Paid leave costs increasing annually

The number of people tapping the taxpayer-provided Paid Family and Medical Leave fund is increasing every year.

The paid-leave program was launched in 2020. It imposes a tax on employers and workers, whether or not the workers ever use the program. The money is used to allow some workers taxpayer-paid time off if they have a serious health condition, need to care for people or want to bond with a new child on taxpayers’ dimes.

If you build it they will come. And they did.

The Employment Security Department shows that in the program’s first year, 112,737 people were approved. In 2023, the number of people receiving benefits grew to 210,268.

As for benefits paid out?

In 2020, just more than $613 million was paid out. In 2023, that amount more than doubled to close to $1.5 billion and up 24% from the previous year. (The number of applicants and wages rose, and so did the benefits.)

The increased number of people applying clearly wasn’t just a COVID thing, which is proponents suggested when the tax rate on workers nearly doubled from initial 0.4% to 0.8% in 2023. After lawmakers gave the program a bailout and shifted $200 million to the program, the rate lowered slightly to 0.74%.

The Washington State Standard reports, “When the Legislature plopped $200 million into the account it artificially pushed the tax rate lower, explained Caitlyn Jekel, the department’s government affairs director.”

The tax rate is set using a formula that factors in the program financial balance. If the balance is low, the higher the rate has to go. Artificially lifting the program’s balance made nice headlines for paid family and medical leave proponents when the rate lowered slightly. It did not help the situation of a too-generous program sitting on the backs of low- and high-income workers.

Last year when looking at financial woes, I found that paid leave is no safety net. The money workers and employers pay isn’t primarily helping people in need. It is going to middle- and upper-income wage earners. Lower-income workers are penalized.

They could be penalized again soon with a tax rate that goes even higher than 0.8%.

Alison Eldridge, leave and care assistant director at the Employment Security Department, told the Senate Labor and Commerce Committee that a program deficit could happen as soon as October.

Sen. Steve Conway, D-Tacoma, noted some states with similar programs have higher payroll taxes attached to them — closer to 1%.

“I wonder if we have structured it properly to make sure we don’t have these funding crises every other year,” he said. Sen. Karen Keiser, D-Des Moines, suggested that staff check whether other states have income caps paid leave taxes as Washington state does.

Conway and Keiser are two of the senators concerned about why program costs keep rising for an idea they support. I am concerned, too, but we should all know why: PFML is laced with entitlement.

It’s hard not to feel entitled to other people’s money when you’ve been forced to pour your wages into a shared piggy bank. I hope the state doesn’t ever require low-income workers to start paying into a fund other workers can use for vacation time or mental health days.

Paid leave came before WA Cares and its payroll tax of 58 cents on every $100 of earnings in 2023. WA Cares is another social program that won’t help workers paying in and requires low-income workers to give money to people with more resources. It also has solvency concerns.

Workers keep seeing decreases on their paychecks, compliments of lawmakers redistributing their income. Lower-income workers shouldn’t be paying higher-income workers to bond with babies or take medical time off from work or receive long-term-care services.

They should be able to keep more of their wages, and the state should protect safety nets for people in need.

— Elizabeth New is the director of the Centers for Health Care and Worker Rights at the Washington Policy Center. Email her at enew@washingtonpolicy.org.