Posted on 03/05/2020 11:04:03 AM PST by Kaslin
Following increased interest in expanding access to paid family and medical leave, Rep. Rosa DeLauro, D-Conn., joined forces with Sen. Kirsten Gillibrand, D-N.Y., to promote the Family and Medical Insurance Leave, or FAMILY, Act. If we believe the act's supporters, it would cost close to nothing and provide essential benefits to employees who don't currently receive them.
Unfortunately, these claims are bogus.
Under the FAMILY Act, the federal government would offer 12 weeks of paid time off to enable workers to care for infants, recover from major illnesses and care for severely ill relatives. During that time, employees would receive benefits administered by the Social Security Administration equal to 66% of their regular earnings, with a minimum monthly benefit of $580 and a maximum monthly benefit of $4,000. To pay for this new handout, the federal government would impose a 0.4% payroll tax to be divided evenly between employers and employees.
Gillibrand argues that the act would provide greatly needed benefits to employees at a minimal cost to them. One of her favorite talking points about the proposal is that it would cost employees only $4 a week, or the equivalent of a cup of coffee.
Unfortunately, the senator's assertion is quite misleading. For starters, a 0.4% hike in the payroll tax would not be enough to pay for the federal spending under the plan. The Congressional Budget Office, or the CBO, released a score of the bill as introduced and found that the FAMILY Act would increase spending by $547 billion in benefits and administrative costs over 10 years, but it would only increase net federal revenues by $319 billion during that time. That means that $228 billion in spending wouldn't be paid for by the FAMILY Act's new tax.
While the federal government is no stranger to deficits, in this case -- and contrary to what FAMILY Act supporters seem to believe -- this deficit will require either more tax revenues or fewer government benefits. The CBO points out that the act "would limit program outlays to amounts in the trust fund," which the Heritage Foundation's Rachel Greszler explains in her recently released paper "is the accumulation of the FAMILY Act's payroll taxes." This means that one way or another, spending must equal tax revenues. Therefore, Congress will have to either ration benefits or raise the payroll tax.
By how much? It would double within four years of the first benefits, which would be paid in October 2022.
Greszler calculates that as the number of people claiming the benefit increases, if benefits aren't rationed, "In 2023, the initial 0.4 percentage point payroll tax would have to rise by 25 percent to 0.5 percentage points. By 2026, the necessary payroll tax would need to double to 0.8 percentage points, and by 2028, it would need to rise to about 240 percent of its initial level, to 0.95 percentage points." And that's just the beginning. This, of course, is on top of the already steep and regressive existing payroll tax.
Moreover, even though employees and employers split the FAMILY Act's payroll tax, most of the employer's share of the tax will still fall on workers. That's because, over time, employers shift the costs of new taxes onto employees in the form of lower wages. In other words, employees will shoulder most of the payroll-tax increase. The CBO accounts for some of this shifting as it projects a $42 billion reduction in federal revenues because employers will reduce workers' wages and benefits.
The FAMILY Act would also lead to other undesirable changes, like a shift in resources from those with lesser means to those who already have more. Greszler explains that in the United States, "where substantial employer-provided paid family leave exists, a government program could be even more regressive because it would provide windfall benefits to larger companies and higher-income employees who already have paid family leave policies." This is currently happening with state-based paid family leave programs. Companies that used to provide the benefits are now asking their employees to tap into the taxpayer provided program first.
Finally, but importantly, economic research reveals that employees -- and women in particular -- in countries where government has implemented such benefits face more discrimination, fewer advancement opportunities, fewer hours of employment and lower wages. These are the unseen costs of such programs that the act's supporters ignore.
All of these facts together make for a very expensive cup of coffee.
Moreover, even though employees and employers split the FAMILY Act's payroll tax, most of the employer's share of the tax will still fall on workers. That's because, over time, employers shift the costs of new taxes onto employees in the form of lower wages. In other words, employees will shoulder most of the payroll-tax increase. The CBO accounts for some of this shifting as it projects a $42 billion reduction in federal revenues because employers will reduce workers' wages and benefits.
Reduced wages mean shorter hours. Instead of 40 hours you are lucky if you get 20, and honestly I can not blame the employers
Correction: I meant the fourth paragraph from the bottom.
So it’ll less than Starbucks. Cool!
Wait, wait, we’re already paying $4 for a $1 cup of coffee...
Who in their right minds pays $4 for a a cup of coffee?
Very little our government does actually benefits workers or the middle class.
In many ways, government regulation and our fiat money system are actually destroying the middle class and giving even more wealth and power to America’s elites.
Or, make your coffee at home and pay about 10 to 20 cents a cup. $4 cup of coffee is one of those aspirational products, but more than most, makes no effin' sense.
The same idiots that go six figures into debt they can never pay back for a useless degree.
You’re already paying $10 for a less than $1 pack of cigarettes in NY State.
I have known people who have smoked moderately their whole lives- they are in their 80’s.
Tobacco companies used to be HUGE Republican donors.
I firmly believe that if they were Democrat donors we would all be learning in school how healthful it is to “bathe your lungs in cleansing smoke”
Don’t make fun of my Gender Studies degree. I learned a lot of big words. Lots.
How long will it be before some genius figures out that you can use the “FAMILY” act to get themselves a paid vacation?
The “reward” for having a Federal Reserve where people who produce nothing worthwhile live off of the churn (needing constant inflation) is a dollar worth $0.17 Constant 1973 dollars in 2020.
bttt!
Let’s begin by not paying $4 for a $0.50 cup of coffee.
Paid Family Leave Act Will Have You Paying $10 for a $4 Cup of Coffee Which Used To Cost $0.25 With Free Refills ...
I would only pay $4. bucks for a cup of coffee if I felt like getting robbed and ripped off. I’m not feeling it.
I make my own.
No coronavirus, no spit, no smug and snarky barista....................
And $4 is too much
This act must not pass.
Maternity leave for female employees only - OK
Anything more will be destructive to all businesses - industry, manufacturing, main street retail. What happens to the job while they are out on family leave? Double up the work load with remaining employees? or hire a temporary employee during the absence? It makes an employer think twice about hiring females of child bearing age.
Paying $10 for a $4 cup of coffee shouldn’t be a big deal.
We are already paying $4 for a 25¢ cup of coffee.
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