On January 1st, 2018, New York’s paid family leave plan kicked to life. Empire State workers with a new baby or an ailing parent can take time off to care for their loved one.
Helping workers deal with family matters is an important goal, but this mandate comes at some costs that shouldn’t be ignored: flexibility, fairness, more generous leave policies, and pressure on struggling business.
In 2016, Democratic Governor Andrew Cuomo signed into law the state’s Paid Family Leave bill. The law provides workers with 8 weeks of job-protected, partially-paid time off to bond with a new child, care for a loved one with a serious health condition, or to make arrangements when a family member is called to active military service abroad.
Full-time and part-time private sector workers and some eligible public-sector workers can earn half of their weekly salary up to $652.96 per week. That wage replacement rate rises from 50 percent to 55 percent in 2019 and again in 2020 and 2022. The 8 weeks of leave increases to 12 weeks by 2021.
This new benefit differs from other government-centered leave plans in that it is funded by a payroll tax of 0.13 percent for every worker.
Americans overwhelmingly support time off for workers to take care of their families. Employers have responded. According to Census data, 56 percent of first-time mothers had access to paid leave.
There’s more work to be done to boost access to paid leave, but government-centered plans are not the right solution for a few reasons:
Loss of Choice and Flexibility
Not all employees want or need the same thing in a workplace: 8 weeks of paid leave. Mandates create a one-size-fits-all benefit for all workers which encourages employers to only provide the most basic benefit. In the case of New York, the benefit is entirely paid for by a new tax on workers. Companies may be tempted to weaken their paid leave policies as a result.
For higher skilled workers in a tightening job market, companies will compete for them by offering generous packages, but for lower-skilled workers, they may see their company-provided benefits disappear.
In addition, some workers don’t want time off at all, but actually, want flexibility and choice over their work arrangements such as telecommuting or job sharing. Mandates discourage those voluntary arrangements.
For the women and couples who struggle with infertility, parental leave can be a painful reminder that they are unable to have a child. Even if you don’t have fertility issues, a spouse in the military, or a sick family member, you just may not want to pay for a benefit that you’ll never use.
Last year, a single woman triggered backlash for her desire for “me-ternity” leave, paid time off for those who don’t plan to have kids. People missed her point. Is it fair to create a new benefit that only goes to a certain group of workers?
In the private sector, an employee can negotiate for other desirable benefits, but government mandates are not negotiable.
Government-centered plans – even those paid for by employee taxes – still create new costs for businesses including administrative costs for tracking time off and compensating temporary workers covering for absent employees. Employers pass on increased costs in smaller salaries, fewer job opportunities, and increased prices. Even so, some businesses may struggle to handle the added costs and disruptions.
In New York, this paid-leave mandate is not the only pressure on businesses. The New York Post Editorial Board explains:
Sure, [the state’s new paid-family-leave law] sounds compassionate. But it’s hard to see how it won’t wreak havoc on companies, especially those teetering on the brink.
Combine New York’s insane regulations, high taxes and bans on fracking and new gas pipelines with ever-rising minimum-wage laws and required paid-family leave — and it’s easy to see why upstate job growth continues to lag the nation, as two New York Fed analysts recently pointed out.
Since last year, they noted, “only a handful of jobs” were added throughout the entire upstate region.
With the higher minimum wages and new mandatory paid-family-leave rules, expect even fewer jobs in New York.
We want working families to have access to the time off they need, but government-centered mandates like this one in New York is not the panacea that advocates think it will be.
Want to know more about the right solutions to paid leave? Click here.