Jersey Has Lost 10k Jobs in '08 - Time To Increase Payroll Taxes

A quick note to anyone who works for a company with at least two employees: New Jersey's paid family leave mandate may cost you more than bill advocates would have you believe (shocking, we know).

The paid leave program will be funded by an increase in the Temporary Disability Insurance (TDI) tax. Paid leave proponents workers stress that workers will be paying the maximum of $33 per year to fund the new program. Plus there's an initial raid of $25 million from the existing TDI fund with a promise to pay it back. Eventually.

That estimate is based on California's usage rate of about 1%. However, the State Chamber went out and polled their members who offer a paid leave benefit. They found that companies offering paid leave experience a utilization rate of 8%. They aptly point out that if the general population used paid leave at a number close to private sector use, the actual cost to workers in the state would be closer to $250 in keeping with legislators pledge not to have employers directly fund the program. Almost anything above 1% of eligible workers using the benefit would represent higher payroll taxes for workers in New Jersey.

Too bad the Assembly Labor Committee refused to consider a voluntary opt-out for employees in the state, huh.

Add this to the other problems we've enumerated here at CIANJ - decreased competitiveness, cost to employers, lawsuit liability and an economic downturn.  Remember, NJ is one of only six states with paid maternity leave. Maybe six weeks of paid time off for the mothers of newborn children is all we can afford.

Update: A loyal reader of NJ Business Matters wrote to remind us of this January 2008 study, which found fewer than 30% of Californians were aware of the Golden State's paid leave program. If more Californians learn about the program, then surely more are likely to use it - putting the 1% assumption in further jeopardy.

An excellent reminder from a savvy reader. Not to be outdone, CIANJ reminds readers that in January California saw 18,874 workers take advantage of paid leave - if that trend continued for the year, it would represent 1.3% of working Californians.