$100 Million Plus Price Tag for Paid Family Leave

February 12, 2019

by Rob Roper

Joyce Manchester, a Senior Economist for the Vermont Joint Fiscal Office, testified before the House Committee on General Housing & Military Affairs regarding the estimated cost of implementing the proposed mandatory, government-run Paid Family Leave program. The total estimated annual price tag is $106 million. This number does not include start -up costs, and is potentially underestimating the ongoing administrative costs, perhaps significantly.

As for those start-up costs, the program would require a new IT system to operate. Estimates for this were between $500,000 and $80,000,000. That’s not a typo. Apparently, the options run the gamut from the tech equivalents of a Lamborghini to a unicycle. Committee chair Tom Stevens settled on an estimate of $10 million as a reasonable starting point for purposes of discussion and future analysis. But this is a wild guess, and, of course, we all know how well the state does with new IT systems (think Vermont Health Connect).

This Paid Family Leave proposal, for which the $100 plus million necessary to pay for it would come from a brand new payroll tax, would guarantee some (more on defining “some” in a later post) employees 12 weeks of leave at full pay up to a little more than $1000 per week for bonding with a new child, or 6 weeks to help care for a sick relative. If the costs exceed these conservative estimates, and many think the certainly will, the payroll tax rate will be increased to meet the demand for revenue.

David Simendinger, president of Champlain Farms, which operates thirty-six convenience stores in Vermont, testified following Manchester. He was blunt, saying, “This has the potential to bankrupt us.” Simendinger further noted that there is no incentive in the bill to encourage someone who takes advantage of the Paid Leave program to return to work when the money runs out.

It is hard enough for Vermont employers to find workers, and once found, depend upon them to reliably show up for work. A government program that pays employees their full salaries not to work will make this dynamic even more difficult for employers.

Simendinger speculated that if this passes, on day one there will be a lot of employees out there figuring out how to game the system so that they can spend six weeks of summer caring for a “sick relative” while receiving 100% of their salary at taxpayers’ expense.

Rob Roper is president of the Ethan Allen Institute.

{ 7 comments… read them below or add one }

Michael hefner February 15, 2019 at 8:12 pm

Invite AOC to help with the transition to capitalism to socialism. Help turn light to darkness.

Reply

Thaddeus Cline February 15, 2019 at 10:13 pm

If you can’t run a business without family leave you simply have to business running a business. All banks should immediately Block all loans for a new business if it dose not provide some family leave . And dose not pay enough for local rents .
What are you the devil? This is 2019 last time I checked . Your business plan your long time goals are dependent on your trement of your employee’s . What you would not let you4 son and daughter working there not get the same plans . What exactly is wrong with you?

Reply

Hunter Melville February 15, 2019 at 11:07 pm

What loans?

Reply

Deanne February 16, 2019 at 3:37 am

I recently read an article that described Vermont as the “moocher” state. Even the rest of the country knows this term describes “New Vermont.”

I am not a bit surprised that more people want another way to get paid for not working. It seems to be a virus going around. It brings to mind something I read in the 90s. I was given a paper copy then, but others have put it up on the internet. Here is one: https://www.nationalgunforum.com/jokes-section/8755-not-raising-hogs.html#/topics/8755.

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petemo February 16, 2019 at 11:01 am

” a liberal state that is ostensibly looking out for the poor”, ‘ostensibly’ being the operative. The wacky Ocasia-Cortez factor at play. These people don’t care about the poor or anybody else. This is all about redistribution of wealth. But then who needs AOC when we have Leahy, Sanders and Welch, the dregs of the Congress right here already?

Reply

mike February 16, 2019 at 1:47 pm

Rob, Unfortunately, the major problem with Joyce Manchester’s expert testimony is that it exposes just how flawed Tom Stephens’ stimates are and therefore she will be politely ignored. As in the past, only those supporting an issue hold sway.

Reply

Tom Otterman February 20, 2019 at 5:21 pm

I wonder if I should take business advice from a residential counselor.

Reply

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