NJPP: Assembly Moves Landmark Paid Leave Bill Forward

This afternoon the Assembly passed a landmark bill improving New Jersey’s paid family leave program (A-4927).

The legislation closely follows several key recommendations laid out by New Jersey Policy Perspective in our April report.

“Improving New Jersey’s paid family leave program will boost the state’s workers, families and businesses,” said Jon Whiten, Vice President of New Jersey Policy Perspective. “Updating the wage replacement levels and caps will help ensure many more of the New Jerseyans who pay into this program are able to use it when they need to.”

New Jersey was a trailblazer in adopting paid family leave in 2008. And while the program – which is funded entirely by workers at no cost to businesses – has helped many families, with an average of 31,000 New Jerseyans having used paid family leave to either bond with a new child or care for an ill relative each year since its inception, this equals very few people who may be eligible.

• In fact, NJPP’s estimate is that only 12 percent of eligible new parents are using New Jersey’s FamilyLeave Insurance. This is lower than in California (17 percent) and Rhode Island (13 percent).
• What’s more, in New Jersey the usage rate has also remained close to flat since familyleave’s introduction– whereas in other states it climbs each year. California’s most recent annual usage rate was, in fact, 20 percent.

There are a few main reasons for this, and chief among them is the state’s woefully inadequate wage replacement of two-thirds of weekly wages. For low-income working families, who already struggle to get by in high-cost New Jersey, losing one-third of your take home pay is often out of the question.

Consider a low-paid worker making $600 a week, or about $15 an hour if they are working 40 hours a week. On leave, the two-thirds replacement rate would provide that worker just $400 a week, the equivalent to $10 an hour – a decrease that an already-struggling family could ill afford.

Meanwhile, an artificially low cap on wage replacements of $633 a week means that middle-class workers are faced with the prospect of losing more than a third of their wages, an unrealistic proposition for the many middle-class families who essentially live paycheck to paycheck in our state.

NJPP has proposed that the wage replacement rate be increased to 100 percent for low-wage workers and 90 percent for higher-paid workers. This bill takes a very positive step in the right direction by increasing the rate to 90 percent for all workers.

In addition, NJPP has proposed that the cap on wages by lifted from 53 percent of the preceding two-year statewide average weekly wage (reminder: this year it is $633) to 90 percent (which would bring it to $1,076 this year). This bill gets about halfway there, lifting the wage cap to 78 percent (which would bring it to $932 this year). This is a dramatic improvement over the status quo, but it falls short of what’s required for workers taking leave.

The other big thing keeping eligible New Jersey workers from using paid leave is a lack of job protection. About 1 in 3 New Jersey workers – the 1 million or so who work at businesses with less than 50 employees – are forced to consider taking leave without the peace of mind of knowing their job will be there for them when they get back. So expanding job protection to all New Jersey workers is vitally important.

This bill extends job protections to more workers, but it leaves out nearly 700,000 workers – 666,000 workers, or 19 percent of the state’s workforce – by cutting off these protections at firms with 20 or more workers.

“Expanding job protections to all workers would do the same, so workers can take leave without having to fear that their job will be gone when they come back,” Whiten added. “This bill takes a small step in the right direction by extending these protections to about 350,000 workers of the 1 million who currently lack them, but it leaves nearly twice as many behind.”

And despite opposition from the organized business lobby, paid family leave in New Jersey has been shown to be a boon for businesses, particularly small businesses, who – because of the leave law – can now compete with larger, richer corporations when it comes to certain elements of their benefits packages.

Nearly every survey – even those done by the business lobby groups – has found an overwhelming majority of New Jersey businesses have not seen a negative impact on profitability or productivity from the paid family leave law. There’s no reason to expect this would change under these improvements.

Contact: Jon Whiten, NJPP: 917-655-3313 (cell) | whiten@njpp.org