Roper: Paid family leave proposal is why Vermont is unaffordable

By Rob Roper

As a result of the November 2018 elections, Vermont Democrats and Progressives achieved veto-proof majorities in both chambers of the Legislature. Their first priority flexing this new muscle is to pass a mandatory, government-run paid family leave program that will require a new payroll tax. This proposal demonstrates exactly why Vermont is an unaffordable, unfriendly place to live and do business.

The proposal, a version of which Gov. Phil Scott successfully vetoed last session, would mandate all Vermont workers begin paying a new 0.93 percent payroll tax, which would fund a government-run insurance program providing twelve weeks of paid leave at 100 percent of salary for new parents or those dealing with a family illness. Why mandatory? Because, according to news reports, “they [Speaker Mitzy Johnson (D-Grand Isle) and Sen. Tim Ashe (D-Chittenden)] said that a paid family leave program shouldn’t be voluntary, because it wouldn’t be able to attract the participation required to make it affordable.”

Rob Roper

Rob Roper is the president of the Ethan Allen Institute.

So, basically, the majority party leaders want to impose a new payroll tax on Vermont workers and create a new financial and bureaucratic burden for Vermont businesses to implement a new government program that people, by their own admission, don’t want. This is why Vermont is unaffordable for working people and has a national reputation as a terrible place to do business.

The median annual household income in Vermont is $74,426, which means the new tax will cost that household budget $692 a year for a benefit most wouldn’t sign up for and don’t need.

Not mentioned in any of the media coverage, it will create an uncalculated new cost of doing businesses for Vermont employers, who will now have to spend time and resources tracking and reporting employee data to the state in compliance with the law. It’s worth noting that many Vermont businesses already offer some form of paid leave, either formally or informally. Those that don’t tend to be small, struggling businesses that genuinely can’t afford to do so. Forcing them to do so will be a major hardship.

The program will also increase state bureaucracy necessary to run the new government program. In 2017 the Joint Fiscal Office scored the original paid family leave bill, H.196, estimating that the administrative costs of running the program would consume 7.5 percent of benefits, and will require a new $2.5 million IT system, and we all know how well the state does with new IT systems!

Governor Scott proposed an alternative paid family leave program in partnership with New Hampshire that would be both voluntary for private businesses and run through a private insurance company rather than the state. This is a far better — and much fairer — alternative.

Critics of the governor’s plan say that his proposal will be more expensive for participants. Yes and no. Yes, it would be slightly more expensive for those who volunteer to participate. But, for the majority of Vermonters who choose not to participate in the program it will be much cheaper – as in zero. This is fair. Those who want the program will pay to support it and benefit from it. Those who feel their scarce resources would be put to better use elsewhere would be free to invest as they see fit. But, again fairly, they won’t benefit from the Leave program.

The fact that the governor’s proposal would utilize an existing, private insurance provider that is expert in managing programs like this means that the state would not have to incur the unnecessary and inefficient expense of “reinventing the wheel” within an expanded state bureaucracy that is, frankly, not expert in running insurance programs. The total cost of this system would undoubtedly be less than the mandatory tax scheme.

Paid family leave benefits are certainly a good thing. The employers that are able to offer such benefits create for themselves a competitive advantage in hiring and retaining the best employees. But, this comes at a cost that the employer and the employee, and they, not the Legislature, are in the best position to determine if this benefit makes sense for them.

Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.

Images courtesy of Flickr/401kcalculator.org and Rob Roper

7 thoughts on “Roper: Paid family leave proposal is why Vermont is unaffordable

  1. Average Vermont income—quoting: “The median annual household income in Vermont is $74,426”. Where does that figure come from, I’ve seen other incomes at $50K+? Who has those salaries? Who is paying them? Must be Gov (state and local) employed, school staff and alike. Do people need those salaries to live in VT and survive?

    Wherever I go in VT I see dilapidated houses, towns in ruin, little or no jobs, sorry roads, high cost of living (fuel, food, taxes, utilities, etc) people having to move out of state.

    Something doesn’t add up, from the visual observations, happenings to what’s printed. It doesn’t take much to see reality and question “facts(?)”

  2. Programs produce nothing, they merely consume what is produced, this is what is killing Capitalism in our State. The sad thing is each time one is created the damage it inflicts creates the need for more programs.

    Programs are parasites of Socialism that pretend to help but never do!
    After they clean the wound, they always continue to consume the hose if they are not removed!

  3. Well said Mr. Johnson,

    All you’re doing here is to make it more attractive to take on a responsibility you are not prepared for. Deciding to start a family means giving up a lot stuff for yourself for quite some time. Stop making it attractive for people to make poor choices.

  4. It’s just another con game to make them look good. They have no interest in making families stronger, making our state attractive for families to move here.

    This program, gives well off a benefit they don’t need. People making good money, everybody really should have a savings of 6 months in the bank. It you have a house for $500k, the latest iPhone, drive the latest BMW or Tesla, should people earning $12 -30 per hour being paying for your family leave? Because you decide that you don’t want to save any money, nor have any plan on how to raise your child everyone else needs to pay? See how our legislature plays games? That raise you got in minimum wage will be immediately taken away.

    What is your plan to start a family? New flash Montpelier, it takes more than 12 weeks to raise a child. Now I know some thing that Vermont institutions can raise children, but most with common sense know better, the traditional family is still the bedrock of families and society. For those who have no plan on raising children this gives them a false sense of hope.

    If Vermont want’s strong families we should shed our state of the Big City social programs that are filling DCF with despair and failure, love and hope are a much better plan.

    Good Jobs
    Affordable Home Ownership/Living (low fees/taxes)
    Good Schools
    Low Crime/Low Drug Problems

    These are the things families need to survive and thrive. Bringing in more dependent programs will bring in more dependent people and bad planning. Of course everyone wants somebody else to pay for their time off, then people don’t have to save or give up their iPhone.

    Do we want to attract more people to our state that want to live off the government and your tax dollars or do we want to attract hard working, family orientated people who plan and save?

    Buffy and Biffy can drive sell their BMW and drive a Buick, it’s more reliable anyway, we don’t need our tax dollars supporting peoples lifestyles.

Comments are closed.