Paid family and medical leave will benefit both employees and their employers.
Whether an employee can take time off for chemotherapy, or to care for a new baby or an ill relative and still receive a paycheck, such a benefit brings peace of mind to employees. In a crisis, workers don’t have to worry about going broke in addition to dealing with an emergency. For employers, the benefits also are clear. Happy employees do a better job. Turnover is reduced, keeping costs lower for bosses.
But legislation being debated in the Legislature — while well-intended — still needs work if it’s to benefit both employees and employers.
Especially in post-COVID-19 New Mexico, where small businesses have struggled through mandated closures, necessary but difficult minimum wage hikes and requirements to offer paid sick leave, the men and women whose work fuels our economy are under pressure like never before.
It’s possible to ignore the doom-predicting claims of business groups opposed to the legislation — the sky is almost always falling for them, whatever pro-labor benefit is discussed. However, we must not dismiss small-business owners who are telling lawmakers that the current iteration of paid family and medical leave is too big a burden. In a letter, Jessica Carothers of Los Ranchos summed it up: “After two years of pandemic restrictions on business, many small-business owners in our state are hanging on by a thread.”
Senate Bill 11 has passed the Senate and is being debated in the House, with Senate Pro Tem Mimi Stewart its primary sponsor. It would provide 12 weeks of paid time off for health emergencies and certain other claims, including caring for a new child or a family member with a major health issue.
The money to cover the costs of an employee’s salary would come from employees and employers — workers would pay $5 for every $1,000 of income, and bosses with five or more employees would pay $4 for every $1,000 of income. The paid leave would pay the entire salary for workers who make minimum wage and a percentage for others making more than minimum wage. Businesses with fewer than five employees are exempt.
The Department of Workforce Solutions would administer claims, with the legislation asking for $36.5 million from the general fund in nonrecurring funds to start the program. The money would eventually be paid back, with the intent for the program to be self-funding and self-sustaining.
However, in reading the fiscal impact report analyzing the fund, it becomes clear resources quickly could become inadequate. The task force established to write the legislation projected some $463.2 million would flow to the fund in 2025, with payouts of $368.3 in 2026. No worries, right?
The analysis, though, points out the task force projects a 4% uptake rate. With a higher uptake rate scenario of 10%, the fund could become insolvent. To prevent that, a cash infusion from the general fund might be necessary, or rates would have to be increased.
There’s a reason insolvency is plausible: Several states that have adopted paid family and medical leave show a higher rate of use than 4%, and New Mexico’s leave package has more eligible categories than a state such as Washington — where uptake rates exceed 4%.
The current proposal could be underfunded, in other words, meaning required contributions could increase significantly in the future. The legislation needs additional triggers — perhaps lowering payouts if necessary — should solvency come into question. Those aren’t built into the current bill.
The effort that went into writing this legislation is praiseworthy — paid family and medical leave must become a standard benefit. The need is clear. New Mexico should be proud of stepping up to fill in that gap. Yet wanting to do the right thing is not the same as actually getting the job done. Before this proposal becomes law, legislators must ensure the fund’s solvency and guard against crippling rate hikes in the future. There should be protections both for employers and employees, as well as offer support for smaller businesses that lack enough workers to fill in when a co-worker is gone.
New Mexico needs paid family and medical leave that benefits both employee and employer. This legislation is not the answer.
