Benefits of a state-run paid family leave program should outweigh costs

In his new book on poverty in America, sociologist Matthew Desmond says the country needs to "embrace policies that foster goodwill and be suspicious of those that kindle resentment."

That describes the promise and risk around the proposal for paid family and medical leave insurance moving through the Legislature. It would make available to all workers the lifestyle benefits that those in large companies have long enjoyed.

Many business owners and executives worry about the costs and hassle as the program is implemented.

But it's unquestionably the right thing to do.

It will foster goodwill among the 3 out of 4 Minnesota workers who get no paid leave benefits from employers.

There will be trouble, however, if changes in costs and benefits kindle resentment in the 1 out of 4 who get paid leave from their employers already.

With paid leave more widely available, fewer Minnesotans should need government assistance when they take time off to have a child or care for someone else.

In turn, that should make it easier for some people who are on the sidelines of the workforce to join in. And then that should benefit employers who are coping with a tightened supply of workers.

I've written that Minnesota is not in a temporary labor shortage but is instead one of the first states to experience the turn from labor abundance to labor scarcity caused by declining birthrates, restrictive immigration and the retirement of baby boomers. Therefore, any policy that helps businesses attract and retain workers is something I favor.

"People are finding it impossible to live their lives and work at the same time," Sen. Alice Mann, DFL-Edina and the Senate lead author of the legislation, told me. "When you offer people paid leave, they come back to the workforce."

Creating a mandatory program does mean new costs for all Minnesota businesses and workers. If passed, they will split a 0.7% payroll tax to fund the insurance program. For someone making $50,000, that means $175 a year, or about $7 in a biweekly paycheck.

Workers who claim a benefit from the insurance fund will get a portion of their pay while on leave. The portion is higher for lower-income workers and caps out for all workers at around $1,250 a week.

Companies that offer better benefits than the state insurance program will be allowed to keep theirs and not have to pay into the fund.

Those with no benefits, or with benefits that are not as extensive as the state fund's, would have to join in. Their employees would only get the benefits offered by the state fund, which, in some cases, will mean less pay than they get from their employer.

The Minnesota Business Partnership, which represents the state's 110 largest companies and are the ones with expansive benefits already, says its members won't be able to match the scope or terms of the state fund.

One reason is because the state program defines "family" more broadly than the federal Family and Medical Leave Act, or FMLA, said Charlie Weaver, executive director of the partnership.

Passed by Congress in 1993, the FMLA has been a baseline for workplace benefits. Under it, a worker can take unpaid leave to provide care to a spouse, parent or child. The Minnesota program would allow caregiving time for siblings, grandparents and in-laws, too.

"That alone would preclude almost any of our members from offering their own benefit," Weaver said. The partnership is pressing for use of FMLA's family definition.

Paid leave ideas have been batted around the State Capitol for more than a decade. But with a split Legislature, Republicans couldn't pass their plan that let businesses opt in to a paid leave fund, and Democrats couldn't pass theirs that requires participation.

After Democrats won control of both the House and Senate as well as the governor's office last fall, they made clear that a mandatory paid leave program was a top priority.

"When we're talking about an opt-in approach, then we're talking about the status quo," said Rep. Ruth Richardson, DFL-Mendota Heights, the House sponsor. "We're talking about a system that is inequitable. The people who are least likely to have access to paid leave are women, people of color, low-income folks and folks who live in rural areas."

The Democrats are overreaching with their plan to spend state government's entire $17 billion surplus — and raise taxes to boot. It's upsetting to me and many financially prudent Minnesotans.

But their push to expand paid leave will fix an imbalance that the free market doesn't.

About a dozen states have already developed paid leave insurance funds. Some have required changes in premiums and benefits after they rolled out. Minnesota's may as well.

The payoffs — in more people working, better health outcomes, lower welfare and fewer resentments — appear to outweigh the costs.