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Mills’ proposal to cut paid family leave benefits could make it unusable for low-wage workers

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Mills’ proposal to cut paid family leave benefits could make it unusable for low-wage workers

Jun 01, 2023 | 8:49 am ET
By Dan Neumann
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Mills’ proposal to cut paid family leave benefits could make it unusable for low-wage workers
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Gov. Janet Mills at a press conference in January 2023. | Beacon

Gov. Janet Mills threw cold water on a plan to create paid family and medical leave in Maine when she called on lawmakers last week to limit the wages that workers could receive when they take time off to take care of a newborn or a sick family member.

The Mills administration is floating a potential wage replacement rate of 66% when someone takes leave, significantly lower than the 90% of wages proposed in LD 1964, which is a top priority of legislative Democrats and progressive groups this session.

That would mean that if a worker makes $16 per hour, they would get $10.56 per hour before taxes in paid leave.

Proponents of the bill say Mills’ plan would make the program potentially unusable for many low-income workers who wouldn’t be able to make ends meet with such a small portion of their normal wages.

“I’m confident it would disadvantage low-wage workers,” said James Myall, a policy analyst with the Maine Center for Economic Policy.

As Beacon previously reported, LD 1964sponsored by Assistant Senate Majority Leader Mattie Daughtry (D-Cumberland) and Assistant House Majority Leader Kristen Cloutier (D-Lewiston) and co-sponsored by 100 other lawmakers — was unveiled last week at a public hearing where child advocates, parents’ groups, labor organizations and other Mainers across the state argued that it is long past time for such a program, which exists in around a dozen other states and most industrialized countries around the world.  

​The original bill would allow most Maine workers to take a combination of medical leave and family leave that adds up to 12 weeks of paid leave each year. Employees and workers would split the cost of paying into a fund run by the state to maintain the program. If the employer has less than 15 employees, they would be exempt from paying their portion of the contribution.

Despite being a legislative priority of her party, Mills had not taken a public position on the bill until the hearing, when she sent her deputy chief of staff, Elise Baldacci, to tell lawmakers to narrow the scope of the proposal. Mills reportedly held meetings in recent weeks with corporate lobbyists opposed to the policy. 

“We believe that this proposal should better balance the needs of employees to take time to care for themselves and their loved ones with the incentive to return to work,” Baldacci said. “Presently, programs like short-term disability replace wages at approximately 66%, and many states have come closer to those percentages when implementing [paid family and medical leave] laws.”

If lawmakers follow Mills’ suggestion, supporters of the measure warn that Maine would be enacting a wage replacement rate that other states have already moved away from. 

California — which was the first state to enact a paid family leave law in 2002 — had fallen behind the curve compared to the 12 states, plus the District of Columbia, that have since passed laws. Until last year, the California system replaced 60% of what a full-time minimum-wage worker earned.

As The American Prospect reported, “Data collected by the California Budget and Policy Center shows that of the more than 18 million workers in the state who contributed to paid family leave in 2020 and were eligible to apply for it, 37% earned less than $20,000 annually. They comprised what was by far the largest single group of workers in terms of eligibility. Yet they accounted for only 14% of the people who actually used the program, with just 608 of every 100,000 of those eligible taking part.”

Progressive groups in California called on lawmakers to raise the wage replacement rate, arguing that, since so few lower income families were accessing the program — yet paying into it — they were essentially subsidizing the higher-income families who used it at a higher rate.

“From 2017 through 2019, paid family leave disbursements to those earning less than $20,000 declined by 6%, while they rose by 23% for those who earned more than $100,000,” the Prospect reported. “In fact, every one of six income groups increased its participation in the program through those years except for California’s poorest.”

In response, California Gov. Gavin Newsom signed a law last year to raise the wage replacement rate for the poorest workers to 90% by 2025.

“California is a good case study of why a low wage replacement rate is a bad idea,” said Myall. “Sixty-six percent of minimum wage just isn’t enough for most people to live on,” he said, referring to the percentage suggested by the Mills administration. 

Myall noted that New Jersey also passed legislation in 2020 to update their wage replacement rate from a maximum of 66% to 85%. 

“Both examples show that more states are recognizing how important it is to give low wage workers a robust wage replacement rate,” he said.

A 66% rate would make Maine an outlier, as most states that have recently passed paid family leave laws have implemented high wage reimbursement rates. Oregon will reimburse low-wage workers with 100% of their wages, while Colorado, Maryland and Minnesota will provide up to 90%, as proposed in Daughtry and Cloutier’s bill.

The Mills administration also suggested reducing the amount of time a person could take off from 12 weeks to six weeks.

If LD 1964 is significantly scaled back in the legislature as the Mills administration has requested, a coalition of advocacy groups, including the Maine People’s Alliance (of which Beacon is a project), may decide to take the issue to ballot. The groups have collected enough signatures to trigger a 2024 ballot referendum on whether to create a paid leave policy.