My Two Cents and My Freedom: The Cost of Paid Family Leave

Some Oregon activists are begging the state legislature to create yet another social safety net: paid family leave. Senate Bill 966 would create “insurance” benefits for family leave, subsidizing time off from work to care for a new child or a seriously ill family member. Proponents argue that if society values families, then this bill is vital.

SB 966 would tax workers two cents for each hour they work, amounting to about $42 each year for a full-time worker. After working six months, workers would be eligible to receive up to $300 per week for six weeks of family leave. And Oregonians could feel better about supporting families through yet another public subsidy.

But once the euphoric glow of new entitlement wears off, Oregon will be left with the cold, hard reality that this program probably will not be financially self-sustainable. For one individual to take six weeks of leave, receiving $1,800 for the duration, 42 workers would have to work for more than a year to foot the bill. Or, to look at it another way, if I took the maximum leave, I would have to work full-time for more than 42 years to pay for that $1,800 I used. And that does not include the program’s administrative costs to the state.

Since the bill does not place a cap on how many times a worker is eligible to use paid family leave benefits, the fund easily could run dry at its proposed rate. If the fund is depleted quickly, then either tax rates will increase, or many individuals who think they are “covered” by this program will be left high and dry. Unless the state does its homework and conducts the proper actuarial studies, there is no reason to believe this fund is sustainable and every reason to believe it would cost taxpayers more. Additionally, since government programs tend to expand, the program likely would grow in size and cost as people discover that $1,800 is not enough “insurance” protection.

Why the program is called “insurance” is a mystery. Real insurance is voluntary and transfers a risk of loss, for a premium, to the insurer. Those who statistically bear the greatest risk bear the greatest cost. For example, individuals who are more likely to get in a car accident pay more for car insurance. In contrast, SB 966’s family leave insurance is not voluntary for businesses with 25 employees or more, and it requires everyone to share an equal risk. SB 966 would require single people who can’t have children to pay for family leave for couples who can and will.

Forty-two dollars per year for a full-time worker may not sound like much to those who value this bill because they are likely to use its benefits. However, to those who are unlikely to need it or who do not want more government interference, it sounds like $42 too many. When you add that $42 to our continually growing tax burden, it sounds even more burdensome.

If paid family leave is something that many people want, then such a program should be optional. Private insurance companies could meet a need for family leave insurance, and those who want to participate can opt into the policy. Private insurance companies already offer maternity leave coverage, among other similar types of policies applicable to various life events.

Consider that taxpayers already subsidize families through tax deductions and credits for children, taxes to support K-12 public education, and subsidies for college education. We pay for food and housing for low-income families and for medical care for uninsured children.

Instead of collecting more hard-earned wages and redistributing them to others, why not encourage individuals to save for family emergencies through tax-sheltered savings accounts? Individual Development Accounts (IDAs) have a track record of helping people get out of poverty and helping themselves by learning to save and build assets. IDAs give individuals incentives to build assets by charitably matching what individuals save. But programs like paid family leave encourage individuals not to save for family emergencies because the government “has your back.” Instead of creating another wealth-transfer program, why not take an existing program and funnel some of the funds into matching rainy day savings for low-income individuals?

The government simply cannot do everything for us. We must help ourselves and our own communities directly, rather than through the overgrown arm of the state. No safety net can replace that of a flesh-and-blood community. State policies should encourage people to build a community safety net of friends, family, neighbors and local private organizations to rely on, instead of the inefficient state. Paid family leave would transfer $42 each year (and potentially more) from individual workers to the state, taking from individuals more power to save their own money or to help a neighbor.

My mother taught me that if you want people to act responsibly, you should treat them as though they are responsible. This bill does the opposite and teaches further dependence on the system, instead of prudent planning for the future.


Christina Martin is Director of the Asset Ownership Project and a policy analyst for the School Choice Project at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Posted by at 06:00 | Posted in Measure 37 | 11 Comments |Email This Post Email This Post |Print This Post Print This Post
  • sagano

    It is possible to nickel and dime a business to death

    • sybella

      Yes, yes, yes. and they are doing it.

  • Joe

    I need family leave to help my family. It should be there for me when I need it.
    Please.

    • sybella

      If you are an employee worth his salt, any employers will work with you as much as possible.

      Unfortunately too many use it as an excuse. True example. Had an employee who had to have a week off to go sit by the bedside of her dying aunt. She had never met the aunt, but had to be there. Guess who didn’t go to sit by her aunt after taking the week off.

      Too many use stuff like that as an excuse. This bill will only make that part worse.

  • Ron

    Paid Family Leave will be sweet. I will knock up my girlfriend on purpose so I can get a 6 week vacation when the baby arrives. She will be taking care of the baby and I will be trout fishing in Montana.
    Also, I want this State to become like Sweden which has a lot of cool handouts. Plus, they tax the crap out of rich capitalists.

  • Wayne Brady

    Joe,

    You are asking for enslavement. Big government is what our founders were trying to escape. We need to limit government if we value freedom.

    This country has had gradual increases in government and people haven’t noticed. That is not the case now. During the last year, government has exploded and we are in jeopardy of losing our country.

    Be careful what you ask for. You will look back and find you have lost all of your freedoms.

  • devietro

    The idea of family leave sounds like a good one but this is directly the WRONG way to go about it.

  • Bad Man

    Family leave is for all the LOSERS that can’t afford child care or need to take time off because of their drug habits.

    • Curious

      Assuming “losers” start at the homeless, and work upward through minimum wage workers, how far further upward does your chart go? I mean, in your world view, what percent of the American people are “losers?”

  • Susan P says stop the inanity

    Oh, dear, what can the blather be…’cept for more socialism tokin’ from PERSian-omical nanny state interests.

  • Joe

    Why not take the PERS money and give it to all of us who need family leave?

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