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Wed., April 18, 2007

‘Buy now, pay later’ haunts family leave

Most consumers know to grab their wallets when they see the words “buy now, pay later” in large letters in the display window. Nothing says you’re over your head – or out of your mind – quite so clearly as the chance to take home the goods before you’ve figured out how to pay for them.

And yet, that’s where the Legislature seems to have landed with regard to one of this year’s signature benefits: paid family leave. Wise and wary consumers will rightly suspect large hidden costs.

A little background. Back in 1993, Congress passed the federal Family and Medical Leave Act. The law requires businesses with 50 or more employees to grant up to 12 weeks of unpaid leave to workers to care for a new child, seriously ill family members or to deal with their own health problems. Since then, there have been many efforts to expand the benefit at the state level.

In 2002, California became the first state to establish a paid benefit, allowing workers up to $882 per week for six weeks to care for a new child or seriously ill spouse or domestic partner. California lawmakers are already working to expand the scope.

For at least six years, similar efforts have been under way here, with a version passing the Senate two years ago. This year, the effort picked up heavy topspin with sophisticated lobbying by liberal advocacy groups and labor unions.

On a largely party-line vote, the state Senate passed a broad family leave bill that would provide a $250 weekly benefit for five weeks to employees to care for a new child or ill family member. Employees would pay for that benefit through a two-cent-an-hour payroll tax.

Gov. Chris Gregoire said she thought the new tax should be put to a public vote. House Democratic leaders also held their enthusiasm in check, but passed a bill last weekend narrowing the scope of the benefit and punting key decisions, including funding, to a task force. Observers expect a reluctant Senate to concur.

The House takes the Senate’s $250 a week for five weeks, but restricts it to care for a newborn or newly adopted child. That’s scaled down from the Senate version, which also included care of family members. But not much. In California, nearly 90 percent of the claims involve spending time with a new child.

There’s nothing wrong with the goal. Who objects to a new mother or father spending time with an infant child? And who would not try to alleviate the stress of a colleague caring for an ailing parent or spouse while holding down a full-time job? That’s why most good employers work with their employees during these and other life transitions.

It’s the right thing to do, both for the affected employee and for the business. Sure, it’s in the employer’s own best interest, but for most, it’s much more than that. They genuinely strive to improve the lives and opportunities of their employees, who frequently are also their neighbors and friends.

Too often, new state regulations impose straitjackets on employers who need flexibility to respond to a changing marketplace and the challenges faced by their employees. While supporters tout the pennies-an- hour cost of the Senate plan, they don’t mention the substantial unemployment insurance liability faced by small businesses who must fill the vacancy. If the employer cannot afford to hold the job open for the leave-taking worker, there are significant consequences in unemployment insurance taxes, another reason not to hire more employees in Washington.

And, as we’ve already seen, mandated benefits expand like waistbands at an all-you-can-eat buffet. Once the benefit is on the books, lawmakers can expect requests each year to expand the scope and increase the value of the stipend.

Granted, there are some lousy employers out there, who rarely run successful operations as they have trouble keeping good employees. But when government regulates to catch the bad guys, very often it does real harm to the good guys by taking away their flexibility and jacking up their costs.

Bet on it: We will not be able to afford family leave on the “buy now, pay later” plan.

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