Maryland lawmakers consider statewide paid vacation program, but uncertainty over details clouds outlook – Baltimore Sun
The long-running campaign to create a paid family and medical leave program in Maryland for nearly all workers has won massive support in the Democratic-controlled General Assembly, moving closer to the goal of creating a new benefit social insurance.
Senior leaders in both houses support it, and legislation creating it was recently passed by both the Senate and House of Delegates by large majorities.
Yet the prospects for a family leave and paid medical leave plan remain uncertain, even with Senate Speaker Bill Ferguson’s vow last month that “it’s going to pass this year.”
Major unresolved differences remain between Democratic lawmakers over how quickly to roll out the multi-billion dollar program, how much to charge businesses and private sector workers, how generous the benefits are and exactly who will be eligible for the furlough. .
And that’s before considering his chances of going through Governor Larry Hogan’s office. The Republican did not directly threaten a veto, but a spokesperson said the governor “will not consider costly proposals that hurt smaller businesses, especially family establishments.”
A Hogan veto would make it harder to pass a paid leave program, despite large Democratic majorities in the General Assembly. Still, it passed the Senate with enough votes (31 to 15) to override the governor unless he lost support. Alternatively, a veto offers Democrats a key campaign stake ahead of this fall’s election to replace the term-limited governor.
Most of the Democratic gubernatorial candidates — including all of the major contenders — signed a joint letter last week urging lawmakers to pass paid vacations this year and promising to effectively administer the program if elected.
The insurance program would allow workers to take time off to care for sick relatives, spend time with a newborn or deal with their own serious health issues while receiving at least some of their previous earnings.
Creating such a plan has been a top priority for a number of progressive and family advocacy groups – and a top concern for business groups worried about the potential costs and difficulty of replacing furloughed skilled workers.
The House has backed legislation setting a non-binding date of June 2024 to start paying claims for the program’s benefits – but leaves sorting out all details about benefits, eligibility and contribution rates until next year – after a study commission has been able to look into the subject in more detail.
Senators, meanwhile, voted to create a program that would provide workers with up to 12 weeks of paid vacation each year — or, for those juggling both serious family health crises and a newborn baby, a total of 24 weeks – from the beginning of 2025.
“We want to make sure we get it right because it’s very important,” said CT Wilson, president of House Economic Matters, which has sponsored paid leave proposals for several years, before rewriting its legislation to study the details. instead of creating the program.
Wilson said he fears the pandemic has upended the economy too much to accurately forecast the program, and that taking too many costs directly from workers’ paychecks could prove not only “difficult” for families, but also unpopular.
“It’s not feasible,” Wilson told his colleagues. “I’m afraid the system itself will fail.”
Others say it is time to act.
Paid leave has been “over-studied, over-analyzed — and ultimately has overwhelming support from working families in Maryland,” said Sen. Antonio Hayes, a Democrat from Baltimore. “To study it once more, I think, would be an exercise in futility.”
Hayes said several previous studies, including a legislative commission in 2017, as well as data from states with paid leave programs, provide plenty of data to launch the program. And Hayes said the framework adopted by the Senate — which allows state officials to adjust a contribution rate each year — provides flexibility.
Under a bill by Hayes and Sen. Joanne C. Benson of Prince George’s County, an actuarial study to forecast potential claims and employee contributions would guide the program as it begins collecting money. money after June 1, 2023. The first benefits would begin one year later. .
How comprehensive and mandatory the program is – whether every worker in a private sector company is required to participate or allowing small businesses to opt out – has been the subject of heated debate in Maryland and in the nine states that have already adopted a paid program. quit the program.
Another key point of the debate relates to the advisability or the manner of distributing the contributions between the companies and the employees. The proposal passed by the Senate in Maryland would have initially split the cost evenly, but was changed to put more of the cost – 75% – directly on workers, with employers contributing the rest.
Every business would be required to participate, while freelancers and other self-employed workers could choose to participate. The benefits would pay a percentage of a worker’s wages while on leave, with the exact amount tied to a worker’s average past earnings. Benefits would be capped at $1,000 per week.
Wilson said he “didn’t believe it was a viable split” and suggested stalled negotiations over increased costs to the business influenced his decision to further favor another study.
Business groups like the Chamber of Commerce have expressed concern over the assumption of new taxes; worker advocates say imposing too much of the price on workers would make the program unfair and unaffordable.
Most economists argue that workers end up paying the full cost, either directly or gradually in the form of lower wages. Mandating larger contributions on workers’ pay stubs could also hurt the program’s political popularity.
For a Maryland worker earning $52,000 a year, or $1,000 a week, contributions to the paid leave program would cost no more than $5.63 a week (although funders hope the actual rate would be well below a maximum rate of 0.75%). The worker’s employer would pay no more than $1.88 more per week.
Republican critics have raised concerns about the uncertainty of the real rate and say the program could have unforeseen costs. They also anticipate an unexpected flood of claims.
A paid leave program in Washington state ran out of money to pay benefits and needed an infusion of state money earlier this month, a potential cautionary tale for critics of the bill’s proposal. Maryland. Washington’s program, however, has several key differences, including a lower initial cap on payroll taxes to fund it.
Still, some critics have suggested that Maryland’s proposal puts the cart before the horse, creating a major new benefits program without a clear idea of how many workers could request furlough or how much it will cost.
“This is a massive government program,” said Andrew Griffin of the Maryland Chamber of Commerce Business Group. “You have to make the most informed decision possible.”
Griffin said the Chamber of Commerce doesn’t necessarily oppose a paid vacation program, but is uncomfortable with the uncertainty surrounding the program’s finances and doesn’t support companies paying a portion of the costs.
Supporters have cited other states for successful examples, including California’s First-in-the-Nation program, which started 20 years ago and has expanded several times. Neighboring New Jersey and DC both have paid vacation programs, and Delaware looks set to create one in the coming weeks.
Research on existing programs, particularly those in California, has shown that more women tend to stay in the workforce when they can access parental leave, and companies tend to be more satisfied with programs than they feared, said Kathleen Romig, who researches the issue for the Center on Budget and Policy Priorities, a left-leaning DC advocacy group that supports paid leave programs.
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Romig said broad statewide programs can also benefit small businesses and the self-employed by making the cost much easier to bear. A company with just three or four employees might struggle to keep paying workers who take off, Romig said, but could make it run more smoothly with a state fund supporting the tab.
The cost of payroll, however, is not the only aspect of a paid leave proposal that worries some business owners. Many pointed to the loss of hard-to-replace employees for long periods of time.
Autoshop owner Bruce Spencer told lawmakers in February that a new payroll tax would be a relatively small expense for him. The biggest concern, Spencer said, is running the shop without one of its experienced mechanics.
“We have four technicians,” Spencer said of his Severn store, Walt Eger’s service center. “If one or two of them were away for 12 weeks or more… that’s income we can’t charge for.”
Proponents of paid leave say these challenges will be outweighed by the program’s broader benefits. Workers who might otherwise quit their jobs to care for newborns or dying parents may choose to stay in the workforce.