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President’s Paid Leave Proposal Would Push Costs to States, Produce Stark Disparities

February 10, 2020 at 3:30 PM

While President Trump claims that paid family leave is a “priority,” the paid leave proposal in his 2021 budget would likely prevent many workers — particularly low-income workers — from accessing paid leave when they need it.

As his last three budgets did, his new budget would require states to provide six weeks of paid leave to new parents through their existing state Unemployment Insurance (UI) trust funds. But this proposal shares fundamental flaws with such congressional paid leave proposals that his Administration has supported as the CRADLE Act and the Advancing Support for Working Families Act.

The budget includes few details about the proposal’s design, but it would leave almost all important details to states, including financing, eligibility, benefit levels, and administration. Letting states create their own program standards — as the UI system does — would likely produce stark disparities across states in the size of benefits and scope of coverage. Under UI, workers in poorer states generally receive lower benefits and face more restrictive eligibility rules than workers earning the same wages in more affluent states. Giving states similarly broad flexibility for their paid leave programs would likely produce similar results.

Low benefit levels make it much harder for low-income workers to access paid leave when they need it, evidence from existing state paid leave programs shows. Even when they’re eligible, low-income workers often can’t afford to take paid leave if their benefits would be substantially lower than their regular wages.

The President’s proposal also lacks any federal funding for paid family leave benefits. Aside from federal funding for start-up and administrative costs, states would have to figure out how to pay for paid leave. They’d pay benefits out of their UI trust funds — which often have few resources to spare — and that would require states to maintain larger trust fund balances. Though the proposal seems to assume that states would raise taxes to maintain solvency, anti-tax advocates could pressure them to maintain solvency by cutting unemployment benefits instead. A paid family leave policy should not pit jobless workers and workers taking paid leave against each other.

Unlike existing state paid leave programs — and the federal Family and Medical Leave Act (FMLA), which provides unpaid leave — the proposal would provide paid leave only to parents caring for newborns or newly adopted children. That would leave out workers who need to care for their own serious health issues or those of a family member — including children with serious health conditions and aging parents — groups that comprise three-quarters of workers now taking FMLA leave.

Furthermore, the proposal would provide only six weeks of leave, well short of the 12 weeks in the FMLA, the FAMILY Act (another congressional proposal), several states’ paid leave programs, or the new benefit for federal workers that Trump called "a model for the rest of the country."

The President’s proposal has several features in common with other flawed paid leave proposals. Just as, for example, his proposal doesn’t dedicate new federal revenues to pay for it but instead would draw on state UI trust funds, other proposals would require new parents to repay their leave benefits by cutting their Social Security benefits or their Child Tax Credits. And each of these proposals would provide paid leave only to new parents, ignoring the important reasons why many other workers may need time off from work.

We can do better. The nation can and should establish a national paid family and medical leave policy that is responsibly financed, without asking workers to forfeit other important benefits. Federal policymakers should follow the lead of existing state programs and finance a comprehensive, progressive national paid leave policy through a modest payroll tax increase or other new revenue streams.

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