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Guest editorial: Paid leave is a good idea, but the devil is in the details

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Posted on April 15, 2019 |
By Emerson Lynn



The Vermont House last week passed another iteration of a mandatory statewide paid family leave program on a 92-52 vote. It’s a more modest bill than was first anticipated, testament to the fact that making the numbers work is difficult, politically and practically. The 92 votes in favor are still eight shy of the number required to override a veto should Gov. Phil Scott decide to do so.

In the main, the idea of a paid family leave program is a good idea. It’s good for both employees and employers. But, as with any such program, the devil is in the details, and before the Legislature gives its final imprimatur, there are a number of questions that need to be answered.

First, it’s not cheap. The mandatory payroll tax will amount to roughly $76 million, and the tax is assessed against employees, unless employers “volunteer” to cover some or all of each employee’s assessment.

Employees can’t opt out. With a median income in Vermont of $58,000 a year, the tax would mean the median wage employee would see a reduction of $318 annually. That’s not chump change; that’s roughly a week’s worth of groceries for a family of four.

The proposal, as passed by the House, provides 12 weeks of family leave or eight weeks of medical leave. For those making roughly $28,000 a year or less, the tax would provide employees 90 percent of their weekly wages. Those on leave who make more than $28,000 would get 50 percent of the amount they earn above the $28,000 level. The legislation stops paying replacement wages above the $70,000 level, which means the maximum benefit is $1,334 per week, or $16,000.

The good news in the House version is that the governor’s proposal for a third-party administrator was tentatively adopted. Managing a 300,000-person program is not only expensive, but a potential horror show from an IT perspective. [Remember Vermont Health Connect, which had only to deal with 30,000 people?]

Still, there is no clear definition in the legislation as to who a qualified employee is. Can people who work fewer than 40 hours qualify for the benefit? Or seasonal employees? All would be required to pay, but would they qualify for the benefit?

Has the footwork been done to know that there are third party vendors willing to bid on the work? If not, what happens? If the state has to pick up the task, what would that cost and how long would it take to put in place?

Have actuaries done the work necessary to know what percentage of the collected payroll taxes would go out as benefits? That’s important to know from a management perspective, and from taxpayers interested in government efficiency.

It’s also important to know that there are only seven states that have a paid leave program; and the 90 percent wage replacement level is the most generous in the nation. Most of these states struggle with the same issue, which is affordability, which is why it’s important that Vermont get this right.

This is why the governor did the work necessary to devise a voluntary paid leave program by joining with New Hampshire. It was more modest — six weeks of leave at 60 percent wage replacement level. But the costs are controllable, which allows for improvements as circumstances permit.

Given that both sides want a paid leave program, a middle ground should be reachable. But to get there we need to know the specifics. We need to see a comparison between the governor’s proposal ad the one being considered by the Legislature. We need answers to the questions posed.

Emerson Lynn

St. Albans Messenger

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