A paid family and medical leave plan for Maine could cost employers and employees a minimum of $266 million starting in 2024, depending on how generous the benefits are, according to a study released Monday.
Cost could be a major issue as paid family and medical leave is being pushed in both the Legislature and by progressive groups at the ballot box. If enacted, the plan would make Maine the 12th state plus the District of Columbia to pass a law allowing paid time off for workers welcoming a child, recovering from a health issue or taking care of a loved one.
Paying for the plan has remained a sticking point on the state and federal levels. A national paid leave plan was stripped from President Joe Biden’s Build Back Better agenda last October because of objections by Sen. Joe Manchin of West Virginia. That leaves the U.S. as one of a handful of countries, and the only wealthy one, to not have some form of paid medical and family leave.
There is a strong push to get a plan in place in Maine. The state’s Commission to Develop a Paid Family and Medical Leave Benefits Program, which includes lawmakers and employers, is charged with developing a plan for Legislature to consider when it reconvenes in the new year. Separately, a coalition of progressive groups is trying to get a sweeping referendum on Maine’s 2023 ballot.
Only 15 percent of Mainers currently have access to paid family leave at work, according to the Maine Paid Family Coalition, a group of pro-family leave organizations. The Maine People’s Alliance, a progressive group supporting the push, welcomed a state-level plan, saying the study shows a comprehensive leave plan in Maine is feasible.
“To make sure that Mainers will be taken care of no matter what happens in the coming months, we are collecting signatures so that in the event that Mainers need to pass paid family and medical leave at the ballot box,” a spokesperson said.
But Rep. Paul Stearns, R-Guilford, who sits on the commission, worries that the plan is too expensive, especially for smaller businesses. He would like to see employees shoulder most of the plan’s cost, although the study recommends equal cost sharing.
“The numbers that were reported are a long, long way from anything that the Legislature will end up putting into law,” he said.
The study estimates that start-up expenses in 2024 would be $40 million, plus several million for staffing. Contributions would start on Jan. 1, 2024, with benefits effective on Jan. 1, 2025. The study prepared by Milliman Inc. for the Legislature used actuarial data to outline 18 plan options with who would pay for them and how much they would cost.
Under the lowest cost option, employers and employees would contribute about $133 million each to total $266 million to a fund in 2024. That would be for a 12-week benefit of 80 percent of income replacement and would require a 7-day waiting period.
The most expensive plan would cost $636 million in the first year, with equal contributions by employees and employers. It would fully replace income, carry a 26-week benefit and have no waiting period.
The first option would pay benefits of $215 million in the first year of payouts, 2025, and more in successive years. The most expensive plan would pay benefits starting at $519 million.
A separate estimate assumes $192 million in benefits would be paid out annually from the fund, according to economic policy analyst James Myall at the liberal Maine Center for Economic Policy and Jessica Milli, founder at Research 2 Impact. A worker making $50,000 annually would pay about $430 per year into the fund.
The Maine Paid Family Coalition urged the commission to consider a program that offers up to 16 weeks of leave and a graduated replacement rate so more low- and middle-income workers could use it.
Stearns also would like to see more focus on getting money to smaller companies that he said need it most. He said there are many considerations to be worked through, including how many weeks can be taken off, whether the fund is run by a state agency or third-party administrator, how much the employee contribution is and whether small businesses can be exempt.
“We have to be really careful as we craft this,” he said. “If we get it right we could get more folks into the workforce and help small companies. But if we don’t get it right it’s going to be the death knell.”