by Rob Roper
The Joint Fiscal Office released its report on the Paid Family Leave bill, and the costs to implement the program far exceed the $79 million (0.93%) payroll tax on employees. We must also consider things like the costs to temporarily replace workers on leave and the administrative costs or complying with the program.
The estimated administrative costs amount will cost employers an estimated $5.5 million, or 7.5% of benefits. What they don’t mention is the expected cost resulting from fines for businesses that don’t, can’t, or improperly comply with the record keeping necessary to track workers’ time off.
JFO did not provide an estimate of what it would cost to temporarily replace all workers state-wide who take leave, but did estimate that the cost for state employees alone could be as much as $12.6 million in 2020 – if the average leave time does not increase with the new benefit, which is a pretty big “if.”
The state will also need to invest $2.5 million in a new IT system to administer the program. We all know how well state IT systems work and how often they are implemented at or under cost.
JFO also warns the long term cost of the program is not realistic and likely to increase substantially beyond what the 1% payroll tax cap set in the bill will cover. The proposed Vermont benefit is more generous than the other handful of state plans that already exist (100% wage replacement up to $52,000 while other states range from 55% to 90%, and 12 weeks for family care as opposed to 4-8, for example).
There’s more. Here’s the full Fiscal Note.
- Rob Roper is president of the Ethan Allen Institute.