Paid Family Leave’s Fuzzy Math Doesn’t Add Up

A proposed paid family and medical leave program is a thinly disguised tax on Connecticut’s workforce that would cost nearly $20 million in employee contributions a year.
A study conducted for the Labor Committee projects the state would need to hire a new staff of 120 employees to run an FMLA program the study estimates would cost $13.6 million in startup costs and $18.5 million a year to keep going.
Those are not the only numbers that don’t add up.
The Labor Committee proposal (SB 221) allows employees up to 12 weeks of paid leave every year at full pay to care for their own and a growing list of family members’ illnesses or injuries.
Workers will pay for the leave out of their paychecks, but the committee hasn’t yet said how big of a bite it will be.
With the program allowing employees to potentially take three-month, fully paid leaves, workers and legislators should be worried.
For example, one advocate guessed that the program could be self-sustaining by taking up to 0.5% of an employee’s wages.
But that would put the program under water as soon as it started.
Take, for example, an average worker making $52,000 a year. He or she would contribute about $260 a year to the program (0.5% of wages) yet would be eligible to receive $12,000 in benefits each year.

How many workers’ contributions would it take to fund just that one employee’s leave?
Multiply this by the many thousands who may view this new program as a get-out-of-work-free card.
Of course, businesses also will have to incur the cost of continuing to provide benefits to employees who are absent up to three months each year.
The state will have to hire scores of new employees to administer the program—federal law prohibits adding the enforcement and administration of this new law onto current Labor Department employees.
The bottom line? This paid family and medical leave payroll tax just doesn’t add up.
For more information, contact CBIA’s Eric Gjede (860.244.1931) | @egjede