The Legislature is developing a habit of best-laid plans going awry. The latest example involves a paid family leave program that went into effect at the start of 2020.
Under the law, eligible workers receive 12 weeks paid time off for the birth or adoption of a child or for a serious medical condition of the worker or a family member. Other provisions are included for health conditions involving a pregnancy or for families of service members about to be deployed overseas or returning home from deployment.
According to the National Conference of State Legislatures, 11 states and the District of Columbia offer paid family leave. State action is necessary because Congress has been lax in defining national family leave and sick leave parameters, leaving U.S. workers with fewer protections than nearly all other industrialized nations.
Washington’s program reflects our state’s values of collectively improving conditions for workers and, in turn, boosting the economy by making it easier for businesses to attract and retain workers. The benefits have been particularly evident during the COVID-19 pandemic, which has led many employees to take time off for illness or to care for a family member and has led others to rethink their career paths.
But problems with the program also are evident. Last week, an actuarial analysis by consulting firm Milliman estimated that Washington’s paid family leave system will have a deficit of $8.7 million by the end of this year. The report recommends an increase in the premium on workers’ wages that provide funding.
When the program was enacted, 0.4 percent of workers’ wages were used, with 63 percent paid by employees and 37 percent paid by employers. That was increased to a 0.6 percent rate earlier this year, with workers paying 73 percent. The recent report recommends a rate of 0.79 percent to ensure solvency.
According to the report, the fund’s balance started at more than $467 million in early 2020 and had dipped to $19 million by March of this year. By the end of June, the balance was $31 million.
This follows a fiasco with the WA Cares Fund, which was designed to fund some long-term care for Washington residents who need it. The plan was to establish a payroll tax on employees, but problems with funding, confusion over the legislation, and opt-outs by those who had private insurance for long-term care led lawmakers to roll back the system as soon as it was implemented at the beginning of this year.
Paid family leave is a reasonable and necessary benefit in a civilized and wealthy society; long-term care is a growing issue that can explode into a financial albatross for families. And the fact that lawmakers in Washington and other states feel the need to address those realities reflects long-standing failures on the part of the federal government.
But Washington’s missteps are an example of good intentions being undermined by poor fiscal planning.
Of course, the pandemic played havoc with the assumptions behind the family leave system. Started in 2020, months before the arrival of COVID, the program quickly saw more applicants than were anticipated. With many people out of work, at least temporarily, any revenue predicated on payroll taxes also was impacted.
But whatever the reasons, fixes are needed for Washington’s family leave and sick leave. As other nations have demonstrated, it is possible to provide such benefits in a fiscally responsible manner, and state lawmakers will need to find that balance or scuttle the program.