Newswise — An average worker contribution of $2.31 per week could fund a proposed family and medical leave insurance program that would cover workers for up to 12 weeks when they leave work because of serious illness or to care for a newborn or other dependent, according to a new study from the Labor Resource Center at the University of Massachusetts Boston.
The study "Sharing the Costs, Reaping the Benefits: Paid Family and Medical Leave in Massachusetts" by two UMass Boston economists provides estimates of the significant costs employers and employees bear currently and with a proposed program for family and medical leave. Now, employers provide sick leave and personal days amounting to $372 million annually in replacement wages, while employees forego $1.36 billion in pay when they take leaves. In all, the total wage cost to Massachusetts is currently $1.73 billion a year, according to economists Randy Albelda and Alan Clayton-Matthews.
"What we know is that individual workers and employers now bear the brunt of these costs," said Albelda, a professor of economics. "There are fears the proposal will be costly and in particular would hurt small businesses. But these fears are unfounded. The program's costs are relatively small in light of current expenses, the program is entirely financed by employee contributions, and the program stands to help small businesses the most."
The report comes as Massachusetts legislators prepare are taking testimony about a proposal from State Senate President Robert Travaglini that would make employees who have worked with their employer for 900 hours and nine months eligible to take a paid leave. The program would replace 100 percent of weekly earnings, up to a cap of $750 per week for up to 12 weeks (following a one week waiting period) and provides job protection to workers taking leave. The plan will be financed by worker contributions to a newly established Strong Families Trust Fund. The bill is scheduled to be heard by the committees on Labor and Workforce Development and Children and Families.
Almost every employee, at some point in his or her work life, is likely to experience a temporary extended illness of her or his own, the serious illness of a loved one, or the birth and/or adoption of a child, the authors report. Yet the United States is one of the few countries that do not offer wage-replaced leave for the birth of a child even though labor force participation rates are high, especially among women.
Five states (California, Hawaii, New Jersey, New York, and Rhode Island) and Puerto Rico have mandatory Temporary Disability Insurance (TDI) programs. California is the first state to expand its TDI program to implement paid family leave. Outside of the TDI jurisdictions, there is a voluntary system of paid family and medical leave in the United States, with costs covered through mechanisms such as purchased disability insurance coverage, sick leave, vacation time, parental leave, medical leave or union benefits.
In the United States, two-thirds of workers who take a family and medical leave receive some pay for some period of their leave. The one-third of workers who do not receive any pay on leave are disproportionately low-wage workers " the workers least able to afford such a leave. "Slightly more than half of the current leaves in Massachusetts are for the worker's own health reasons," said Clayton-Mathews, a professor of public policy at the McCormack Graduate School of Policy Studies and the co-editor of Massachusetts Benchmarks, a quarterly economic forecast. "Twenty-two percent of leaves are for parental leave (including maternity disability), and another 23 percent are for tending to an ill relative." The average length of leave for all leaves is 5.4 weeks, he noted.
When the researchers looked at the proposed legislation, they determined:
"¢ The total number of family and medical leaves taken increases by just under 25,400 to a total of 467,962, a 5.7 percent increase. The total number of leaves using the proposed program will be 183,981 (assuming two-thirds of all eligible workers taking leave use it).
"¢ The total cost of the proposed program is $389 million. Averaged across all employees, the annual cost is $120 per worker and the weekly cost is $2.31.
"¢ Total costs of leaves (including lost wages, employer benefits, and the program costs) rise to $1.84 billion, an increase of 6.4 percent over current costs. The new program results in some costs being shifted from employers to employees, and from individual workers taking leave to all workers.
"¢ The average length of leave increases by one-half day from 5.4 weeks (based on a five-day week) to 5.5 weeks.
"¢ The percentage of leaves with no wage replacement decreases to 24.0 percent.
This project was a joint initiative of the Labor Resource Center of the University of Massachusetts Boston and the Institute for Women's Policy Research (IWPR). It is part of a larger effort to inform and stimulate debate on work/life balance and job quality issues.
To view the report on the web, go to: http://www.cpcs.umb.edu/lrc/paidleave
UMass Boston prides itself on academic excellence, diversity, and its commitment to serving students and the greater Boston community. Through its six colleges—Liberal Arts, Science and Mathematics, Management, Nursing and Health Sciences, Public and Community Service & Graduate College of Education "the McCormack Graduate School of Policy Studies, and the Division of Continuing, Corporate and Distance Education, UMass Boston offers undergraduate and graduate study in more than 150 fields. More information about UMass Boston can be found at: http://www.umb.edu.
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