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Eric Davis: Family leave bill must share costs

One of the major issues before this year’s Legislature will be establishing a paid family leave program in Vermont. While legislative Democrats and Gov. Scott seem to agree on the principle of family leave, they have fundamental disagreements over whether or not the program should be mandatory.
The purpose of the family leave program is to provide employees with paid time off following the birth or adoption of a child or to care for a family member with a serious illness. Many employers believe in the principle of paid leave to deal with stressful family situations. Such leaves make for more satisfied and more productive employees in the long run.
However, only a very few employers provide paid family leave as an employee benefit. In most cases, employees must decide either to take time off without pay, or to keep working and juggle their family and work responsibilities as best they can.
Last year, the Legislature passed a paid family leave program that would have provided up to 12 weeks of leave for a new child and up to six weeks of leave in cases of illness of a family member. The program would have replaced 70 percent of an employee’s wage, and would have been funded by a payroll tax of 0.141 percent, or about $70 for an employee earning $50,000 annually. Employers with fewer than 10 employees would have been exempt.
Gov. Scott vetoed this legislation, because he argued that many small businesses in the state, that are already struggling to make a profit, could not afford the additional tax needed to fund the program. Last year’s Legislature did not attempt to override the governor’s veto.
A similar bill will likely be passed in the 2019 legislative session, and the governor would likely veto it again. However, with Democrats having a veto-proof majority in both houses, it is possible that a veto could be overridden by the necessary two-thirds majority in the House and Senate. 
Doing so would require the Democratic legislative leadership to hold on to nearly all Democratic members’ votes. This will be a challenge, since the Democratic caucuses in both House and Senate are both very big tents, including a number of moderate Democrats from rural districts who will be attentive to the concerns of small business about the affordability of a paid leave program.
Meanwhile, in order to get his own plan on the table, Gov. Scott announced, with Gov. Chris Sununu of New Hampshire, that Vermont and New Hampshire would set up a voluntary paid family leave program. This program would include a larger number of people than a Vermont-only program. The two governors said they would start the program by making it available to all state employees.
The problem with a voluntary family leave program, however, is that the only people likely to choose to enroll in the program are those who would need it. These would be families expecting a new child within the next few months, or families with a sick or disabled person who needs care from another family member. Because those who sign up would likely use the benefit very soon after enrolling, the premiums would have to be set at a high level in order for the program to break even.
A mandatory program would spread the risk among a much larger number of participants, thereby keeping the cost per participant at a lower level. As noted earlier, the cost for the plan vetoed last year would have been about $70 for someone earning $50,000. The cost for a voluntary program could well be five to 10 times as much, or between $350 and $700 for the same employee. Administrative costs for the voluntary program would also be higher, as there would be a greater churn of members in and out of the plan.
Eric L. Davis is professor emeritus of political science at Middlebury College.

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