Implementing Paid Family and Medical Leave Insurance:

ConnecticutPRESENTATION BY:

SARAH JANE GLYNN, CENTER FOR AMERICAN PROGRESSAND JEFFREY HAYES, INSTITUTE FOR WOMEN’S POLICY RESEARCH

ADDIT IONAL RESEARCH SUPPORT BY: GAYLE GOLDIN, CONSULTANT

SARAH FLE ISCH F INK, NATIONAL PARTNERSHIP FOR WOMEN AND FAMIL IES

SHERRY LE IWANT, A BETTER BAL ANCEAND VICK I SHABO, NATIONAL PARTNERSHIP FOR WOMEN AND

FAMIL IES

What is Paid Family and Medical Leave?

Paid family and medical leave insurance provides wage replacement when workers need time off to:

Care for a new babyCare for a seriously ill family memberAddress their own serious health condition

The United States versus the rest of the world

The United States:◦ Only advanced economy without paid maternity leave◦ One of a handful without paid paternity leave or temporary disability leave◦ Only high wealth country without any form of paid leave at all

5 states currently offer Temporary Disability Insurance: California, New Jersey, Rhode Island, New York, and Hawaii

◦ 3 states also cover family caregiving: California, New Jersey, and Rhode Island

More than a dozen states and the District of Columbia introduced paid family and medical leave insurance bills in 2015

Why Paid Family Leave Insurance?

Economic benefits to workers and economy◦ Increased likelihood of labor force participation

Health care benefits ◦ Breastfeeding, vaccinations, child well-being◦ Reduced stress

Anti-poverty measure, reducing the risk of:◦ Bankruptcy, ◦ Job loss, ◦ Having to rely on benefits like SNAP and TANF

What do people currently do in CT when they have a health crisis or new baby?◦ 74%of Connecticut children – 550,398 children – live in households where all parents work ◦ Nearly 777,000 people above the age of 60 live in Connecticut

Simulation ModelDeveloped in early 2000s by IWPR and economists at UMass-Boston, Albelda and Clayton-Matthews 2000 FMLA Survey from Department of Labor Current Population Survey Annual Social and Economic Supplements

Updated in 2014-2015 with funding from the Department of Labor (WB & OASP) 2012 FMLA Survey collected for DOL by Abt Associates American Community Survey

FMLA Survey used to estimate worker leave taking decisions when a qualifying event occursACS used as source of local labor market information

Simulating Use of Paid Leave Program and Employer Paid Leave

Policy Scenarios for Cost Modeling

Model Summary Benefit Level Eligibility

1 Task Force ProposalConnecticut FMLI Taskforce report for up to 6 weeks of FMLI.

Two-thirds of average weekly earnings up to a maximum benefit of $1,000 per week.

A worker must have earned at least $9,300 in the base period.

2 Legislation IntroducedBased on Connecticut 2015 H.B. 6932 for up to 12 weeks of FMLI.

100 percent of average weekly earnings up to a maximum benefit of $1,000 per week.

A worker must have earned at least $9,300 in the base period for an employer with 2+ employees.

3 Sliding Scale Benefits Sliding scale benefit formula to provide 12 weeks of FMLI.

100 percent of first $385 per week in average earnings, 80 percent of amount over $385 up to $769 per week, and 66 percent of higher weekly earnings.

A worker must have earned at least $5,050 (500 hours at $10.10/hour)in the base period for an employer with two or more employees.

4 MA Benefit Calculation 6 Weeks

Sliding scale benefit similar Massachusetts S. 1008 for 6 weeks of FMLI.

95 percent of first $231 per week in average earnings, 90 percent of amount over $231 up to $385 per week, 80 percent of amount over $385 up to $615 per week; and 66 percent of higher weekly earnings over $615 per week up to a maximum weekly benefit of $1,000.

Worker eligibility based on 1,000 hours in the base period.

5 MA Benefit Calculation 12 Weeks

Sliding scale benefit similar Massachusetts S. 1008 for 12 weeks of FMLI.

Same as Model 4. Same as Model 4.

Total Number of Leaves Taken Annually

Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

Current PolicyTask Force

ProposalLegislation Introduced

Siding Scale Benefits

MA Benefit Calculation 6

Weeks

MA Benefit Calculation

12 Weeks(Baseline) (Model 1) (Model 2) (Model 3) (Model 4) (Model 5)

Own Health 170,928

180,470

182,544

181,608

181,939

177,073

Maternity & Bonding

45,152

44,367

45,955

44,025

44,521

46,356

Family Care

71,882

71,624

72,522

73,223

73,038

69,728

Total 287,962

296,461

301,021

298,856

299,498

293,157

Change --

8,499

13,059

10,894

11,536

5,195

Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

Annual Number of Leaves Claiming Benefits

Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

Task Force Proposal

Legislation Introduced

Sliding Scale Benefits

MA Benefit Calculation 6

Weeks

MA Benefit Calculation 12

Weeks(Model 1) (Model 2) (Model 3) (Model 4) (Model 5)

Own Health

73,248

74,973 78,209 75,418 70,924Maternity & Bonding

20,692

22,727 22,590 20,328 21,197

Family Care

3,781

3,931 4,438 3,799 3,394

Total

97,721 101,631 105,237 99,545 95,515

Cost of BenefitsTask Force

ProposalLegislation Introduced

Sliding Scale Benefits

MA Benefit Calculation 6

Weeks

MA Benefit Calculation

12 Weeks(Model 1) (Model 2) (Model 3) (Model 4) (Model 5)

Own Health ($M) $192.0 $354.7 $334.1 $225.4 $292.7Maternity & Bonding ($M) $38.8 $80.0 $77.1 $42.5 $68.7Family Care ($M) $3.8 $5.7 $6.4 $4.1 $4.8Total Benefit Cost ($M) $234.6 $440.3 $417.6 $272.0 $366.3

Administrative (5 percent, $M) $11.7 $22.0 $20.9 $13.6 $18.3Total Cost ($M) $246.3 $462.4 $438.5 $285.6 $384.6Cost, Percent of Total Earnings 0.29% 0.54% 0.51% 0.34% 0.45%Cost, Percent of Sliding Scale 31% 58% 55% 36% 48%

Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

Two Sources of Administrative Cost Estimates

1) ESTIMATED BENEFIT COSTS FOR WASHINGTON HB 1273 (2015) AND CALCULATED ADMINISTRATIVE COSTS FROM FISCAL NOTE AS A PERCENTAGE OF BENEFIT COSTS

2) PROJECT TEAM OBTAINED ADMINISTRATIVE COSTS AS A PERCENTAGE OF BENEFITS PAID FROM RHODE ISLAND DEPARTMENT OF LABOR AND TRAINING

2014 (Year 1 for TDI & TCI) 5.3 percent2005-2014 Average 4.6 percent

Flat and Sliding Scale Contribution Rates

Based on a request from the working group, two methods were used to calculate the amount of income to self-fund FMLI on a sustainable basis.Flat rate based on TOTAL EARNINGSSliding Scale Contributions Based on Workers Annual Earnings 0.0 percent on annual earnings below $20,0000.6 percent on annual earnings of $20,000 - $39,9990.8 percent on annual earnings of $40,000 - $74,9991.0 percent on annual earnings of $75,000 or more

Program IncomeANNUAL PROGRAM INCOME FROM SLIDING SCALE (IN MILLIONS 2017 $s)

Annual IncomeQuarterly

Income

Private Wage & Salary $684.3 $171.1State/Local government $98.3 $24.6

Self-employed $51.0 $12.7

Total $833.6 $208.4

Source: IWPR Analysis of 2014 American Community Survey.

Notes: Includes individuals employed in Connecticut. Earnings were adjusted for inflation of 1.5 percent per year between 2014 and 2017.

BASED ON TOTAL ANNUAL EARNINGS (IN MILLIONS 2017 $s)

Total Earnings

Annual Income (0.54

percent)Quarterly

Income

Private Wage & Salary $79,603.9 $429.9 $107.5State/Local government $11,324.4 $61.2 $15.3

Self-employed $6,008.8 $32.4 $8.1

Total $96,937.1 $523.5 $130.9

Source: IWPR Analysis of 2014 American Community Survey.

Notes: Includes individuals employed in Connecticut. Earnings were adjusted for inflation of 1.5 percent per year between 2014 and 2017.

Percent of Leaves Receiving NO COMPENSATION

Current Policy

Task Force Proposal

Legislation Introduced

Sliding Scale Benefits

MA Benefit Calculation

6 Weeks

MA Benefit Calculation

12 Weeks(Baseline) (Model 1) (Model 2) (Model 3) (Model 4) (Model 5)

Overall 24.6% 16.2% 16.4% 16.1% 16.4% 17.1%Main Reason for LeaveOwn Health 25.1% 15.7% 16.1% 15.6% 15.7% 16.6%Maternity & Bonding 23.6% 7.7% 7.4% 5.7% 9.0% 7.9%Family Care 24.3% 22.9% 22.8% 23.7% 22.7% 24.7%

Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

Ongoing Administrative Costs•Roughly 120 employees are likely to be needed when the program is fully operational.

•It is important to consider that staffing will not start at 120 employees, but rather be a gradual increase over time as claims increase.

•When fully staffed, the annual costs for salaries and benefits will be $18,528,207.

One Time Startup Costs Each of the cost simulation models outlined in this report includes an additional 5 percent of benefit payments to cover administrative overhead. However, regardless of the model selected, the fund will have one-time start-up costs in addition to the ongoing administrative expenses. In total we estimate the initial startup costs at approximately $13.6 million. The estimated start-up costs include:

Initial technology development including hardware, software and programing estimated at $7,725,099

Salaries and benefits for additional employees involved in the initial planning and training estimated at $4,729,174

Overhead and capital needs including office space, phone lines, and computers for staff estimated at $776,700

Initial outreach and education efforts to raise awareness of the program estimated at $340,000

Important Consideration for Policy

Eligibility ◦ Low eligibility threshold to ensure most vulnerable workers are covered

Inclusiveness ◦ Should cover all workers in the state

Length of Time ◦ No less than 12 weeks

Benefit level◦ Wage replacement should be high enough to allow for program participation

Contributions ◦ Employer, employee, or both

Administration ◦ State run program is preferable