Elizabeth Hovde of the Washington Policy Center explains why the program is irresponsible and penalizes work
Elizabeth Hovde
Washington Policy Center
When the Legislature meets in January, it should do an about-face on another social program that isn’t carrying its financial weight as promised. Instead, there are plans and recommendations to take even more of a worker’s wage to pay for the social program many workers don’t need or want. That’s awfully hard to hear about a program that benefits few, taxes many and isn’t even allocated for people in need.
A new actuarial analysis for the state’s paid-family-and-medical-leave program, which just started paying benefits in 2020, estimates the fund will have an $8.7 million deficit by the end of the year. (The analysis was done by consulting firm Milliman.) An Associated Press story rightly tells that the report recommends a higher payroll tax rate to maintain fund balances “close to target levels in future years.”
Workers just saw a tax increase for paid leave this past January. The tax grew to 0.6% from the 0.4% state lawmakers and the public were sold in 2017 when the law for paid leave was enacted. The new actuarial report recommends raising the tax to 0.79% (which would get rounded to 0.8% as is required, I’m told).
Money is regularly taken from employers for the program, too. And this past January, lawmakers set aside $350 million in the state supplemental budget to address any deficit that exists on June 30, 2023, which is the end of the fiscal biennium.
The rate could go even higher. A Seattle Times story by Rachel La Corte says that the Employment Security Department (ESD) has estimated a 0.9% tax will be needed. Officials are still calculating the latest data, and ESD will possibly announce its results next week, Rep. Peter Abbarno, R-Centralia, tells me. Abbarno is a leader on the state task force charged with figuring out how to make the program solvent and giving recommendations to the Legislature by December. He says the task force will be looking at ESD and Milliman numbers to help it do that.
Abbarno also confirmed what I heard in a recent meeting of the task force. There is a possibility for the state to assess an additional 0.6% solvency surcharge temporarily. That would be quite a jump, and it doesn’t look like there is much appetite for it.
Another thing that hit me in a recent task force meeting, and that might bother others, too, is that a payroll tax on low-income workers often benefits people with more means and who might not be in need of such taxpayer help. And more than once. A slide showed 31% of workers receiving paid-family-leave benefits had more than one claim. Another slide showed that 20% of those benefitting from the program in the first half of this year were at the maximum benefit cap.
Of course, that’s how the program is designed: Most of the state’s workers pay in and can apply for benefits, and they can take benefits for medical reasons or new parenting. Still, taking money from those on minimum wage for people who make much more doesn’t sit right.
If you build it, they will come — and they did. The program saw steady growth that cannot keep up with demand, perhaps not even with an even higher payroll tax. The fund hasn’t made ends meet and the state underestimated the program’s use.
Washington state’s paid family and medical leave isn’t set up for people in need, has solvency problems and unfairly takes wages from workers who may never need, use or want the program. Workers could find plenty of places for those dollars that are now missing from their paychecks in these inflationary times, whether that is to pay for groceries, gas, rent or continuing education.
This program is irresponsible and penalizes work. Lawmakers should be interested in repeal. I’d bet the majority of them aren’t, despite the program’s oversell and underfunding. At the least, lawmakers should make the program voluntary. Workers who want family-leave “insurance” of sorts can pay for it. Those who don’t can keep more of their earnings.
Elizabeth Hovde is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center. She is a Clark County resident.
In the next Legislative session, should Washington lawmakers kill the state’s paid family and medical leave program?
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