Making Family Leave Family-Friendly

California considers a law that will subsidize new parents

In 1993, Congress passed the Family & Medical Leave Act, which gave employees the right to 12 weeks of unpaid leave to care for a newborn or for a sick family member. Now, family activists in more than two dozen states are pushing for the next step: ensuring that workers can afford to take time off by subsidizing their leaves.

On Aug. 30, the California Legislature passed a paid-family-leave law that could become the country's first. Governor Gray Davis has until the end of September to sign or veto it, or let the bill become law without his signature. Although many companies oppose the notion as too burdensome, advocates assume it will become law, given that national polls show 82% of women and 75% of men favor the idea.

Either way, the attention the issue is getting in California is likely to focus national attention on paid leave. The movement has taken off since a 2000 Labor Dept. survey found that 78% of those who say they want to use the federal leave law can't afford to do so. Already, 28 states have some kind of paid-leave law pending. "That was the catalyst for a lot of us to act--when we realized that millions of people can't use the federal law," says Art Pulaski, head of the AFL-CIO's California unit, which has pushed the bill in that state.

Popular though the idea may be, the question, of course, is who will pay for the new benefit. The California bill would expand an existing program called State Disability Insurance. Employees could tap the SDI system for about half their pay, up to a maximum of $380 a week, for six weeks, to care for a new baby or a sick relative. The funds would come from a 50 cents-a-week hike in the current SDI employee tax. Not everyone is thrilled with the plan. At a news conference earlier this month, California Manufacturers & Technology Assn. President Jack Stewart said: "California would be the first state to pay people to take leave time off. It sets up a new tax at the wrong time."

In an effort to get business on board, the bill's sponsors made some concessions. They agreed to halve the duration of leave time to be subsidized, which originally matched the federal law's 12 weeks. They also accepted that employees should pay the entire 50 cents instead of splitting it 50-50 with employers.

Even so, some business groups remain opposed to the legislation. Both the California Chamber of Commerce and the Manufacturers & Technology Assn. have lobbied hard against it, calling it a "job killer" that would cost employers $2 billion a year. Some companies believe the program would be difficult to administer and would encourage more workers to take leaves. It would also create inequities, since all would pay for benefits only some use. "We're opposed to this bill," says Intel Corp. spokesman Robert I. Manetta. "Our understanding is that it will create an extremely expensive and easily abused leave system."

Small employers are even more opposed, because they say the bill would require companies with fewer than 50 employees to give workers their jobs back if they take a leave--which they need not do under the federal law.

But the bill's patrons say business' fears are overblown. They argue that the costs of fill-in workers would be offset by a decline in turnover and a rise in retention. The reason: Fewer workers would quit when a new child or medical emergency comes along. Proponents cite a recent study by University of Chicago economist Arindrajit Dube, which found that such factors would save companies in the state a total of $89 million a year. State taxpayers would save $25 million a year, because fewer low-wage workers would quit to take a leave and wind up using welfare or food stamps.

Advocates are now gearing up to push for paid leave in the other states. One early target: Massachusetts, which passed a bill in 2000 that GOP Governor A. Paul Cellucci didn't sign. Whatever the outcome in the Golden State, the issue is now on the national agenda.

By Aaron Bernstein in Washington, with Ronald Grover in Los Angeles and Cliff Edwards in San Mateo, Calif.

— With assistance by Ronald Grover, and Cliff Edwards

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