The cost of having or not having paid family leave

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Good afternoon everyone,

An often cautious Gov. John Carney may have surprised some in the business community when he announced support for paid family leave in his State of the State speech.

So far, nine states have put paid family leave/disability leave systems in place. The U.S. is frequently cited as one of the few First World nations without paid leave.

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As the population ages and the costs of starting a family increase, calls for an expanded family leave safety net have grown.

In addition to maternity leave, many workers face the financial burden of fighting a health condition, getting called to active duty with the National Guard, or caring for a loved one, perhaps in their final moments.

There remains the distinct possibility their employer will find a way to eliminate their job once unpaid leave ends. Some smaller employers often have few options, a situation made worse by the current labor crunch.

The 19-page piece of legislation from Sen. Sarah McBride, D-Wilmington, calls for a state-run system to add a few tenths of one percent to payroll taxes.

That might not seem like much of a burden, but with inflation on the rise, the cost will squeeze some small businesses and nonprofits. (Many larger employers already have a paid leave or disability insurance system in place that could be exempt from the tax).

It was no surprise that the National Federation for Small Business came out against the measure.

“Senate Bill 1 creates a new fixed labor cost, and that will serve as a deterrent, not a catalyst, to solving our state’s labor shortage,” NFIB noted.

One area of the bill that is raising eyebrows comes in the fiscal note.

Under the bill, the state Department of Labor would need to hire 67 employees to pour through the mountain of paperwork that would come from claims. The cost is estimated to run more than $7.4 million annually, with another $20 million in one-time start-up costs.

Other alternatives should be explored and a cost analysis that goes beyond a bare-bones fiscal note.

Unfortunately, Delaware does not have a mechanism that fully explores the costs and options from well-intentioned legislation that can come with unintended consequences.

Agree or disagree? Let us know. Simply reply to this email. – Doug Rainey, chief content officer.

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Delaware Business Now is a four-year-old, five-day-a-week newsletter and website operated by Bird Street Media LLC. Publisher and Chief Content Officer is Doug Rainey, a 30-year veteran of business journalism in the state of Delaware.  Business Now focuses on breaking business news in Delaware and immediate adjacent areas with apropriate background and perspective. Also offered exclusively in our FREE newsletter is commentary on state and regional issues. Have a complaint, question or even a compliment? Send an email to drainey@delawarebusinessnow.com. For advertising information, click on the About tab at the top of the home page Our business hours are 8 a.m. to 5 p.m., Monday through Friday. Call us at 302.753.0691.
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