Travaglini on the Family Leave Proposal

On Tuesday, State Senate President Robert Travaglini addressed the Greater Boston Chamber of Commerce and described a proposal for paid family leave that we’ve been discussing here on Blue Mass Group ever since.  I just listened to a broadcast of Travaglini’s speech, and want to report his take on the proposal.

Travaglini stressed that this is still a proposal, not a bill about to be voted on.  He expects that it will go through some changes during the drafting and committee process.  He also stressed that it is not an impulse announcement, but rather the result of years of study and work by previous legislative and executive elected officials, and consultation with the MIT Workplace Center.  It’s modeled on a successful family leave law in California, but goes further.

  • Paid leave would be available for up to 12 weeks a year, for  parents of newborn children, people with medical emergencies, and families of people with medical emergencies.
  • The program would be funded by a contribution from employees, not employers.
  • Paid leave would only be available to employees who had been with their employer for at least 9 months or put in at least 900 hours (equivalent to about 5-6 months of full time work)
  • People seeking paid leave for medical reasons would need a letter from a doctor.
  • There would be penalties for fraudulent claims for paid leave.
  • Paid leave would begin after five days during which the employee uses either vacation time or sick time.

Travaglini talked about California’s law, which has similar benefits but only covers 6 weeks and 55% of salary.  He said it has been so successful and popular that Governor Schwartzenegger, who initially said he would try to repeal it, dropped his opposition.  So far, according to Travaglini, only 1%-2% of California workers have taken advantage of paid leave, which indicates that the expense will be relatively small and fraud not a major problem.  According to estimates by the group who worked on this proposal, the actual cost would average $1.50-$2.00/week per worker.

Travaglini referred to research that shows that having paid family leave reduces employee turnover, and increases productivity.  He presented it as “trading risk” in exchange for the weekly, positioning this as an insurance program, similar in concept to Social Security in my opinion.  It fills in the smaller spaces that Social Security left uncared for.

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17 Comments . Leave a comment below.
  1. Why another tax?

    I think three months of paid leave for either parent is an excellent idea. Strong families, well cared-for children = healthy society. But why impose another tax, and a big bureaucracy to administer it. I think companies should be required to give employees three months of paid leave when they have a baby, period. I ran a small business for many years and that is what I did when one of my employees had a baby. If the net social benefits of this kind of policy are positive, it will help the Massachusetts economy. Canada with 14 months and Sweden with 16 are doing just fine. In fact, that's what happened in my company: my employee insisted on doing some work from home, the three months were up fast, and she came back better than ever. If anti-family anti-baby business whiners are too strong politically, then I guess forcing employees to pay is better than nothing, but for God's sake spare us from another state agency to administer this program.

    • The problem is that it builds in discrimination...

      I think companies should be required to give employees three months of paid leave when they have a baby, period.

      OK -- now you're a small business(wo)man, and you have to choose: do I hire the young woman or the man, both equally qualified.  If the woman gets pregnant, I lose 1/4th of a year of productivity.  I've got to pay for it, but get nothing.

      If I hire the man, he might use leave, but its less likely than the mother.  So, if they're equally qualified, who do I hire?  The man.  In the near term, he's less risky.

      Designing a system that encourages this kind of behavior is a bad idea.  Instead, running it like "insurance", so that the money is paid in regardless of the gender & age makeup of the employees, will help prevent these kinds of problems that absolutely would crop up.

      • Disagree

        I did run a business, and I chose a woman -- despite my family leave policy (and the law, incidentally, in that jurisdiction). In fact, I hired lots of women. Why? Because they were the best candidates for the jobs. Maybe they would have children and maybe not. It didn't enter into my hiring decision. I wanted to make money by hiring the best possible people. There is logic to your supposition, but as a practical matter I suspect the possibility of family leave is so attenuated that it won't make any difference. Do you have any hard data for your statement? Women seem to be doing OK in the workforce in Canada and Sweden despite the family leave laws in those countries.

      • Some citical thought on BMG ... finally

        Stomv is exactly correct.  He points out one of many  unintended consequences of Family Leave which actually hurts women.  Personal child-rearing anecdotes and grass-is-greener European (and Californian) comparisons shouldn't be presented as conclusive proof of the program's merit.

        And Stomv's scenario is only part of Family Leave's downside, albeit an immediate one (should it ever be passed.)  There are its long-term effects of inhibiting job creation, increasing the cost of living, and increasing levels of taxation which go unmentioned.

        When will liberals begin analyzing both sides of the equation?

        • you flipped it

          Actually, he was saying exactly the opposite.

          The drawbacks you praise him for pointing out, are the drawbacks of not having this kind of paid leave program.  Without such a program, the burden and expense falls largely on the employer.  Sure, some people just don't take leave, but their productivity is shot because they're not taking the leave because they can't do without the pay.  So either the employer loses their employee, or pays for their employee's leave time (as Bob describes he did), or pays normal salary for very reduced productivity.  A proposal like Travaglini's would lift that burden from employers through an insurance program covered by employees.  Productivity goes up, and costs to employers go down.

          ... and because the burden is no longer on the employer, fewer employers will be tempted to discriminate against women.  (Bob, just because you didn't, doesn't mean nobody does - even if, as I believe, doing so hurts them, and not doing so helped you.)

          I don't see anyone presenting California's experiment as "conclusive proof", but it sure is evidence.  Present your counter-evidence.

        • do you have any analysis?

          if so, I think we'd all be interested in hearing it.

          I like the proposal. It's pro-family.

          Some people tend to forget the human side of the equation -- just because a woman wants a baby does not make her eminently unqualified for a job (and in some cases, she's the best candidate, as Bob pointed out.) shortsighted is the policy-maker who believes that any time a person must leave work for family is inherently bad for business.

          I would argue the opposite: this being a free market-place, wouldn't workers go to work for the company that offers the better benefit? Thus depriving the business owner who chooses not to support family values.

          You also create resentment within the existing workforce when you force them away from their newborn children. Smart business owners, like Bob, understand that their employees are people and work better in a positive atmosphere. Rather, the conservative viewpoint seems to be one of constant damnation for basic family values like raising children.

          feh.

          • that reply is to BS

            not Cos... posting order didn't come out right

            • it worked

              Indentation is what indicates threading.  Your comment is at the same indent level as mine, and one level past bostonshepherd's comment.  In other words, it looks (correctly) like we both replied to bs, but I replied first so my reply shows up above yours.

              • thanks, cos,

                I want to make sure my jabs are aimed at the right place, which tends to be BS in general, as well. go figure ;)

    • a state agency

      for God's sake spare us from another state agency to administer this program.

      That made me blink.  But I'll stick to two questions:

      1. Did Travaglini propose created a new agency?  (I missed it if he did)

      2. Why is a state agency inherently inferior to either a) letting an existing agency administer it, or b) leaving it to each business to administer the policy for their own employees?  I can see implementation details making the difference, but I don't understand why you think it's inherently bad no matter how it's done.  (Keep in mind that if Travaglini proposed no such thing, then this whole debate would be about a straw man, neverthess I'm curious)

      • Well, someone has to administer it.

        Lots of money coming in.  Someone has to keep tabs on it.  More importantly, lots of applications for leave coming in.  Someone has to decide who gets it and who doesn't (either because it's a fraudulent app. or because it doesn't meet the program's criteria which will by then have been spelled out in excruciating detail in the Code of Mass. Regulations).  Then someone has to decide how much the successful applicants are entitled to receive, and has to process the checks.

        Most likely this starts out inside an existing agency, and eventually becomes its own "office" inside that agency, and perhaps eventually morphs into its own bureaucracy as the program inevitably expands.

  2. Pro family benefits are the best defense against fundies

    Making Massachusetts a Pro family state in the long run will innoculate it from the fundie anti abortion thugs. I am one that does not believe in the "bright" blueness myth of Massachusetts (UMASS has become a hotbed on intolerance and racism and there are far too many hate radio stations in MA. pumping conservative talking points to mention, just drive thru Spfld and that myth of "Liberal MA." is crushed).

    Pro family is the most PROACTIVE POSITIVE means of reducing abortions in a humane, equitable, civilized and SANE manner... this combined with good education and availabilty of contraception.

    They want a wedge issue... well here it is.

    What would you rather pay for, state and federal funding for fake Crises Pregnancy centers, funding for sonogram machines not used to diagnose prenatal care but just to shame a mother into keeping the child, funding for prisons and prisoners of women who have "illegally" aborted and doctors who have performed them (We are only one SCOTUS judge away from this reality)?

    There is no separating Pro Family benefits from the whole War on Reproductive Freedoms launched by the GOP.

    This is our time to FRAME the issue and showcase it as a saner more civilized abortion reduction policy... It is no wonder that the European countries who have the most abortions and the fewest children are those who have the least familiy benefits namely the very Catholic Italy and Spain. Families in those countries simply can't afford children... yet there is a baby boom going on in France (white French, not the immigrant population)... why because France has the best family benefits in all of Europe... so much so that now countries with negative indigenous growth rates (Germany and Austria) are looking to France as a model.

    Basically, if the "need" for abortions were reduced drastically using pro family benefits, REAL sex education, availability of contraception (The Plan B contraception would IMMEDIATELY REDUCE ABORTIONS BY 50%... that is to say tens of thousands of abortions would no longer be neccessary each year, which is the real reason why the refuse the FDA to approve it... it is not an abortificant it is the same hormone that women produce while breast feeding)... that is to say if the NEED for abortions were drastically reduce... the GOP would be left "holding a war" that no one would show up to.

    And this is highly possible because the abortion rates in European countries that practiced SANE and CIVILISED reproductive freedoms do not have one fourth of the number of abortions that Americans do nor do they have an over burden foster care system packed with unwanted children.

    It is all in the frame... it is time to look at the bigger picture and this one in a winner ... unless Dems allow the GOP to "frame" it as yet another tax  and petpetuate the GOP spin of "Taxachusetts"....

  3. The two major flaws in Travaglini's paid family leave plan

    Having spent well over a year developing risk, cost, and use models for a commercial Family Leave insurance product, I would like to point out a couple of major flaws in Senate President Robert Travaglini's plan to grant up to 12 weeks of paid family leave at full salary, capped at $750-a-week—one is “moral hazard” and the other is “adverse selection”. These flaws will cause costs to employees to escalate or be shared by employers and/or tax payers, due to certain and rapid program insolvency.

    First, insurance policies typically employ waiting periods, deductibles, and co-pays to prevent the over-use of insurance policies by causing the insured to participate in the risk and cost of an incident. By providing benefits from the very first day of family leave, and by providing full pay, the employee considering leave, and then taking leave has no financial incentive to prevent or mitigate the cause of leave; nor does the employee have an incentive to return to work as soon as possible. The lack of participation by the insured in preventing or mitigating the incident or causes of incidents is called “moral hazard”.

    Second, if a paid family leave benefit of 100% of pay with no waiting period is adopted, those workers who most need the benefit will want to move to Massachusetts for work simply to get the benefit. While it is possible Massachusetts wants an influx of new workers, if workers take jobs for the purpose of taking paid family leave, those jobs will be less available for workers with standard risks of taking family leave. This practice—selecting a job just to get the benefit—is called “adverse selection”. I am not judging here, merely stating facts.

    Without measures and tools to prevent both moral hazard and adverse selection, an insurance company would either go bankrupt, or have to charge so much for the policy as to make it unaffordable for the policy holder. This is precisely what will happen to a state mandated paid family leave fund that pays 100% of salary from day-one of family leave.

    The answer to this problem is not to ignore the need for paid family leave, but to implement fiscally sound solutions that workers and employers both can afford—and solutions that benefit both workers and their employers. By proposing an unworkable plan, Senate President Robert Travaglini is hurting, not helping, the case for paid family leaves. Businesses and taxpayers are justifiably wary of Travaglini’s plan—let’s hope his plan has not made them wary of all solutions to the real need for financially assisted family leave.

    Jesse Rothschild Rothschild-Landry Holding, Inc.

    • there is a waiting period

      Workers must use vacation or sick time during the waiting period, before paid family leave kicks in.  I understand your point, and you could say that the waiting period is not a high enough cost to have the effects you desire.  But it's false to say there is no waiting period and the leave kicks in right away (it also makes me think that you're commenting without having read my post first).

      • Waiting period mis-reported in News, but flaws and unfairness remain

        My apology for making the earlier statement regarding "day-one" benefits. I read those exact words in a news article from Boston.

        Please understand that I believe all efforts to produce a sound paid family leave benefit are important. The concerns remain that with 100% benefit for many workers there will be, if it passes, a very high and unpredictable use-rate among workers who earn up to $750 per week. Being able to predict the costs of such programs is necessary if one expects to gain the support of employers and tax payers.

        The additional concern I have over this proposal, Washington State's proposal, and California's existing program is the unfair assignment of costs. The costs of the program should be based on salary just as the benefits are. A worker earning minimum wage will receive a substantially lower benefit, and therefore should not pay as much as the individual who will receive the maximum benefit. There is a reason we have a progressive income tax in the US--we should bear this in mind here, too. Unfair application of benefits relative to costs will be a sore spot among workers if the plan passes as proposed.

        Lastly, while I am pleased that the maximum benefit of $750 is better than other programs and proposals, it is still not enough. The maximum benefit can be substantially higher without increasing the costs of the program if benefits are scaled similarly to commercial disability policies--60-70% of salary.

  4. Paid Family Leave proposal

    Programs that balance work and family are a necessity today, and only the most uninformed would disagree. The challenge is to provide needed benefits without penalizing those who neither want nor need those benefits, and to provide benefits that assist businesses, too.

    It is fair that we consider workers who have no children, workers who need not care for ill parents, and workers who do not expect to have a child in the near future. As a married father of three, I certainly enjoy the tax deductions I receive, but is it fair for everyone else to pay for me?

    An elective insurance program, properly implemented, can be beneficial to those workers who want and need family leave benefits without penalizing those who are at very low risk of using such benefits.

    Each state that has looked at paid family leave--California, Washington, New Jersey, and others--have examined the potential costs of providing paid family leave as a "mandatory participation" program; in other words, employees may not opt out of the program. Further, these evaluations focused on each employee paying either a flat percentage or flat dollar value per X term.

    The flaw in these evaluations is they ignore individual risk, ignore moral hazard, and ignore anti-selection or adverse selection.

    Yes, these are insurance terms developed by commercial insurance companies and their actuaries. Surprise--these guys actually know risk, know odds, and know habits. The principals of risk, habit, behavior, and motivation do have a place in evaluating state funded, state mandated, and state administered paid family leave programs--only, the state programs need not make a profit.

    I have spent more than 18 months studying the risk models associated with providing paid family leave via both commercial and government programs, and I have realized two important things: 1. The cost of providing adequate coverage for paid family leave can be downright cheap if implemented well, and 2. people who don't need or want the coverage need not pay for those who do in order for that coverage to be affordable.

    It is important for lawmakers to view paid family leave programs with the eye of an insurance company, then take the profit out of it. If they manage to do this, the programs they propose will have a real shot at being both helpful and affordable.

    Jesse Rothschild

    • Is it fair to support each other through taxes?

      It is fair that we consider workers who have no children, workers who need not care for ill parents, and workers who do not expect to have a child in the near future. As a married father of three, I certainly enjoy the tax deductions I receive, but is it fair for everyone else to pay for me?

      No more or less fair than it is for everyone to pay to support public schools even though some people don't have or want children, or want to send their kids to Catholic School, etc.

      Read my post, "On Our Own, Or Together?" for my further thoughts on that specific critique.

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Wed 16 Apr 9:22 AM