Paid Family Leave Will Cost . and Cost . and Cost.
Posted March 6, 2008

Marking an unfortunate turning point in yet another tax hike battle, the State Senate voted Monday to pass New Jersey’s paid family leave bill. The measure, which passed the Senate by a 22-16 margin, is expected to pass the Assembly, probably by the end of this month, and then be signed into law by the governor.

The bill would require businesses to give employees up to six weeks of paid leave each year to care for an ill family member or a child within 12 months of birth or adoption. Incidentally—or rather significantly – a “family member” under the bill includes any domestic or civil union partner as well as a husband, wife, father, mother, mother-in-law, father-in-law, grandparent, grandchild, child, brother, sister, foster child, or “any relatives … residing in the household.”

To fund this expedition, every employee in the state will pay an additional $30 per year in payroll taxes (up to a maximum of $33 per year). In turn, those who take advantage of the leave can receive two-thirds of their salary, up to a maximum of $502 per week or $3,012 over the six-week period.

As the Bergen Record reports, if the measure passes, New Jersey will become the third state with such an allowance, following California, whose 2004 law also gives workers up to six weeks paid leave, and Washington’s five-week paid leave law, which will go into effect in October 2009.  Under federal law, businesses with at least 50 employees are required to provide up to 12 weeks of unpaid leave per year. 

But according to Seth Grossman, Somers Point attorney, Executive Director of Liberty and Prosperity 1776, Inc., and host of Seth Talk Live!, the numbers don’t add up. Grossman writes in the Asbury Park Press:

According to my arithmetic, a $30-per-year deduction from every employee in the state pays for the program if only one employee out of 100 takes time off during any year…. If one in 10 employees takes the time off in a year, the state will collect $300 and pay out $3,012 for every 10 employees – a shortfall of $2,700. Multiply that by New Jersey’s 3.6 million employees, and you are spending close to another billion dollars – the same as increasing the sales tax to 8 percent.

Who will be left to pay for this shortfall?  Either businesses themselves or, you guessed it, New Jersey taxpayers. Either way, the burden is more than New Jersey can afford. This is the typical tax and spend policies with one caveat: Those who have pushed for this know the numbers and understand that this will, in the long term, be another program that employers and employees will have to fund with additional taxes. It is the same reasoning and actions that got this state into the fiscal mess we are currently in! Will they ever get it? 

According to Senator Leonard Lance (R-Hunterdon/Warren), the ranking Republican member of the Senate Budget Committee, the bill would “make New Jersey uncompetitive, particularly with Pennsylvania.” 

Senator Kevin O’Toole (R-Essex) echoed Lance’s sentiments: “What message is being sent? New Jersey is antibusiness.” 

Senator Anthony Bucco (R-Morris) agreed: “Small business is the engine that drives this state, and you know what, we’re choking the engine.”

The New Jersey Chamber of Commerce also again voiced its unequivocal opposition to the bill, saying in a statement, “[O]ur elected leaders do not comprehend that their timing could not be any worse. There is more economic uncertainty than ever and the last thing our business owners need to worry about is another mandate imposed on them by government.”

Even if the state decided not to hit businesses with extra costs, the alternative would be raising taxes on hard-working New Jerseyans … again.

The good news is that there is still time to send a strong message to Trenton that this bill is bad for business and bad for the people of New Jersey.  You can make an impact right from your home computer!  Click here to contact your two Assembly members and tell them to vote no on paid family leave.

 

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