Looking Back on Five Years of Family Leave Insurance in New Jersey – and Ahead Towards the Next Five

July 1st, 2014  |  by  |  Published in Economic Opportunity, NJPP Blog: As a Matter of Fact ...

Share

As New Jersey’s Family Leave Insurance program turns five years old today, it is worth reflecting on how much the law’s helped the state’s working families as well as looking at ways to make the program’s impact even greater.

In May 2008, New Jersey extended its temporary disability benefits program to provide Family Leave Insurance to family members or individuals providing care to a newborn or ill family member. When Family Leave Insurance became effective on July 1, 2009, eligible individuals were finally able to get paid when they had to take time off to care for a new child or a family member. New Jersey was the second state in the nation to offer such a program, and individuals could take up to six weeks off with benefits equal to two-thirds of their average weekly wage.

To date New Jerseyans have been approved for 143,956 paid leave claims and received $370 million in benefits. The vast majority of claims (about eight of every ten) have been to bond with a newborn or newly adopted child, while the remainder were to care for an ill family member.

fli stats 5th anniversary-01

While business lobbyists fought Family Leave Insurance for years, claiming that it would be an undue burden on small businesses and ripe for fraud and abuse, five years later the doomsday scenarios have not materialized. The President of the Employers Association of New Jersey summed it up well, noting that “the rhetoric that this law would be a nail in the coffin for New Jersey’s businesses is totally overblown.”

The latest evidence refuting those claims came last month, from a Center for Economic and Policy Research (CEPR) study that found virtually no negative effects reported by business owners whose employees have used Family Leave Insurance. None of the 18 employers participating in the study reported any effect on productivity or turnover or said they were aware of fraud or abuse, and only two felt the program harmed their profitability.

Meanwhile, women who use paid leave show a stronger connection to the labor force, generally higher wages after returning to work and are less likely to be receiving public assistance in the year after the child’s birth.

Increasing the Impact of Family Leave Insurance

The Family Leave Insurance program put New Jersey ahead of the pack, but as we noted last week there is more that can be done and important ways that this benefit could and should be improved. Drawing from the Rutgers Center for Women and Work’s January 2013 report, we recommend that policymakers:

• Include job protection as a provision of Family Leave Insurance.

Protection exists for individuals working at jobs covered under the Family and Medical Leave Act of 1993 and New Jersey’s Family Leave Act (both unpaid leave programs). However, New Jersey’s Family Leave Insurance includes no provision to protect job security.

• Increase funding and support for outreach and educational efforts to ensure all workers understand Family Leave Insurance and how to access these benefits.

Awareness of the Family Leave Insurance program is appalling; fewer than four in ten New Jersey residents had seen or heard anything about it in 2012 according to a Rutgers-Eagleton poll. Legislation to inform more residents of their rights under the program passed the Senate Labor Committee in 2012 but stalled; this bill, or something like it, is worth revisiting.

• Increase the maximum wage replacement and wage replacement rate to encourage more high-wage and low-wage earners to use the program.

Family Leave Insurance is not “New Mother’s Insurance,” however the large majority of those taking advantage of the program are women (males compromised only 11 percent of the bonding claims in 2011, for example). One reason: the maximum wage replacement of $595 per week likely deters many family breadwinners from using Family Leave Insurance. By increasing the maximum wage replacement, the number of fathers and other higher income earners using the program could likely increase, promoting additional familial bonding and greater equality in the Garden State.

On the other end of the spectrum, Family Leave Insurance only provides workers with two-thirds of their regular weekly wages. For low-wage workers, every dollar counts in high-cost New Jersey, and losing a third of their wages may not be an option. One way to tackle this problem would be to implement a graduated replacement rate structure where low-wage workers would collect a wage replacement rate at or closer to 100 percent. The higher the wages, the lower the rate until it levels off at 66 percent.

• Expand the definition of family under the law to cover other family members such as grandparents and grandchildren.

As demographics and common living arrangements shift – particularly in a state as culturally diverse as New Jersey – the Family Leave Insurance program should change to reflect these shifts. Expanding the law to include grandparents, aunts and uncles would enable non-traditional families to provide care to sick family members.

• Expand demographic data collection and reporting efforts.

To ensure transparency, accountability and to properly evaluate the program effectively greater data availability is essential. Age, gender, ethnicity, and education data along with detailed information about claims should be made available for researchers and program audits.


Help us help New Jersey's working families. Make a tax-deductible donation today.

Leave a Response


Contact Us

137 West Hanover Street
Trenton, New Jersey 08618
PH: 609-393-1145

Click Here To Contact Us

NJPP is a member of the Economic Analysis and Research Network and the State Fiscal Analysis Initiative

Support NJPP

NJPP is a 501(c)(3) organization under the Internal Revenue Code. That means we do not engage in elections or partisan politics, and your contributions are tax-deductible.

Please consider a donation to NJPP.

Connect With NJPP