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Economic Recovery Package Includes Nation’s First Comprehensive Paid Family and Medical Leave Program

The House Ways and Means Committee has released an ambitious plan to address major gaps in the nation’s caregiving infrastructure by creating a permanent, broad-based, comprehensive, and progressive paid family and medical leave program. Committee members are expected to consider the legislation Thursday as part of the recovery package that Congress is developing.

Millions of workers struggle to get by when they need time off work because they have a new baby or have adopted a child, become seriously ill, or are caring for ailing family members. All too often they must choose between meeting those needs and the paycheck that puts food on their family’s table. Low-paid workers, who are least able to accrue substantial savings, are among the least likely to have access to paid family and medical leave, putting their households at particular risk of financial insecurity or inability to take leave when it is needed. The United States is alone among wealthy countries in its lack of a national paid family and medical leave program.

The Ways and Means plan would address this major gap in our caregiving infrastructure, and is consistent with most of the paid leave principles we described for an inclusive and progressive plan. It would cover the vast majority of workers, as long as they have worked recently. Workers could gain eligibility for benefits even if they change employers or move to a different state, as well as from part-time work, non-traditional work arrangements, and self-employment. The plan would offer benefits to workers who welcome a new child to the family, face a serious illness, provide care for an ailing family member, or manage a military deployment.

The program would have a progressive benefit structure, replacing at least two-thirds of recent earnings for most workers and a larger share for lower-paid workers. Ideally the plan would also offer job protection, so that an employer can’t terminate someone who takes leave, but it does not. This is likely due to procedural concerns that job protections may not be permissible under rules for legislation being considered under the budget “reconciliation” process.

The benefits of paid leave are well established. Providing new parents with paid time off to care for newborn or recently adopted children contributes to healthy development, improves maternal health, supports fathers’ involvement in care, and enhances families’ economic security. Paid medical and caregiving leave lets workers care for themselves and their loved ones when ill or injured, and it reduces financial insecurity and stress during those times. Paid leave benefits businesses by improving retention and productivity, and can increase economic growth by boosting labor force participation.

A robust national paid leave program would be especially beneficial to workers of color, who are disproportionately ineligible for current federal, state, and employer-based leave policies, and face more barriers to accessing benefits even when they are eligible. Similarly, paid leave has large benefits for women, who often take on greater caregiving responsibilities for newborns and to care for other family members.

While most workers would be covered by the new federal benefit, the plan includes carve-outs for workers whose states or employers already offer paid leave. Some workers would continue to receive state paid leave benefits, as long as they are at least as generous as the federal standard; the federal government would reimburse states’ costs. Other workers would be covered by their employers, so long as they offer paid leave benefits at least as generous as the federal standard, in addition to job protection and continuity of health insurance coverage; qualifying employers would be reimbursed for most costs.

The Committee has not released a Congressional Budget Office analysis of the proposal’s cost. Ultimately, the paid leave proposal will be wrapped together with other equally important pieces of the Build Back Better legislation, which will be largely offset by revenue increases and health care savings.

Implementation of an ambitious new program can be challenging, and the Ways and Means plan includes many best practices from state paid leave programs. The bill would allow applications to be submitted online, by phone, or on paper; would require the agency administering the program to use existing wage data and allow workers to supplement it when determining eligibility and benefits; would permit advance claims when possible; and would require the agency to make benefit determinations and payments within a month of application.

However, the plan’s ambitious implementation timeline — of less than two years from now — may not allow enough time for a smooth rollout. At the state level, standing up paid leave programs has typically taken at least two years, even when they have been built upon an existing temporary disability insurance infrastructure. Establishing a major new federal program will require hiring and training new staff, establishing processes for determining eligibility and deciding appeals, setting up data-sharing agreements and IT infrastructure, reaching out to workers and employers, and drafting regulations and responding to public comments. Implementation of medical and caregiving leave is particularly complex, because a structure has to be established for evaluating claims related to medical conditions and caregiving needs. Full implementation of the paid leave program may require more than two years.

Policymakers also should consider which agency is best suited to administering the new program. Ways and Means chose the Treasury Department. But implementation could be faster and simpler if the program were instead administered at the Social Security Administration (SSA), which already has much of the necessary infrastructure — including local field offices, a national 800 number, a claims adjudication process, an appeals process, and data on wages and births.

Whichever agency takes on the new paid leave program will need ample funding to ensure smooth implementation. SSA’s operations are underfunded and the agency would also need enough additional funding to improve customer service for its existing programs. Of course, IRS operations are also woefully underfunded, so adding a major new program at Treasury with significant customer service demands would also require substantial new resources.

The Ways and Means paid leave plan would make progressive, comprehensive paid leave benefits available to workers over the long term. Establishing a comprehensive paid leave program would help us build toward an equitable recovery where workers no longer must choose between their paychecks and their health or their families.