Op-Ed: Five Reasons Christie Should OK Paid Leave Fixes

This op-ed appeared in the July 16, 2017 edition of the Sunday Star-Ledger.

Last month the New Jersey legislature sent Gov. Christie a landmark bill to boost working caregivers, small businesses and the state’s economy. The legislation would go a long way to ensuring that more workers – who all pay into the funding for paid family leave – are able to take advantage of this vital benefit. After all, while an average of 31,000 New Jerseyans have used paid leave each year since its inception – an impressive number – that’s just a small share of those who are eligible.

There are many clear and compelling reasons the governor should sign these improvements into law. Here are five.

It would help low-paid workers

Today if you take paid leave in New Jersey, you receive a wage replacement that equals two-thirds of your weekly wage. But for low-income working families scraping by in high-cost New Jersey, losing one-third of a week’s take-home pay is often out of the question.

Consider a worker making $600 a week, or about $15 an hour if they are working 40 hours a week. On leave, the two-thirds replacement rate would provide that worker just $400 a week, the equivalent to $10 an hour – a decrease that an already-struggling family could ill afford. Under this bill, that worker’s take-home pay would increase to $540 a week; while he or she would still be losing income, the loss would be much smaller.

It would help middle-class workers

Meanwhile, an artificially low cap on wage replacement of $633 a week means that middle-class workers are faced with the prospect of losing more than a third of their wages, an unrealistic proposition for the many middle-class families who essentially live paycheck to paycheck.

Consider a worker making $1,200 a week, which is slightly above the statewide average. Today, that worker would lose nearly half of his or her income by taking leave, because the cap on wages is set at 53 percent of the statewide average weekly wage. This bill takes a step in the right direction by increasing the cap to 78 percent, which would get the $1,200-a-week worker up to $936, but it would still fall short of what’s required for middle-class workers taking leave.

It would help small businesses compete

While paid leave – and its expansion – have been characterized by lobbyists as being “bad for small businesses,” in fact the opposite is true. Retaining a strong and talented workforce remains the primary concern of most small businesses, and having a state family leave program helps ensure that small firms and mom-and-pop shops can better compete with multinational corporations when it comes to leave benefits.

Perhaps that’s why most small businesses in New Jersey have had no trouble adjusting to the paid leave law, and have found it to either have no effect or a positive effect on their bottom line. After all, this is a robust social insurance program, paid for entirely by workers, that helps businesses attract and retain talent.

It would help many workers at those small businesses

Another big thing keeping eligible New Jersey workers from using paid leave is a lack of job protection. Currently about 1 in 3 New Jersey workers – the 1 million or so who work at businesses with less than 50 employees – are forced to consider taking leave without the peace of mind of knowing their job will be there for them when they get back.

This bill extends job protections to some of those workers by covering those who work at firms with 20 or more workers, which is a positive step. That said, by not making these protections universal the bill leaves out 19 percent of the state’s workforce – the nearly 700,000 workers that work at businesses with fewer than 20 employees.

The costs are tiny compared to the benefits

Workers – not employers – pay for the entire paid leave program through a payroll tax. This year, workers contribute 0.10 percent of their salary up to the first $33,500 they earn. The most anyone can pay in is $33.50 a year – or about 60 cents a week.

By slightly increasing the wage ceiling and the amount of the payroll tax, New Jersey could easily raise enough revenue to accommodate a projected increase in usage – and the benefit would still be a bargain for workers.

For example, if paid leave usage soared, we estimate that the cost to workers could rise to a maximum of $2.45 a week. Even with these higher contributions, New Jersey workers would still be paying far less than workers in other states with paid leave.

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