New Jersey’s trailblazing paid family leave policy is falling short of its potential, with serious repercussions for New Jersey’s working families and the state’s economy, advocates said on a press conference call today.
While the state’s Family Leave Insurance (FLI) program – signed into law in 2008 – has been a clear success, having replaced over half a billion dollars in lost wages for hundreds of thousands of New Jerseyans who needed to take time off to be with a new child or sick family member, it could help even more New Jersey families with a few modest tweaks, according to a new report by New Jersey Policy Perspective (NJPP) that was released and discussed on the call.
“New Jersey led the way when we became the second state to adopt a paid family leave program. Since it began in 2009, the NJ Family Leave Insurance program has helped hundreds of thousands of New Jerseyans to be there for loved ones when they’ve needed them most,” said Dena Mottola Jaborska, Director of Advocacy and Organizing at New Jersey Citizen Action. “But we can do better. With a few changes we can ensure the program is accessible for all New Jerseyans when they need time to care for their loved ones.”
NJPP’s chief recommendation is to improve the wage replacement policy to ensure more New Jerseyans can afford to take leave when they need to, by increasing the current two-thirds wage replacement to make leave more affordable for low-income workers while raising the very low cap on earnings to enable more middle- and higher-paid workers to afford leave. But the report includes a slate of other recommendations as well: include job protections for those taking leave; expand outreach efforts to ensure greater awareness of the program; allow workers to take 12 weeks of paid leave; and expand the definition of family that is eligible for leave.
“Paid family leave is good for families, good for businesses and good for the economy,” said Jon Whiten, Vice President of NJPP. “It’s great that New Jersey has paid leave, but just having it is not enough: we need to ensure that our policy is as effective as possible. The good news is that there are some relatively simple tweaks that could go a long way to making paid family leave an even bigger asset to New Jersey.”
The core problem is that New Jersey’s paid family leave policy design undermines the intention of the program, since just two-thirds of a workers’ weekly salary is replaced – up to a meager cap of $633 per week. This is inadequate for low-income families as well as higher-paid middle-class families.
Take a low-paid 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.
And even for higher-paid families, a few weeks of missing pay can cause financial instability. A New Jersey family with one adult and a child needs around $1,000 per week (about $52,000 a year) just to get by. Today, a worker earning that much would lose $367 a week by taking paid family leave – a full 37 percent of his or her pay.
Inadequate wage replacement policy is a major factor that keeps too many New Jersey workers from taking leave. Only an estimated 12 percent of eligible new parents are taking paid family leave (14 percent in the most recent year for which data is available), the NJPP report finds. In contrast, an estimated 17 percent of eligible new parents in California have used that state’s paid leave program since inception (and 20 percent in the most recent year for which data is available).
“Paid family leave is an important asset to New Jersey’s economy and working families – but it is falling short. Many families simply cannot afford to go on leave because of New Jersey’s poverty-level replacement rates,” said Amy Dunford, the author of the report and a former Kathleen Crotty Fellow at NJPP. “New Jersey should strengthen its wage replacement rates to boost the usage of the program, allowing many more families to receive the benefits of leave and creating a stronger and more competitive economy.”
While the bulk of paid leave in New Jersey (81 percent) is taken by new parents, paid leave for caregivers is a crucial part of the program – and of vital importance to New Jersey families as the population ages, more people of all ages live with disabilities and the complexity of care tasks increases.
“New Jersey’s 1.1 million family caregivers make it possible for older New Jerseyans and other loved ones to live independently at home—where they want to be – yet too many working caregivers face financial difficulties or risk losing their jobs if they must take time off to address family needs,” said Evelyn Liebman, Associate Director of AARP-New Jersey. “And improving New Jersey’s Family Leave Insurance program makes fiscal sense. New Jersey’s family caregivers perform unpaid care valued at about $13.6 billion annually to help their loved ones stay at home, the value of which is significantly greater than the annual cost of Medicaid for institutional stays. Without family-provided help, the economic cost to the state’s health and long term services and supports systems would skyrocket.”
Since men and women are equally eligible to apply for family leave insurance, the policy should help reduce disparities between mothers and fathers on salaries, workplace promotions and childcare duties. But that has not been the case.
New Jersey women are using paid family leave far more than men – comprising 86 percent of all eligible claims. When it comes to leave to bond with a new child – which makes up the overwhelming majority of paid leave taken in New Jersey – men comprise an even smaller share, at just 12 percent. In other states with paid leave, this share is much higher: men make up 33 percent of bonding claims in Rhode Island and 29 percent in California.
While this can be attributed to many factors, including cultural norms, lack of awareness and lack of job protection, New Jersey’s inadequate wage replacements clearly play a role: With men earning $12,000 a year more on average than women, many men stand to lose larger chunks of their take-home pay by taking paid family leave.
“Research shows that New Jersey’s Family Leave Insurance Program has helped many workers afford to take time off to care for family, but it has untapped potential to help many more,” said Karen White, Director of the Working Families Program at the Rutgers Center for Women and Work. “NJPP’s report shows how we can increase access to this important asset.”
The costs to make the improvements outlined in NJPP’s report would be modest and paid for entirely by workers. If lawmakers adopted all the changes in the report, paid leave usage soared and workers took every day of available leave – a highly unlikely combination – New Jersey workers would still be paying significantly less each year to the program than workers in California and Rhode Island.