year before Zevin’s resolution was filed, and he says the proposal had no impact on decision-making. He does say, however, that the changes were the result of “always listening to our partners,” Starbucks lingo for workers—and PL+US, of course, had helped those partners’ voices reach higher up the chain of command.
It’s typical, says Bloxham, the corporate governance expert, for management not to acknowledge activists’ roles in policy changes. But on issues of gender equity, she adds, activist shareholders “have made a huge difference in the way companies operate.” One prominent example: In 2015, Arjuna Capital, a small asset management firm, filed proposals with nine top tech companies, urging them to analyze and publicize their gender pay gaps. Intel was the first to do so; seven others, including Apple, Amazon, Google, and Facebook, quickly followed suit. Arjuna wasn’t credited in press releases, but activists felt the timing was hardly coincidental. The bigger takeaway, says Arjuna managing partner Natasha Lamb: Once one firm adopts an employee-friendly standard, “investors are more likely to see it as a competition issue,” and the dominoes start to fall.
Advocates see the Walmart and Starbucks actions as the beginning of an even bigger domino effect in family-leave benefits—regardless of who gets credit for pushing over the first tiles. Zevin is currently coordinating an investor statement urging laggards to update their policies. The statement, which will go public in May, had the signature of 17 investment firms with combined assets of over $130 billion as of mid-April. Simultaneously, PL+US will launch “America’s Favorite Brands,” a campaign calling out companies whose paid-leave policies are worse than Walmart’s. PL+US’s Bethell expects the rabble-rousing to bring more good news. “We have wind at our backs,” she says.