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DEAN'S LIST - 3/16/2008
(by Dean Naddeo - OpEd Columnist - March 16, 2008)
Beneath the surface of paid family leave
Last week, Democrats flexed their political muscle and approved legislation that mandates family leave benefits for workers caring for sick family members, and newborn or newly adopted children.
The family leave bill (S786) would allow employees to take up to six weeks off from work, and still be eligible to collect up to 2/3 of their salary to a maximum of $524 per week.
On its surface, the legislation seems to illustrate genuine compassion for working families, many of whom incur great financial hardships when challenged with involuntary unemployment. But underneath the face of good intentions, S786 is laden with significant problems.
First, we need to closely examine the funding of the program. The Office of Legislative Services (OLS) estimates that the costs of the benefits provided by the bill would amount to a $33 dollar annual assessment on employees’ wages, a.k.a. an-other tax on New Jersey’s workers. The inconspicuous problem here is that this figure is based on an estimate of 38,000 total claims to be filed in 2009. The OLS derived their estimate by calculating eligible pregnancy claims in 2005, and analyzing California’s experience with paid family leave. They then extrapolated that 37,200 people would have filed claims in 2005 if the program had been available, including 29,000 pregnancy and adoption claims, 5,000 claims for the care of sick family members, and 3,200 claims by laid off workers.
The funding problem now becomes painfully obvious, as it is clear that the OLS has wildly underestimated the number of workers in this state that will take advantage of this entitlement program.
It is simply illogical to believe that in a state that employs 4 million workers, only 5,000 will file a claim to care for a family member with a serious health condition. As outlined in S786, the definition of “family member” extends to a ‘child, spouse, domestic partner or parent of an individual’. The bill also expands the definition of “serious health condition” to include ‘continuing medical treatment or continuing supervision by a health care provider’. With such broad definitions, common sense will dictate that the number of actual program participants will rise dramatically.
The program also creates another government bureaucracy that will require an estimated $5.2 million dollars in administrative costs in its first year alone. Again, this figure is based on the number of total program participants, which could be exponentially higher. The program also intends to borrow about $25 million from the state’s temporary disability fund for startup costs. The bottom line: Once this program gets going, it’s going to cost us.
Another major drawback is the adverse affect that this bill will have on the perpetually challenged small businesses of our state. Many of these businesses simply cannot function without their key employees for extended periods of time, and finding suitable temporary replacements may not be feasible. The result: Many smaller businesses may simply choose to shut their doors, or move their operations to a more business-friendly state.
To their credit, several mainstream Democrats have openly expressed their concerns with the bill: Senator Ronald Rice (Newark) questioned the economic impact on small businesses in his district, and Senators Nia Gill (Essex County) and Paul Sarlo (Bergen County) were clearly troubled by the timing of the bill in light of the recent economic developments.
In the end, though, the Democrats were able to use their majority to approve the bill, confirming once again that in New Jersey, what the Democrats want, the Democrats get.
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