It's Back: Taxpayer Financed Parental Leave

Led by Vermont's only taxpayer-financed ($265,000) lobby group, the Governor's Commission on Women (GCOW), a coalition of liberal groups is preparing to attend to some of the unfinished business of the 2000 session: paid parental leave.

Federal law passed in 1993 requires employers with more than 50 employees to give employees 12 weeks of unpaid job-protected leave for the birth of adoption of an employee's child, or for a "serious health condition" of an employee or family member. The leave time can be intermittent, taken even a few hours at a time. The employer must maintain the employee's health coverage.

Vermont's liberal leadership, including Gov. Dean, the labor unions, the progressives, and GCOW, want state law to require that employers pay the employee while on parental leave. So far similar coalitions in 15 states have pushed for this, but it has yet to be adopted anywhere.

Last year's game was to send the tab for the parental leave payment to the state's Employment Security Fund. Thanks to good times, this fund is full of cash, and thus a tempting target for spenders. The Senate voted 16-15 (Lt. Gov. Racine breaking the tie) to pay for parental leave out of the Fund. Only then did the backers of the idea, notably Sen. Peter Shumlin (D- Windham), discover that under federal law, raiding the Fund to pay for family leave would disqualify the Federal tax credit employers get for contributions into the Fund. Amid some embarrassment, parental leave advocates were forced to back off until this year.

Gov. Dean and Sen. Shumlin recently went before the Vermont Chamber of Commerce to promote this year's version: Although specifics have not been publicly announced, their proposal is expected to apply to all employers of whatever size. Maximum payments would be on the order of $195 per week, and (at first) only lower income workers would be eligible. The Governor's budget contains $750,000 to underwrite "a trial".

Even though the budget proposal states that the "trial" is over when the money is gone, the word "trial" is misleading. Once anybody becomes entitled to a government benefit, that entitlement is not easily terminated. Typically, ever more people get into the program and qualify for ever higher benefits (in this case, the next step would be paid medical leave).

This has already happened with Gov. Dean's Vermont Health Assistance Plan. It's running deeply into the red. The Governor vows that no one in the program will be put out, so he has been forced to ask the legislature for a huge cigarette tax increase to pay its bills.

How could anybody be opposed to such a nice thing as the government mandating employers to keep their employees on the payroll while they are welcoming a new baby, or suffering from a "serious" health condition?

Employers want to retain good workers. Especially in a tight labor market, they are willing to make allowances for family situations and illnesses. But once paid leave becomes a government mandate, unfortunate things began to happen.

It's not at all simple to keep track of paid leave when it's taken in chunks as small as half an hour. What constitutes a "serious" medical condition is a dicey question. A crippling car wreck? Sure. The flu? Indigestion?

Industry surveys have shown that 60 percent of presently unpaid leave-takers do not schedule the leave 30 days in advance, as they are supposed to. When they disappear from work, the employer may face sudden and serious workplace disruptions, and other employees are saddled with the extra workload. One Vermonter who worked at a large company with a liberal (unpaid) leave policy reports that " a woman in my department spent 18 months appearing and disappearing as she pleased, and since I was the only one who could cover for her, I was doing about 1.8 jobs for 1.0 pay, and nearly losing my marbles."

The existence of a mandated paid leave benefit encourages the least responsible employees (and their unions) to contrive ways to game the system, and to bring grievances or even lawsuits when the employer refuses to go along with their desires. It invites elected attorneys general to bring well-publicized actions against "irresponsible corporations".

In the eyes of people who make decisions about locating or expanding facilities, the first state to legislate mandatory paid leave, regardless of how it's paid for, will bear the Mark of Cain They will know that the legislature is under the control of a liberal coalition eager to move on to the next costly anti-business nostrum. They will see that state as a politically unfriendly, high-cost economic environment, and take their employment and tax revenues to a more congenial place. Let us hope that Vermont does not become the pioneer.

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February 2001