Nothing like it has happened yet. But economic conditions permitting, it may not be too far away.
In Massachusetts, paid parental leave is on the tip of everyone's tongue right now, thanks to Governor Jane Swift's delivery of twins in May. Swift continued to receive full pay during an abbreviated work schedule, arguing that there is no precedent for a public official at her level to take leave, paid or unpaid. But she is considering options for some form of paid leave plan for the state. One would treat paid leave as a form of "student loan," with workers borrowing the money to cover their absence from employment, then paying it back over an extended period of time at a low interest rate. Others would use tax credits or tax-free savings accounts.
While waiting to hear Swift's recommendations, the Massachusetts Senate has earmarked $120 million for a new program that would give new parents 12 weeks off at half-pay. The House is considering one of the tax-credit plans. The state AFL-CIO has launched an effort to put an initiative on the ballot that would levy a new tax on companies-- $20 per worker--to pay for a parental leave fund.
Massachusetts is the one state whose legislature has actually endorsed comprehensive paid leave in the past: A bill to create a 12- week paid leave entitlement passed both chambers of the legislature in 2000, but was vetoed by then-Governor Paul Cellucci. Such a move might not be politically feasible for Swift if the issue comes across the governor's desk again.
At least 17 states addressed the idea of paid leave in their legislative sessions this year. A confluence of factors is bringing the subject closer to the front of the agenda. Advocates concerned about low-income workers have been agitating for measures that would help keep new parents off of welfare. Women's organizations are arguing in favor of supporting the burgeoning female labor force by making it easier to have a child and maintain a sense of connection with one's workplace. "The reality is that they are working," says Minnesota state Senator Ellen Anderson, author of a paid leave bill, "and they have to work in most cases. We need to make it possible for them to both do that and spend that precious time with their babies."
Of more immediate impact, however, is a ruling from the U.S. Department of Labor in the closing months of the Clinton administration that allows states to tap unemployment insurance funds to finance paid parental leave. The heady economy of the late 1990s generated unexpected surpluses in many states: At the end of last year, 29 of the UI funds were over the federal government's recommended level of solvency. Bills to open up unemployment insurance for this purpose have been making their way through several legislatures, although the funds' solvency varies from state to state, making it a more reasonable solution in some than others.
The current economic downturn could change that situation. But the Labor Department ruling created an initial momentum for paid leave that will not be easy to slow down. "Baby UI," as the bills have come to be known, were introduced this year in Arizona, Florida, Illinois, Indiana, Maryland, Nebraska, New Jersey, New Mexico, Oregon, Vermont and Texas, as well as Massachusetts. In Vermont, an unemployment insurance-based measure passed the Senate last year but died in the House. Senate President Pro Tem Peter Shumlin likes to make the point that when unemployment insurance went into effect in Vermont in the 1930s, only 5 percent of women of childbearing age were in the work force. Today, that number has jumped to 90 percent.
The idea of using unemployment insurance for paid leave has faced opposition on a number of fronts. Most of the business community sees it as paying workers for what is essentially a form of voluntary leave. The U.S. Chamber of Commerce has sued the Department of Labor in a case that is currently pending, arguing that the department stepped beyond the limits of its authority by authorizing the use of the funds to finance parental leave. "It's bad policy and bad law," says Randy Johnson, the chamber's vice president, "We don't think that the unemployment insurance funds set up under the Social Security Act can be used for this purpose...and if the past administration wanted to expand the use of these funds, they should have gone to Congress."
Eric Oxfeld, president of Strategic Services on Unemployment and Workers' Compensation, a pro-employer group, notes that the 1993 federal family leave law covers only businesses with more than 50 workers. But all companies, including smaller ones, are subject to unemployment taxes.
Critics also see a potential drain on the unemployment funds at a time when more money will be needed to protect workers who have been laid off. The U.S. Chamber claims that the entitlement could end up costing states $36 billion annually, in addition to the added payroll taxes that business would be required to contribute.
The accuracy of that $36 billion figure, however, remains a matter of controversy. In Massachusetts, supporters of the unemployment insurance fund bill say that the program would cost the state about $40 million a year, or about 2 percent of the $1.9 billion trust fund. A study by Vermont's Joint Fiscal Office reported that the cost of a paid leave program to the state would be about $2 million annually, less than 15 cents per week per employee. The School of Family Studies at the University of Connecticut issued a report estimating the nationwide impact at between 4 cents and $1.45 per week per employee.
These studies don't reassure everyone. Cheye Calvo, employment and insurance analyst for the National Conference of State Legislatures, says that with "the economy having greater signs of uncertainty, and unemployment on the rise, the notion that there may be a slowdown is sort of scaring people away from it...when states look back to when the trust funds hit zero, it's a powerful reminder of what can happen when you're not prepared."
Warnings such as those are prompting paid leave advocates to look for other funding mechanisms besides unemployment insurance. Several states already have the rudiments of a paid leave system available through temporary disability insurance (TDI), which provides partial wage replacement for medical leaves including pregnancy and childbirth. Some form of TDI exists in California, Hawaii, New Jersey, New York and Rhode Island, covering 22 percent of the nation's private work force.
Advocates in New York, New Jersey and California are working to expand the coverage offered by current TDI systems so that they will more effectively support the parents of newborns or newly adopted children, and Massachusetts, New Hampshire and Washington have looked into starting up TDI systems of their own. Other states have considered offering tax credits to employers who provide family-leave benefits, or allowing workers to use accrued sick leave to take time off with pay for family or medical reasons.
One key battleground is Minnesota, where this year's buzz was about a tripartite program--financed in equal thirds by the state, the employer and the employee--that businesses could voluntarily opt into. Because the idea involved drawing money directly from the state's general fund, the issue faced opposition from Republicans who were nervous about additional expenses at a time of diminishing treasury surplus.
Most of all, business worried that the program wouldn't stay voluntary very long. "If a pilot program is enacted that just uses $1 million, aren't we sort of setting out the promise to parents that a leave will be inevitable?" asked Tom Hesse, the chamber's director of labor management policy. "Then we come back to them and say, `Sorry, because of insufficient resources we're going to need more money, which will lead us right back to the unemployment insurance trust fund.'"
After much wrangling in the legislature, what ultimately ended up making the final cut was a $35,000 study of the issue. That makes Minnesota at least the sixth state to conduct a detailed assessment of the costs and benefits of paid parental leave programs, and the results have begun to filter into the legislative chambers. The other studies have not led to enacted legislation so far, but sponsors are convinced that they are a step in that direction. "It's an idea whose time has come," says Minnesota's Ellen Anderson, sponsor of the tripartite proposal. "It's time to ask politicians, `Do you want to give lip service to family values, or do you want to pay for them?'"
