[Senate Hearing 117-187]
[From the U.S. Government Publishing Office]
S. Hrg. 117-187
PAID LEAVE FOR WORKING FAMILIES:
EXAMINING ACCESS, OPTIONS, AND IMPACTS
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HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
ON
EXAMINING PAID LEAVE FOR WORKING FAMILIES, FOCUSING ON EXAMINING
ACCESS, OPTIONS, AND IMPACTS
__________
May 18, 2021
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Printed for the use of the Committee on Health, Education, Labor, and
Pensions
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
46-767 PDF WASHINGTON : 2022
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
PATTY MURRAY, Washington, Chair
BERNIE SANDERS (I), Vermont RICHARD BURR, North Carolina,
ROBERT P. CASEY, JR., Pennsylvania Ranking Member
TAMMY BALDWIN, Wisconsin RAND PAUL, M.D., Kentucky
CHRISTOPHER S. MURPHY, Connecticut SUSAN M. COLLINS, Maine
TIM KAINE, Virginia BILL CASSIDY, M.D., Louisiana
MAGGIE HASSAN, New Hampshire LISA MURKOWSKI, Alaska
TINA SMITH, Minnesota MIKE BRAUN, Indiana
JACKY ROSEN, Nevada ROGER MARSHALL, M.D., Kansas
BEN RAY LUJAN, New Mexico TIM SCOTT, South Carolina
JOHN HICKENLOOPER, Colorado MITT ROMNEY, Utah
TOMMY TUBERVILLE, Alabama
JERRY MORAN, Kansas
Evan T. Schatz, Staff Director
David P. Cleary, Republican Staff Director
John Righter, Deputy Staff Director
C O N T E N T S
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STATEMENTS
TUESDAY, MAY 18, 2021
Page
Committee Members
Murray, Hon. Patty, Chair, Committee on Health, Education, Labor,
and Pensions, Opening statement................................ 1
Burr, Hon. Richard, Ranking Member, a U.S. Senator from the State
of North Carolina, Opening statement........................... 3
Witnesses
Shabo, Vicki, Senior Fellow, Paid Leave Policy and Strategy,
Better Life Lab at New America, Washington, DC................. 5
Prepared statement........................................... 9
Summary statement............................................ 38
St. Hilaire-Finn, Marcia, Founder/CEO of Bright Start Early Care
and Preschool, Washington, DC.................................. 38
Prepared statement........................................... 40
McManus, Marianne, Vice President, Health & Benefits, IBM, on
behalf of the American Benefits Council, Westchester, NY....... 45
Prepared statement........................................... 46
Milito, Elizabeth, Senior Executive Counsel, National Federation
of Independent Business, Washington, DC........................ 51
Prepared statement........................................... 52
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.
Casey, Hon. Robert:
100 Days Letter.............................................. 83
ACP Letter................................................... 89
CLASP Letter................................................. 93
MCH Letter................................................... 98
Kaine, Hon. Tim:
Management Professionals Letter.............................. 100
Interfaith Paid Leave Statement.............................. 127
Network Lobby Letter......................................... 129
Hassan, Hon. Maggie:
AAUW Letter.................................................. 131
NARAL Letter................................................. 134
NCJW Letter.................................................. 137
Murray, Hon. Patty:
MomsRising Letter............................................ 139
NPWF Letter.................................................. 143
NWLC Letter.................................................. 153
PLUS Statement for the Record................................ 163
Testimony from A Better Place................................ 178
QUESTIONS AND ANSWERS
Response by Vicki Shabo to questions of:
Senator Casey................................................ 182
Response by Marcia St. Hilaire-Finn to questions of:
Senator Lujan................................................ 182
Senator Murkowski............................................ 184
Response by Marianne McManus to questions of:
Senator Murkowski............................................ 184
Response by Marcia St. Hilaire-Finn to questions of:
Senator Murkowski............................................ 185
Response by Elizabeth Milito to questions of:
Senator Murkowski............................................ 185
PAID LEAVE FOR WORKING FAMILIES:
EXAMINING ACCESS, OPTIONS, AND IMPACTS
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Tuesday, May 18, 2021
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The Committee met, pursuant to notice, at 10 a.m., in room
106, Dirksen Senate Office Building, Hon. Patty Murray, Chair
of the Committee, presiding.
Present: Senators Murray [presiding], Casey, Kaine, Hassan,
Smith, Rosen, Lujan, Hickenlooper, Burr, Cassidy, Braun,
Romney, and Tuberville.
OPENING STATEMENT OF SENATOR MURRAY
The Chair. Good morning. The Senate Health, Education,
Labor, and Pensions Committee will please come to order. Today,
we are having a hearing on paid family sick and medical leave
and what having paid leave options would mean for workers and
families across the Country.
I would like to thank Ranking Member Burr for working with
me to hold this bipartisan hearing. Senator Burr and I will
each have an opening statement, and then I will introduce our
witnesses. And after they give their testimony, Senators will
each have 5 minutes for a round of questions.
Before we begin, I do want to walk through the COVID-19
safety protocols in place. And I, again, want to thank all of
our Clerks and all our staff who have worked really hard to get
this set up and to help us all stay safe and healthy.
We will be conducting this hearing following the same COVID
protocols we have used in the past. Committee Members are
seated at least 6 feet apart. Some Senators are participating
by videoconference. And while we are unable to have the hearing
fully open to the public or media for in-person attendance,
live video is available on our Committee website at
help.senate.gov.
Given the new guidance from the Centers for Disease Control
and Prevention and the Office of Attending Physician, I will be
working with Senator Burr, our Committee Members, and staff
going forward to follow the new guidance. Over the next few
days, we will discuss with member offices, the Senate Rules
Committee, and the Sergeant at Arms staff the best way to now
operate our hearings going forward for Senators and staff.
For those in need of accommodations, including closed
captioning, you can reach out to the Committee or the Office of
Congressional Accessibility Services.
Paid leave is an issue that I have been focused on since I
first got into politics. When I came to the Senate in 1993, the
first bill we worked on was the Family and Medical Leave Act,
which provided job-protected, unpaid leave to workers across
the Country. It was a hard-fought victory for families. But,
even then, it was clear that bill was a first step, and we have
been fighting since then to take the next one.
Today, we are the only developed Country in the world that
does not guarantee paid leave. Nearly one in four mothers
return to work within 2 weeks of giving birth. One in five
retirees are forced to leave the workforce earlier than planned
to care for an ill family member, and four of five private
sector workers have no access to paid leave.
The numbers are even worse for workers who are paid the
lowest wages, workers who are disproportionately women and
people of color. Nineteen out of 20 of these workers have no
paid family leave. And studies show that while workers with
disabilities may be more likely to need paid leave in order to
care for their own health, they are less likely to have it
since they are disproportionately part-time or low-wage
workers.
When this pandemic struck, we saw just how costly this has
been for workers, businesses, families, and our Country.
Millions of workers were forced to choose between the well-
being of themselves, their coworkers, and their families, or
their paycheck. Millions were infected. Millions more,
especially women and workers of color, were forced out of their
jobs in large part due to lacking paid leave or quality
affordable childcare options. That is a tragedy that we cannot
afford, we cannot repeat, and we know we need to address.
Last year, at the dawn of this pandemic, Congress included
an expansion of paid leave in the COVID relief legislation.
Now, that language was not permanent and it was not nearly as
comprehensive as it needed to be, but it was impactful. One
estimate shows it cut infections by 15,000 a day in April of
last year.
As we look to learn all the lessons of this pandemic and
make sure we are better prepared for future public health
emergencies, one lesson is crystal clear: our Country needs a
comprehensive national paid sick, family, and medical leave
policy.
We cannot rebuild a stronger and fairer economy if workers
are forced to choose between their and their families' health,
or their paycheck. That is why I have joined Senator
Gillibrand, who has long been a champion on this issue, in
reintroducing the Family Act to provide paid family and medical
leave to all workers.
It is why I reintroduced my Healthy Families Act with
Congresswoman DeLauro, so workers across the Country can earn
paid sick days and put their health first.
It is why I am going to do everything I can to get the paid
leave policy President Biden proposed in the American Families
Plan across the finish line.
President Biden's proposal would create a national,
comprehensive paid family and medical leave program so workers
can take paid time off to bond with a new child; care for a
loved one who is aging, ill, or has a disability; deal with a
loved one's military deployment; find safety from sexual
assault, stalking, or domestic violence; heal from their own
serious illness; or take time to deal with the death of a loved
one.
Providing paid leave is not radical. It is commonsense. It
is basic decency, and it is a public health necessity. Several
states, including my home State of Washington, have already
taken action to guarantee access to paid leave. It is well past
time we make the same guarantee to all families in our Country.
When I spoke on the Senate floor back in 1993 about the
need to pass the Family and Medical Leave Act, I shared the
story of a friend of mine. Her employer told her she could
spend time with her son, who was diagnosed with leukemia, or
she could keep her job, but not both. That is an impossible
decision no one should ever have to make.
While providing unpaid leave was a step forward, the fact
that in our Country today, amid a pandemic no less, people are
still forced to choose between a paycheck they need to make
ends meet and taking time to care for themselves or their
families, welcome a new child, or even grieve a lost one.
It is unconscionable, and it is unacceptable. It is bad for
families, as any working mom or dad or anyone who cares for a
family member with a disability knows all too well. And, it is
bad for our economy as a lack of paid leave means employees
lose wages; businesses lose workers.
Studies have shown providing paid leave improves employee
recruitment, retention, productivity, and morale, overall
business performance and profitability, and can reduce pay
inequity for women and workers of color, which is why, exactly,
it is far past time to make progress, and it is far past time
we make paid leave a right for all, not a privilege for some.
I look forward to hearing from our witnesses today about
how important this is, and I hope to work with my colleagues on
both sides of the aisle to finally make it happen.
With that, I will turn it over to Ranking Member Senator
Burr for his opening remarks.
OPENING STATEMENT OF SENATOR BURR
Senator Burr. Good morning, Madam Chair, and thank you for
scheduling this hearing. Welcome to our witnesses. It is also
my hope that, as the COVID guidance continues to evolve, that
we will soon return to hearings that have witnesses and Members
here in person, and I pledge to work with the Chair to
accomplish that.
As a father, a husband, a grandfather, and a son, I
understand the need to balance family life with the workplace.
I support, and I believe most people support, being able to
take time off of work when they are sick, their family member
is sick, or after the birth or adoption of a child.
I also support and encourage the idea of paid leave for
workers. During my time in Congress, I have cosponsored bills
to help Americans earn more paid leave, such as the Working
Families Flexibility Act, which would allow private sector
employers to offer all employees who work overtime to choose
between monetary compensation or comp time, just like the
Federal Government allows.
There are great benefits to providing paid leave. It helps
attract talent, improve retention, increase employees' health
and wellness, and it increases employee engagement.
However, there are big questions of disagreements
surrounding paid leave. Is it mandated? Who pays for it? Who
gets it and for what reason? Many of my colleagues are lawyers
or have never had a job outside of government. It shows in some
of the policy proposals they pursue. It is easy to come up with
good ideas and tell someone else to pay for it. As my friend,
John Boehner, used to say, everyone wants to be Santa Claus.
As we look at paid leave proposals, no matter how well
intentioned, we cannot just say to the private sector, now you
need to pay for our extremely generous, brilliant ideas. Some
large businesses currently provide paid leave and are not
looking for a new Federal mandate, but instead want a
commonsense approach to help them deal with the varying
requirements across different states.
However, there are others that endorse a Federal mandate. I
am skeptical this is a selfless act and worry that this is a
form of corporate rent-seeking where they are trying to impose
costs on their smaller competitors to drive them out of
business. Most small businesses already offer some form of paid
leave because most people agree if someone is sick, they should
not be at work.
But, a costly new mandate imposing a one-size-fits-all
policy of paid leave on small business cannot be easily
absorbed and could force business to cut jobs, not add jobs. If
Washington wants to come up with the idea, Washington needs to
pay for it with tax credits, subsidies, grants, at least for
small business.
The Family and Medical Leave Act of 1993 provides eligible
workers 12 weeks of leave, but it does not have to be paid for.
In 2017, thanks to Senator Fischer of Nebraska, Congress
provided tax credits to encourage eligible employers to provide
paid leave. I supported Senator Fischer's employer credit as
part of the Tax Cuts and Jobs Act. This tax credit has now been
extended through 2025. It provides a credit for eligible
employers ranging from 12.5 to 25 percent of wages paid to
employees for up to 12 weeks of family and medical leave.
Employers must provide at least 50 percent of the wages.
Senator Fischer deserves a tremendous amount of credit for
pressing us to include that into the law.
Also, the Families First Coronavirus Response Act,
bipartisan legislation, supported by both sides of the aisle,
provided businesses with fewer than 500 employees payroll tax
credits for paid leave related to COVID-19 pandemic. These tax
credits have been extended through September 2021.
Let's talk about the private sector leave programs. Job
creators want talented workers and want to provide benefits for
those workers. The private sector has many creative ideas to
provide paid leave, such as paid time off purchase plans that
allow workers who want more leave to purchase additional paid
time off either through employer flex credits or salary
reductions with pre-tax dollars.
Others are providing short-term disability insurance to
provide employees income security due to time off for injury,
illness, or even pregnancy.
Flexibility for the employer and the worker makes it work
for all involved.
State governments are coming up with paid leave plans of
their own. For example, Senator Murray noted, Washington State
provides a family and medical leave program funded through
premiums paid by the worker and the employer with the worker
paying the larger share of the premium. Small businesses with
fewer than 50 workers are not required to pay the employer
premium.
There is a lot of bipartisan interest in the Senate
surrounding paid leave, including expanding the Fischer tax
credits I have already mentioned. But, we need to remember that
we are really not good at running businesses from Congress. The
one-size-fits-all approach does not work on issues, especially
paid leave. So, instead of pushing our brilliant ideas with
arbitrary decisions made by Congress or bureaucrats in
Washington, we should make sure we give business the
flexibility to help employers make paid leave work. This is an
important issue.
Madam Chairman, I thank you for holding this hearing. I
look forward to what our witnesses have to say.
The Chair. Thank you very much.
I will now introduce today's witnesses.
Vicki Shabo is a Senior Fellow for Paid Leave Policy and
Strategy at New America's Better Life Lab, where she works
closely with policymakers, advocates, researchers, and business
leaders on policy design and strategies to advance paid family,
medical, and sick leave for workers and families.
Welcome. Thank you for joining us today.
Next, I would like to introduce Marcia St. Hilaire-Finn,
who is the Founder and Owner of Bright Start Early Care and
Preschool in Northeast Washington, DC, which has been in
operation since 2002.
Welcome. Thank you for being here.
Next, Marianne McManus is the Vice President of Health and
Benefits at IBM and recently served as Chair of the American
Benefits Council Board of Directors.
We are glad to have you here today.
Finally, I would like to introduce Elizabeth Milito. She is
the Senior Executive Counsel to the National Federation of
Independent Business and has served in her role since March
2004.
Thank you for joining us today.
We will begin with Ms. Shabo for your opening statement.
STATEMENT OF VICKI SHABO, SENIOR FELLOW, PAID LEAVE POLICY AND
STRATEGY, BETTER LIFE LAB AT NEW AMERICA, WASHINGTON, DC
Ms. Shabo. Thank you so much, Senator Murray, and thank you
for your tireless leadership on paid leave well before the
pandemic and for this last very difficult year. And thank you
so much, Senator Burr, for having me here today, as well.
The pandemic has shown us nothing if not that we must
address holistically how we care for ourselves and one another.
I want to touch briefly on paid sick days, paid family and
medical leave, and FMLA.
First, paid sick days. In March 2020, just 25 percent of
workers in private firms and nearly 70 percent of low-wage
workers did not have a single paid sick day at their jobs.
These are disproportionately workers in food service, retail,
janitorial services, many of the same workers who were on the
frontlines of this pandemic as essential workers.
For these and others, just 2 to 3 days away from work
jeopardizes their ability to buy groceries for a month, pay
gas, pay utilities. Seven and a half days risks a month's
mortgage or rent.
For many, multiple sources of structural racism and
economic inequality create health disparities that layer on top
of layer--less access to paid sick days, creating multiple
barriers to closing health and even educational equity gaps.
Fortunately, when COVID hit, as you mentioned, you and your
colleagues created the first ever paid sick time standard,
committing public funds to preventing the spread of the virus.
COVID emergency paid sick leave is estimated to have prevented
more than 15,000 cases per day nationwide. But, that emergency
paid leave requirement for some businesses and some workers
expired at the end of 2020, and now we have reverted to no
guaranteed paid leave, even as the virus continues to ravage us
in some parts of the world, and also in spikes here, and as
people need access to vaccines.
Access to paid sick days is associated with better
preventive health, lower rates of community disease spread,
fewer workplace injuries, and more efficient use of healthcare
resources. And, as I prepared for this hearing today, I
marveled at the amount of research that has been amassed over
the past several years as more and more experience with paid
sick days has been had in states and cities.
Access to paid sick days correspondingly is not associated
with negative job consequences, business consequences, job
loss, price increases, or reduced employee benefits.
The Healthy Families Act, which would allow workers to earn
up to seven paid sick days each year, is a key solution and
would replicate the paid sick time that Federal contractors
have been obligated to provide since 2017.
Notably, since the pandemic hit, three new states have
adopted paid sick days laws, joining nearly a dozen others in
two dozen localities in creating baseline earned paid sick day
standards. Yet, everyone else is left behind. It is time to
change that and guarantee paid sick days to all working people.
On paid family and medical leave, COVID also brought home
workers and families' precarious situations when babies and
children need care or a serious personal or family illness
strikes.
In March 2020, just as the pandemic hit, one in five
private sector workers, just one in five, had access to paid
family leave through their jobs, and there are huge
disparities.
Thirty-eight percent of higher-wage workers had paid family
leave, but just 5 percent of low-wage workers did.
Just two in five had access to employer-provided temporary
disability insurance for a personal medical leave lasting weeks
or months. And, again, we see the disparities replicated.
Overall, these numbers mask dramatic and growing
inequalities. Over the past 10 years, paid family leave access
for high-wage workers climbed by 20 percentage points. For low-
wage workers, just two. That is unacceptable.
The Country's failure to address paid leave has
macroeconomic consequences in terms of reduced GDP and lower
labor force participation.
It costs families an estimated $22.5 billion annually in
income, or more than $9,000 for a typical family who needs 3
months of leave, which means less money circulating in local
economies and communities, as well as hardships within
individual households.
Lack of paid leave reduces mothers' earnings and means
hundreds of thousands of dollars lost in older workers' income
and retirement savings.
It means more public dollars spent through Medicaid for
nursing homes and more resources for SNAP and other public
assistance programs.
Too often, critics asks, how can we afford a national paid
leave program? But, the truth is that we are bearing enormous
unaffordable and unsustainable consequences of the status quo.
The comprehensive paid family and medical leave proposal in the
American Families Plan, the Family Act, and Chairman Neal's
Building an Economy for Families Act all present workable paths
forward. They reflect models from 10 states, including
Washington and Washington, DC, and would make a public
investment in paid leave for all working people, no matter
where they live, where they work, their job, or their serious
personal family and medical need.
Finally, the FMLA. And I know I am running short on time,
so I will try to wrap up. The Family and Medical Leave Act,
which offers job protection and health benefits continuation,
coverage is 56 percent of the workforce, meaning more than four
in 10 workers are left out of job protection. This is
disproportionately Black and Latino workers, low-wage workers,
and single parents. And now, with the pandemic's effects on
employment for these very same groups, coverage is likely to be
even lower.
Congress must expand job protection and must do so to match
any paid leave program it creates so that workers can use the
paid leave that will be made available. And Congress must never
create paid leave protections that merely align with today's
FMLA or we will simply replicate the same inequalities and
inequities and the same disparities that we have now.
I leave you with this. This hearing is titled with the
words Working Families in it. Paid leave rewards work. It
strengthens people's attachment to the workforce. It promotes
employee retention. It allows people to care for themselves and
their loved ones.
But, at the end of the day, it is really about values, like
love, responsibility, and care and dignity.
It is about people, like April Kimbrough, who lost her job
and her home when she had to go care for her son with kidney
cancer.
People like Felix Trinidad, who died 8 years ago of stomach
cancer because he did not have a sick day and then had to work
through chemo at his grocery store. He left behind a wife and
two small children.
It is people like Ms. St. Hilaire-Finn, who we will hear
from, and business owners, too, like Sarah Piepenburg, who fell
behind on her own home and business payments in order to
provide paid leave to an employee who had broken both arms.
Paid leave must be an essential element of economic
recovery, and there is no time to lose.
Thank you.
[The prepared statement of Ms. Shabo follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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[summary statement vicki shabo]
Introduction
Paid leave policies like those adopted in states and
cities are needed at the national level; the costs of inaction
and lost potential are high. Broader access to paid leave would
have helped during the pandemic and will help as people re-
enter the workforce.
Paid leave policies are tremendously popular in
representative surveys of individuals and small businesses.
Part I: Urgency Exacerbated by COVID-19
Women, low-wage workers and people of color have been
disproportionately harmed by COVID, and are those least likely
to have access to paid sick time and paid family and medical
leave--many also have caregiving responsibilities. Personal
stories of working people and small business owners illustrate
the harm of the status quo and the need for expanded access to
paid leave
Part II: Disparate Access, Deep Needs and the Interventions
That the U.S. Needs
Paid Sick Days: Access to paid sick days is
disparate, has increased due to state and local policies and
yet 30 million people are still left behind. FFCRA paid sick
days prevented COVID spread, which is just the most recent
evidence on the multiple positive individual and community-wide
effects of paid leave for health, economic security, and the
use of health resources. There is no evidence paid sick days
laws cause harm or negative job or economic consequences.
Congress should enact a paid leave standard like the Healthy
Families Act.
Paid Family and Medical Leave: Access to paid family
leave and short term disability insurance is too low and vastly
unequal, with significant consequences for individuals,
families, businesses and the economy. State paid family and
medical leave programs show the elements of paid leave that are
needed and that will result in positive outcomes. Congress
should enact a comprehensive national paid family and medical
leave program.
FMLA: The FMLA excludes more than four-in-ten workers
by conservative estimates, and that was before the pandemic
likely circumscribed coverage even more. Job protection and the
continuation of health benefits need to track the paid leave
benefits Congress enacts and Congress must not enact a paid
leave policy that replicates the inequities of FMLA and should
expand job protection to parallel paid leave benefits. Congress
should also allocate greater resources to outreach and
enforcement.
Part III: Concluding Thoughts
Work, family and care challenges are ubiquitous and
affect more than just the individuals who are struggling.
Congress should act boldly to enact new policies that will
directly touch people's lives in multiple ways.
______
The Chair. Thank you very much.
We will turn to Ms. St. Hilaire-Finn.
STATEMENT OF MARCIA ST. HILAIRE-FINN, FOUNDER/CEO OF BRIGHT
START EARLY CARE AND PRESCHOOL, WASHINGTON, DC
Ms. St. Hilaire-Finn. Chair Murray, Ranking Member Burr,
and Members of the Committee, thank you for the opportunity to
testify today. My name is Marcia St. Hilaire-Finn. I am the
founder and owner of Bright Start Early Care and Preschool in
Washington, DC. and a member of the Main Street Alliance, a
national network of more than 30,000 small business owners.
Launched with just two employees, my business had three
locations and three employees by the end of the summer. Thirty
years ago, I came to the U.S. from the eastern Caribbean island
of Dominica for a career in nursing. I started Bright Start in
2002 after seeing there was no nearby childcare center to fit
my unique schedule and provide quality care for our daughter.
Early on, to attract the best employees and despite the
cost, we provided 1 week paid sick time and 2 weeks paid
vacation. I have since added partial health insurance and more
paid and unpaid leave and vacation time. As a result, we have
extremely low turnover and our children benefit from being with
the same staff.
But, even with a business model that relies on private pay
and higher fees, I cannot meet my employees' full needs. Many
other small businesses are from industries and places where it
is even harder. Small employers generally do not have the
capital to provide paid leave on their own. That is why most
small business owners support a national paid family and
medical leave program and commonsense national standards for
sick days. As a registered nurse and childcare provider, I know
firsthand the benefits of paid sick days that let employees
stay home and out of the workplace where they may spread
disease.
DC was the second city in the Country to pass a paid sick
day law. We had no trouble with the new policy, which is the
typical business experience. Studies of cities with sick paid
policies found that most business owners have few difficulties
and support the program once it is in place.
When sick days are not enough, I have had employees who
needed more time off--several to welcome a new baby, and two
for cancer treatment. I held their jobs for them and cobbled
together what I could. After they exhausted their 4 weeks of
paid time off, I provided unlimited unpaid leave. When needed,
I arranged for partial advances on their salaries. These
employees said they recovered more quickly just knowing they
could take care of themselves with a job to come back to. They
returned even more energized. But, I have also had several
staff members who took less time than needed because they could
not afford unpaid leave.
Our paid leave policy was the right decision, but not an
easy one. While these employees were out on leave, I paid for
their leave and additional staff. That is why I strongly
support a paid family and medical leave program in the
District. We now have access to a public insurance option with
small, predictable costs and up to 8 weeks paid leave. If an
employee needs to take leave, the program pays their wages so I
can use that money for overtime for an existing employee or
new, temporary hire.
The DC program also provides an expanded family definition,
which better meets the needs of today's families, and the
public administration of the program takes that task off small
business. Overall, this helps level the playing field for small
businesses with larger companies.
Then came COVID. Last fall, I had to close one center for
10 days to quarantine our staff when we had an exposure.
Families First was a lifeline. I could have kept paying for
staff while they were out all at once because of our public
health measures. I could not have afforded this on my own.
While Families First was essential, it has challenges and
should not be the model for a permanent paid leave solution.
Tax credit programs rely on businesses applying for and
administering the program. For willing, well-connected business
owners with payroll and H.R. services, this can work. But, a
typical small business, like mine, does not have these support
systems. Public programs are easier for both employees and
small employers and should be the model for national paid
leave.
This past year has been one of the most difficult ever for
my business and for most small businesses, particularly
childcare centers across the Country. We have been given a
wake-up call. We need bold investments in our care
infrastructure to get on the path not just to recovery, but
resilience.
Thank you for the time and attention. I look forward to
answering your questions.
[The prepared statement of Ms. St. Hilaire-Finn follows:]
prepared statement of marcia st. hilaire finn
Chair Murray, Ranking Member Burr, and Members of the Committee:
Thank you for the opportunity to testify today and share my
frontline experience on the urgent public investments needed for paid
sick, family and medical leave. And thank you in particular to Chair
Murray for your strong leadership and commitment to expanding our
Nation's care infrastructure.
My name is Marcia St. Hilaire-Finn, and I am the founder and owner
of Bright Start Early Care and Preschool in Washington, DC. I am also
speaking today as a member of Main Street Alliance, a national network
of more than 30,000 small business owners who, like me, are eager to
share their perspectives on critical public policy issues, especially
as we try to transition from relief to recovery amidst the most
challenging public health crisis of our lifetime.
I have grown my business from a home-based day care with five
employees to a successful business on track to have 3 locations and 36
employees by the end of June. From the start, I have been very
intentional about the choices I have made for my employees'
compensation and benefits. With my business based in the District of
Columbia, I have experienced firsthand the roll out of the District's
sick days and paid leave legislation. So I can share clear before-and-
after pictures of these paid leave programs from a small business
perspective. During this pandemic, we experienced several COVID
exposures, needed to temporarily shut down, and made use of the
Families First Coronavirus Response Act (FFCRA) to help us through that
time.
Why I Started My Business . . . and Offer Good Benefits to Staff
Thirty years ago, I came to the United States from the eastern
Island of Dominica to pursue a career in nursing. Several years later,
as the mother of a young daughter, I searched for a child care center
in my neighborhood that would fit my unique schedule and provide
quality care, but couldn't find one. So, in 2002, I decided to start my
own small business in my basement, launching Bright Start Early Care
and Preschool.
I opened Bright Start with the idea that to provide the care our
children deserve, the caretakers should be fairly compensated, which
includes access to paid time off. During the early days of Bright
Start, we provided 1 week paid sick time, and 2 weeks paid vacation
time--well above industry standards at the time. This was an
intentional and conscious choice on my part to attract the best and
brightest employees, despite the additional cost burden. Providing
good, competitive benefits has created a virtuous cycle. We experience
exceptionally low turnover, which saves us in recruitment and training
costs. But just as importantly, our children benefit from the
continuity and know-how of our staff.
As all parents can appreciate, caring for children is truly a labor
of love--but it's also grueling work! That is why it's so important
that my employees are able to take care of themselves and their
families.
As I have grown my business, I have been able to add additional
benefits--and now provide partial health insurance coverage, another
week of paid leave in addition to sick and vacation time and unpaid
leave. My business model, which relies on a large portion of fully
private pay parents and higher fees, makes my employee compensation
choices possible. Yet even with this model, I have not been able to
meet the full needs of my employees. And many other small businesses
operate in industries and locations where a high-road business model is
less feasible. Small employers generally don't have the capital and
scale to provide paid family and medical leave on their own.
That's why I, along with a strong majority of small business
owners, support a national paid family and medical leave program and
common sense national standards for earned sick days.
The Case for Paid Sick Days
As a registered nurse and child care center owner, the benefits of
paid sick days are clear. Paid sick days help ensure employees stay
home to take care of themselves or their family when they're sick and
out of the workplace so that other employees and our customers can stay
healthy. Without access to paid sick days, employees who handle food,
provide childcare or care for the elderly are posing serious risks of
spreading illness to others. The costs to our employees, families, and
economies are huge. Paid sick days are a common-sense solution.
In 2008, Washington, DC. was the second city in the country to pass
an ordinance mandating businesses to provide a minimum number of paid
sick days based on the size of their business. We were already
providing above the mandated rate and had no trouble implementing the
new law--which is in fact the typical business experience. Like all new
programs, some businesses need help with initial planning and
implementation. But studies of cities with sick day policies find that
most business owners experience few difficulties and have high levels
of support for the programs after they are in place.
Small business owners also support a national program. A 2017 Main
Street Alliance survey of nearly 1,800 small business owners in 17
states found that 64 percent of respondents supported a nationwide paid
sick days minimum standard like the Healthy Families Act.
This increased to 73 percent when just looking at women small
business owners and business owners of color.
Paid Family and Medical Leave Coverage
But sick days are not enough. Over the past two decades, I have had
numerous employees who needed to take additional time off to care for
themselves or a loved one. Several employees had the joy of welcoming a
new baby into their families. And two employees have had to deal with
the shock of cancer diagnosis and take time for surgery, treatment, and
recovery.
In the interest of their health and well-being, the onus was on me
to offer family and medical leave through whatever means possible. I
committed to hold their jobs open for them and cobbled together what I
could. After they exhausted their 4 weeks of paid time off, I provided
unlimited unpaid leave, and when it's been needed, I've arranged for
partial advances on their salaries so they can at least pay some bills.
They have since told me that they believe they recovered more
quickly just knowing they could take care of themselves and having that
peace of mind that they had a job to come back to. They truly felt
valued and came back to work even more grateful and energized. By the
same token, I am also well aware that I've had several staff members
who took less time off than they needed because they couldn't afford
unpaid leave. If they had more paid time available, they and their
families would have benefited from not rushing back to work.
Our four-week paid leave policy was the right decision for me as a
small business owner--but certainly not an easy one. While these
employees were out on leave for those 4 weeks, I was paying for their
leave and additional staff to cover their positions.
DC Paid Family Leave Program a Stepping Stone
That is why I was an early and strong supporter of the District of
Columbia Paid Family and Medical Leave program. Instead of
unpredictable spikes in payroll costs that fall on us as the employer,
we now have access to a public insurance option with small, predictable
costs I can plan for. Should an employee now need to go out on leave,
the program will pay their wages so that I can use what I would have
spent on their wages to pay for overtime for an existing employee or
hire a temporary employee.
Last July, DC launched its Paid Family Leave (PFL) program, which
offers up to 8 weeks of paid parental leave to bond with a new child
(``parental leave''); up to 6 weeks of paid family leave to care for a
covered family member (``family leave''); and up to 2 weeks of paid
medical leave to care for the employee's own ``serious health condition
(``medical leave'').
Between this and our existing leave policy, we have the security of
knowing that we can access up to 12 weeks of paid leave should we need
it. Before implementation of this program, we could only offer 4 weeks
at Bright Start and had to limit family leave to immediate family
members.
The DC program provides an expanded family definition, which better
meets the needs of today's families. In addition, the public
administration of the program takes that task off small business, which
makes it easier for us as well. Overall, this helps level the playing
field for small businesses with larger companies.
Emergency Paid Leave to Help Battle COVID
Then came COVID. Last September, I had to close one of our centers
when we had a coronavirus exposure. We shut down for 10 days to
quarantine our full center staff as a recommended precaution.
Thankfully, the FFCRA program was a lifeline for my business and my
employees just when I needed it. Having access to this emergency paid
leave through FFCRA meant I could continue to pay my entire staff--18
people at the time--even though they couldn't work because of the
public health measures we took. My employees could continue to collect
their checks and I could feel confident that making the right decision
to protect others would mean my employees wouldn't miss rent or food on
the table.
We've been fortunate to have only one instance where we needed to
close down our center, but it's reassuring to know FFCRA will be there
if and when it happens again. I certainly would not have been able to
pick up the full cost of my staff going out on sick leave all at once.
It has also been great to be able to offer the added incentive of paid
days off through FFCRA for my employees to get and recover from
vaccinations without them having to draw down their own paid sick days.
For us as a business with a payroll service, applying for the FFCRA tax
credits was easy and went smoothly.
As we managed our way through COVID exposure, like countless other
small businesses have, I kept thinking to myself, ``Why are we one of
the only countries without a national paid leave program? If there is a
silver lining to this crisis, it should be that we've been given a
wake-up call to pass a robust and permanent national paid leave
program.'' And here we are, with that very question before us. It just
doesn't make practical or moral sense to me why we wouldn't!
While FFCRA was an essential program, it was put together hastily
in the midst of a crisis. As a result, the program had its challenges
and should not be the model for a permanent paid leave solution.
One major issue small businesses had with FFCRA was simply finding
out about it. Tax credit programs rely on businesses to apply for and
administer the program. For willing business owners, who are well
connected and monitor program availability and supported with H.R. and
payroll services to administer the programs, this can work. However, a
typical small business does not come equipped with these support
systems. Public programs like Unemployment Insurance are easier for
both employees and small employers to access and administer benefits
and should be the model for any national paid leave program.
The vast majority of small business owners agree. As part of the
same Main Street Alliance survey, small businesses that were not able
to provide family and medical leave to their employees overwhelmingly
identified a social insurance program as what they most needed to be
able to provide this benefit (79 percent selected this option, while
only 8 percent identified a tax credit).
For My Small Business, Care IS Infrastructure
This past year has been one of the most difficult ever for my
business. The same can be said for the majority of small businesses--
particularly child care centers--across the country. It was challenging
not just because of COVID-19, but also the hidden longstanding crises
that COVID exposed--the total lack of care infrastructure that allows
people the freedom to work and take care of their families.
As a child care provider I've known this crisis intimately for many
years. Not only as a small business owner with employees myself, but in
talking to our parents about how hard it is to balance the
accessibility and affordability of child care, and needing to take time
off to heal or care for elderly parents without losing their paychecks.
During the course of the pandemic we did what we could to keep our
doors open, while operating safely, because we knew how critical
providing child care was in this crisis--for the essential workers, and
parents across the country who were struggling to work full time in
their day jobs and also substitute as full-time teachers for their kids
at home. As early learning professionals, we've always understood child
care was essential; now the rest of the country does, too.
In the same way that the recently enacted American Rescue Plan
addressed the immediate crisis of the pandemic for small business, our
employees, and our customers, we now need bold investment in our care
infrastructure--from paid leave to child care to elder care and
everything in between--if we are to set ourselves on the path not just
to recovery, but resilience. We've ignored and underinvested in these
critical supports for far too long. In the same way I need good roads
and bridges to get to and from work, my employees and I need a care
infrastructure that provides time to heal for employees when they need
it, as well as affordable and accessible child care. We can't ``build
back better'' if we don't address these longstanding gaps that have
been holding our economy back and prolonging the pandemic-induced
recession.
Promising Paths Forward on Comprehensive, Permanent Paid Leave
That is why we at Main Street Alliance are encouraged by the scale
and broad focus of the Biden-Harris administration's proposed American
Families Plan as well as House Ways and Committee Chair Richard Neal's
Building an Economy for Families Act. Both build on the bicameral
Family and Medical Insurance Leave Act (FAMILY Act), sponsored by Sen.
Kirsten Gillibrand and Rep. Rosa DeLauro, which had stood alone as the
only comprehensive, universal paid leave program offered at the Federal
level.
As incredulous as it may seem, until now no American president has
ever proposed a national, permanent comprehensive paid family and
medical leave program. The United States remains one of the few
countries in the world that doesn't guarantee paid leave. As a provider
myself, I am heartened to see both proposals call for investments in
affordable, quality child care along with tax policies that support
working families. Moreover, COVID has underscored the need for a
national paid sick leave policy to help workers and their loved ones
quickly recover from short-term illness and prevent the spread of
disease.
Care Can't Wait
While Bright Start has grown to currently a team of 24 employees
serving 76 children (with a dozen more staff set to join this summer),
over the years it took a patchwork of ad hoc workarounds to manage
sick, family, and medical leave for my staff--sometimes with government
support, mostly without. And businesses smaller than my own, with
thinner operating margins, could not have resorted to absorbing the
cost burdens of providing leave the way I did on multiple occasions to
protect the health and well-being of my workers.
With the ongoing pandemic and Main Street still on the path to
recovery, paid leave is not an ``extra''--it's an essential must-have
to the survival of our country's 30 million small businesses and the
health of small business owners, employees, and customers alike.
Small businesses like mine have been calling for these investments
for years. Recently organizations representing thousands of small
businesses sent a letter to Congress calling for urgent action on paid
leave and investments in our care economy. Small business owners
overwhelmingly support national paid leave--even before the pandemic
made it abundantly clear--for numerous reasons:
More than ever, small businesses and their employees
need a program that allows owners and workers to take time from
work for health reasons--whether to care for themselves and/or
their loved ones or to quarantine or isolate and avoid
spreading COVID-19. Multiple studies point to the public health
benefits of paid sick time protections when it comes to
combating contagious diseases.
Small businesses can't afford paid leave on their own
like many larger businesses can. Small businesses generally
lack the capital and the scale to provide paid leave, even when
owners want to provide that benefit. Moreover, private insurers
generally do not offer affordable, adequate paid leave policies
to small businesses. As a result, as of 2019 only 14 percent of
workers in firms with 99 or fewer employees had access to
employer-provided paid family leave, compared to 29 percent of
workers in firms with 500 or more employees.
Our businesses benefit when employees can take time
to care for their families and return ready to work. Paid leave
helps reduce turnover and boost employee morale and loyalty,
increasing productivity and cost savings for our small
businesses. Paid leave makes good business sense.
Paid Leave is a matter of racial and gender equity.
The racial wealth gap means employees and business owners of
color like myself have less of a financial cushion for taking
time off, but they also have more limited access to paid leave.
And, with most caregiving still falling to women, paid leave is
an important gender equity measure for business owners and
employees alike. These facts have been further heightened
during the pandemic. With higher rates of COVID-related
illnesses, death, and business closures, the need for paid
leave is higher than ever in Black and brown communities. A
robust, permanent paid family and medical leave program is
essential for supporting Black-and brown-owned businesses,
their employees, and the communities they serve.
Addressing workforce shortages. Over the past year
women have left the workforce in droves--and the lack of paid
leave and child care was a major contributing factor. Closing
these care infrastructure gaps will be a major factor in
addressing our current labor shortage. We can't afford not to
use every tool in our toolbox to support a rebounding and
growing economy.
Economic Recovery on Main Street. For small
businesses and Main Street economies to recover, we need more
customers spending on Main Street and the safe return of our
labor force. Comprehensive paid family and medical leave
programs have been shown to significantly increase mothers'
attachment to the workforce and caregivers' participation in
the labor both short and long-term. Paid leave dollars go back
into the local economy, boosting consumer demand at small
businesses, as working people spend their leave to cover
basics.
Business owners support paid leave. A national survey
of 600 small business owners found that two-thirds supported
the U.S. having a national policy for paid family and medical
leave. Support for paid leave by the owners is also not a
partisan issue, with 80 percent of Democrats, 55 percent of
Republican, and 53 percent of Independent owners in favor of a
national policy for paid family and medical leave. Over 1,600
small business owners have added their names to state and
Federal campaigns calling for comprehensive paid leave.
The time has come for Federal lawmakers to put in place a robust
permanent paid family and medical leave program. From our experience
with existing state programs we have learned that policy details matter
to small businesses and our employees. We need a program that:
Covers all businesses, families and individuals,
including freelancers and the self-employed and business owners
themselves;
Increases financial security by providing wage
replacement to enable employees to take time off and meet their
expenses;
Is sustainably and responsibly funded to make the
program affordable for businesses of all sizes, and affordable
to use by workers of all incomes;
Provides leave to care for parents, children,
spouses, domestic partners, and other family;
Is publicly administered to ensure ease of
administration by small business; and
Includes extensive outreach to ensure small business
owners and our employees can learn about and access the
program.
In order to successfully overcome the COVID-19 crisis and thrive in
the future, small businesses need a comprehensive, sustainable, and
affordable paid leave and care foundation now more than ever. As
Congress considers a long-term economic infrastructure and recovery
package, a national, permanent paid leave policy and program and
investment in our care economy must be a priority. Care infrastructure
is not just what small business employees and owners deserve, it is
vital to keeping our entire communities safe and our economy resilient.
Paid leave is an essential component to ensuring more small
businesses are able to make it back to profitability and to leveling
the playing field for small businesses in the long run. We must never
be unprepared for a crisis like this again.
Thank you for your time and attention. I look forward to answering
any questions you may have.
______
The Chair. Thank you very much.
We will turn to Ms. McManus.
STATEMENT OF MARIANNE MCMANUS, VICE PRESIDENT, HEALTH &
BENEFITS, IBM, ON BEHALF OF THE AMERICAN BENEFITS COUNCIL,
WESTCHESTER, NY
Ms. McManus. Good morning, Chair Murray, Ranking Member
Burr, and esteemed Members of the Committee. I am Marianne
McManus, Vice President of Health & Benefits at IBM. I am
responsible for overseeing global benefits design, strategy,
and delivery, along with corporate health and safety guidance
across IBM, globally.
Today, I am here on behalf of the American Benefits Council
to communicate our support for Federal paid leave legislation
so that all workers in the United States have access to robust,
paid family, sick, and medical leave benefits.
At IBM, we have long recognized the vital role these
benefits have in the lives of our employees and continue to
believe that paid family, sick, and medical leave are
essential. This past year, the COVID-19 pandemic underscored
just how critical paid leave policies are for our workforce's
health and well-being, particularly as it becomes increasingly
mobile and remote.
Our challenge is not in providing paid time off benefits to
our employees. Instead, the challenge is created by the
patchwork of inconsistent state and local laws, the speed at
which new regulations are changed and introduced, and the
volume of requirements applicable to nationwide operations
around the Country.
IBM and our fellow council member companies all agree that
we are most successful in recruiting and retaining top talent
when our employees do not have to choose between their careers
and caring for their health and their families. But, due to
varying state and local mandates, we inevitably have different
processes that employees must follow and different benefits
depending on where they work.
Today's policy model does not allow for consistent and
uniform benefits for all employees. This is not just a matter
of the unnecessary costs and administrative burden for
employers. It is a matter of fundamental fairness and equity
for employees. It can be overwhelming and confusing for
employees to determine which laws apply and what benefits they
are already entitled to.
Here is a concrete example of the challenge. Prior to the
pandemic, an IBM employee in San Francisco could be covered by
as many as four laws simultaneously addressing the duration and
amount of paid leave available to them for their illness or the
illness of a covered family member: The state paid sick leave
law, the city's paid sick leave ordnance, the state paid family
leave law, and the Federal Executive Order on paid sick leave.
During the height of COVID-19, that employee was covered by two
additional laws: both the state's and the city's public health
emergency paid sick leave law.
The challenge posed by having to navigate six, or even
four, different applicable laws simultaneously is significant
for employers and employees alike. We recognize that not all
workers have access to generous paid leave benefits and that
there are challenges for many small businesses or certain types
of employers in providing these benefits.
The Federal Government's essential role in filling the gaps
nationwide for organizations of all types and sizes can be done
while building on effective employer benefit programs.
In our view, a Federal legislative solution that provides
employers a single set of standards nationwide would advance
employee equity while eliminating confusion for employees and
cumbersome compliance burdens for employers. A Federal solution
should offer all employees consistent benefits regardless of
where they live or work.
At IBM, we believe this era of technology and innovation is
powered by our employees' hard work and creativity. We strive
to provide our workforce with the flexibility and benefits they
need to do their best work.
The best outcome for the American workforce would be a
balanced solution as I have described today--one that allows
employers to offer innovative and competitive benefits that are
valued by their employees in a consistent, equitable manner,
nationwide.
We applaud the Committee for focusing on this challenge,
and I thank you again for the opportunity to testify. I look
forward to answering your questions.
[The prepared statement of Ms. McManus follows:]
prepared statement of marianne mcmanus
Good morning Chair Murray, Ranking Member Burr, and esteemed
Members of the Committee. I am Marianne McManus, Vice President of
Health and Benefits at IBM Corporation. I am responsible for overseeing
global benefits design, strategy, and delivery, along with Corporate
Health & Safety across IBM globally. I am here today on behalf of the
American Benefits Council (``the Council'').
The Council is a Washington, DC.-based employee benefits public
policy organization. It advocates for employers dedicated to best-in-
class solutions that protect and encourage the health and financial
well-being of their workers, retirees, and families. Council members
include over 220 of the world's largest corporations. Collectively,
Council members either directly sponsor or administer health and
retirement benefits for virtually all Americans covered by employer-
sponsored plans. IBM has been a longtime member of the Council and,
most recently, I served as the chair of the Executive Board of
Directors.
Specifically, I am here to communicate our strong and enthusiastic
support for a Federal paid leave program that builds on private-sector
solutions. Council member companies agree that we are most successful
recruiting and retaining top talent when our employees are confident in
their ability to take paid time off when they need it. Furthermore,
paid leave is good for business. According to an E&Y study entitled
``Viewpoints on paid family and medical leave: Findings from a survey
of US employers and employees, March 2017,'' showed that employers
offering paid leave benefits overwhelmingly saw a positive effect when
it came to operating outcomes.
We recognize the important role paid leave benefits have in the
lives of our employees and agree that paid family and medical leave, in
addition to sick leave, are essential. This past year, the COVID-19
pandemic underscored the vital role paid leave policies serve for the
health and well-being of our workforce. Let me say it unequivocally on
the record that IBM and the Council believe that all workers in United
States deserve access to paid leave benefits.
We recognize that not every U.S. employer has the ability to offer
the same level of paid leave that IBM provides to our workforce. At
IBM, we have a long history of providing flexible time off to employees
as part of a generous and competitive benefits package. As a large,
multi-national employer with employees in all 50 states and operations
in over 170 countries worldwide, we understand the value of a
comprehensive and uniform paid leave policy. Our benefit programs are
generous and expansive: Our regular full time and part time U.S.
employees receive a minimum of 15 days of paid vacation; up to 26 weeks
of short term disability benefits; specifically, all eligible employees
can receive up to 13 weeks of short-term disability benefits at 100
percent pay and another 13 weeks at a minimum of two-thirds of their
pay; up to 12 weeks for all new parents at full pay; paid care leave at
full pay for family care, marriage, or bereavement ranging from 3 days
to 4 weeks depending on the use; in addition to a minimum of 56 hours
of paid sick leave annually. We also offer long-term disability
benefits for eligible employees.
In response to the COVID-19 pandemic, we quickly pivoted and rolled
out enhanced paid time off offerings, which include additional paid
sick leave for illness or the need to quarantine; paid leave to care
for an ill family member; and up to 4 weeks of emergency paid care
leave for parents and caregivers for emergency family back-up care.
These benefits were renewed for 2021. IBM also offers employees paid
time off and flexibility to get vaccinated, should they choose to do
so.
Administrative and Complex Compliance Challenges
It is important for this Committee to be aware of the significant
challenges facing nationwide companies who support paid leave but are
required to navigate a maze of increasingly complex, inconsistent,
administratively burdensome, and overlapping paid leave mandates across
the country. Meeting compliance and reporting obligations is inherently
time consuming and can be confusing for even the most knowledgeable
benefits professionals. Council member companies typically have
nationwide operations in numerous states and localities, making it
increasingly difficult to offer and administer consistent and uniform
paid leave benefits to employees wherever they work. Variations among
state and local paid leave laws, such as employee eligibility rules,
qualifying absences, benefit duration and amount, and ability to
coordinate statutory and company benefits make the administration and
compliance burden overwhelming for nationwide employers. One of the
most widely used and valuable resources the Council offers its members
is a National Paid Leave Atlas, which identifies detailed requirements
imposed by the various state and local paid leave laws. This type of
summary is an essential tool for nationwide employers to keep track of
requirements and ensure compliance. This is not just a matter of
administrative cost and burden for employers. It is also a matter of
fundamental fairness and equity for employees, particularly in light of
increasingly mobile and remote workforces.
Impact on Employees
The numerous state and local leave laws have a significant adverse
effect on employees and their families. Employees who previously
received benefits at no additional cost from their employers in some
cases must now pay an employee contribution, imposed by some state
programs, for those same benefits. Employees who previously enjoyed a
user-friendly experience in going directly to their employer to request
benefits in some cases must now go to the state agency administering
the applicable Paid Family and Medical Leave Program in addition to
their employer. That places an unnecessary burden on employees who are
already facing a challenging situation dealing with personal and family
obligations. Furthermore, when the required time off is related to a
medical condition, the employee may also incur additional cost if the
treating health provider charges for copies of records or completion of
additional forms. This often results in pay cycles being out of sync
(e.g., the employer benefit is approved in a week; but state benefits
may take several weeks to be approved) and causes unnecessary stress
for the employee. To simplify this process for employees, IBM has, at
added cost to the company, implemented private plans in most
jurisdictions.
We want the Committee to understand that our challenge is not in
providing paid time off benefits to our employees. Instead, the growing
challenge is created by the patchwork of inconsistent and increasing
number of state and local laws, the speed at which new laws and changes
to existing laws take effect, and the sheer number of requirements
applicable to IBM's operations around the country. Moreover,
compounding these challenges is the need to coordinate IBM benefits,
which are frequently more generous, with these state and local
mandates.
The burden of compliance and the range of different requirements
mean that the resources designated for such programs are applied to
navigating administrative complexities rather than program design and
execution, which add value and enhance employee engagement. By
contrast, standardizing inconsistent and competing requirements could
encourage more companies to voluntarily provide paid sick leave and/or
paid family and medical leave benefits to employees regardless of
whether they are required. One-size-fits all mandates are not the right
solution for employers that already offer rich, generous benefit
programs.
Rather than referencing general challenges posed by the various
requirements across the country, let me be specific. Because IBM is a
Federal contractor, we comply with the Federal Executive Order
establishing paid sick leave, as well as all state and local laws on
paid sick, family, and medical leave. As noted in the Council's
National Paid Leave Atlas, as of July 1, 2021, there will be 16 states,
the District of Columbia, and roughly 21 counties or municipalities
with paid sick leave requirements, and the list is growing each year.
Two other states have paid time off requirements, which allow the paid
time off to be used for sick leave or for any other reason. These laws
also vary in requirements, including eligibility criteria, differences
in waiting periods, rate of accrual, accrual and use caps, qualifying
uses, covered family members, ability to frontload (provide all time
off up front), and notification requirements--making it nearly
impossible for an employer to craft a uniform and consistent policy for
its national workforce.
In the wake of COVID-19, at least three states and 12 counties or
municipalities passed public health emergency paid sick leave laws to
supplement their regular paid sick leave laws and address employee
needs due to the public health emergency. Likewise, IBM created its own
paid time off program in response to the pandemic while also complying
with all other applicable requirements imposed by the varying state and
local laws.
There are also six states, plus the District of Columbia, that have
paid family and medical leave laws, with three more states that have
passed such laws to take effect in the near future.
Before COVID-19, an IBM employee could be covered by as many as
four different laws simultaneously addressing the duration and amount
of paid leave available to them for an illness or the illness of a
covered family member (not to mention the Federal Family and Medical
Leave Act, which covers unpaid leave in similar circumstances).
For example, an employee working on a Federal contract in San
Francisco would be covered by (1) Executive Order 13706, (2) the
California Healthy Workplace, Healthy Family Act, (3) the San Francisco
Paid Sick Leave Ordinance, and (4) the California Paid Family Leave
Law, all of which may have different eligibility, time off qualifying
reasons, duration, covered family members, reporting and record keeping
requirements. During the height of the COVID-19 pandemic, that same
employee also would have been eligible for leave under two other leave
laws: San Francisco's Public Health Emergency Leave and California
Supplemental Paid Sick Leave. While all of the laws provide that the
most generous provisions apply, it requires significant time and
resources to identify the most generous entitlement and ensure
compliance with all applicable requirements. For employees, it can be
overwhelming and confusing to determine which laws apply and to which
leaves they may be entitled.
IBM's workforce is not alone in this predicament. For employees at
similar companies, navigating the complexities and rules across these
differing programs is deflating and stressful. For nationwide
employers, the burden of administering the numerous state and local
paid leave mandates is significant. According to a survey conducted by
Mercer \1\ of nationwide employers, associated administrative expenses
will typically range from 8 percent-20 percent of total leave costs.
Employers need to have sufficient staffing to administer all the
nuances of the varying paid leave requirements and may need to spend
substantial resources to gain access to a more robust administration
assistance system. In fact, the Mercer study also shows that 66 percent
of employers experienced an increase in resources in the last 5 years
to handle state and local paid leave mandates.
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\1\ All data from: Mercer, Survey of Absence and Disability
Management, 2021
We would speculate that, given our own challenges--despite our
significant resources and sophisticated H.R. systems--it must be far
more burdensome and costly for smaller companies or companies with
fewer resources. This labyrinth of leave requirements can overwhelm
employers, leading to non-compliance. Significantly, the new normal of
multiple applicable leave mandates and processes is transforming the
traditional role of employers as the single point of contact for
employee benefit programs and can negatively impact the employee
experience.
Key Features of a Paid Leave Program
Predictability and flexibility are important in a paid leave
program for both employees and employers. It is important for employees
to understand available benefits in advance as well as how to
seamlessly apply for those benefits. Employees should not be required
to contribute a portion of their paycheck to fund paid family medical
leave benefits if they already receive those benefits at no additional
cost. Employers should be permitted to efficiently administer a uniform
benefits program that matches the specific needs of its workforce. The
current model is not ideal for a national employer who wants to offer
consistent and uniform benefits that employees may access in a user-
friendly way.
Both before and during COVID-19, IBM has continually sought
feedback from our employees about how they are doing and to determine
their needs. We design our benefit programs accordingly and customize
leave benefits to address employee priorities. For example, in response
to employee feedback, we added paid care leave to support IBMers and
their families through personal and family situations. Paid care leave
can be used to care for a family member, celebrate a marriage, or for
bereavement. Family care, one aspect of paid care leave, is typically
covered by paid family and medical leave laws, yet marriage and
bereavement leave are not. Our focus continues to be addressing the
particular needs of our employees whether or not a particular leave
type is required by law.
We recognize that not all workers have access to generous paid
leave benefits, and gaps remain that need to be filled. All workers in
our country should have access to robust paid leave benefits. The
Federal Government plays an essential role in filling the gaps in leave
benefits nationwide and can do that while preserving effective employer
plans at the same time.
The Need for Uniform Federal Standards
In our view, the dual concerns of enabling employee equity with
respect to paid leave benefits and eliminating administrative and
compliance burdens created by inconsistencies in the various state and
local leave laws should be addressed through a Federal legislative
solution. We believe that any Federal solution should consider as a
starting point the Council's Statement of Principles on Paid Leave [see
Appendix 1.] These principles outline a common-sense approach for
building on the generous leave programs already provided by the
Council's national employer members. Those companies are at the
forefront of innovative benefit solutions for their employees. The goal
of ensuring access to paid leave programs for all workers on an
equitable basis cannot be realized without leveraging private sector
solutions.
As such, IBM strongly supports a Federal legislative solution that
would provide employers the flexibility to offer a paid leave program
that meets a single set of standards for employees nationwide. If this
can be established, employers could offer paid leave programs that meet
uniform criteria while satisfying compliance requirements throughout
the country. This would also offer employees nationwide consistent
benefits regardless of where they work or live. This approach would not
be new or novel. Congress has made possible both flexibility within
certain parameters for different employers and workforces as well as
Federal uniformity for employers who operate in more than one state, in
the design and operation of their health and retirement plans.
This proposed national approach to paid leave provides the kind of
flexibility required for employers to ensure their paid leave policies
address employees' specific needs and priorities, while also reducing
costs and eliminating administrative complexity.
Outlook
We remain optimistic about the prospects for a Federal legislative
solution that can achieve two important goals: create an environment
where all American workers gain access to paid leave benefits and
enable nationwide employers to provide uniform and consistent benefits
to their employees while relieving the administrative and compliance
burdens imposed by inconsistent state and local laws. Most recently,
President Biden's American Families Plan and the Building an Economy
for Families Act released by U.S. House of Representatives Ways and
Means Committee Chairman Richard Neal, are important steps forward in
this dialog. The acknowledgement of a need for a Federal solution is
significant, and we are encouraged that Chairman Neal's discussion
draft recognizes the important role of employer plans.
We similarly applaud the bipartisan commitment of the leaders of
the HELP Committee to thoughtfully gather information and perspectives
from a range of stakeholders in order to craft a Federal solution that
meets the Nation's needs. IBM and The American Benefits Council stand
ready and eager to support you in this important effort.
Thank you again for the opportunity to testify today. We are
committed to working closely with Congress and the Biden administration
to find a balanced solution that allows large employers to continue
providing innovative and competitive benefits to their employees. I
look forward to answering any questions you may have.
Appendix I
American Benefits Council
STATEMENT OF PRINCIPLES ON PAID LEAVE
American Benefits Council member companies recognize
the importance of paid family and medical leave and paid sick
leave benefits and they provide generous paid leave to their
workforces.
Paid family and medical leave programs are important
for workers so they can meet the needs of parenting, care for a
member of their family who is ill or address their own illness.
Paid sick leave is an important public health and
safety measure because it helps ensure that individuals who are
ill do not feel compelled to come to the workplace, where they
might infect co-workers and members of the public.
The American Benefits Council supports Federal
legislation to expand access to paid family and medical leave
and paid sick leave consistent with the following principles:
Y Employers must have the ability to treat workers
equitably. Similarly situated workers for the same
employer should expect their eligibility to receive
paid leave, and the benefits and administration of the
leave program, to be consistent wherever in the United
States they live or work.
Y Federal standards for paid leave programs must
ensure that employers operating in more than one
jurisdiction are not subject to the cost and
administrative burden of complying with various state
or local paid leave requirements that may be
inconsistent or even contradictory.
Y The Federal standards for national employers must be
reasonable, affordable and administrable.
Y To simplify the administration of paid family and
medical leave benefits, the Federal Family and Medical
Leave Act definitions and standards should apply.
Y Employers that adopt and comply with Federal paid
leave standards must be deemed to be in compliance with
all state or local paid leave requirements.
Y Employers should have flexibility to design and
administer innovative paid leave benefits since what is
best suited for one company's workforce or industry may
not be best suited for another.
Y Federal paid family and medical leave legislation
should protect and build on private sector solutions
that would allow employers to provide coverage either
through self-funding and/or private insurance.
Y Paid family and medical leave programs should be
designed, operated and funded by the private sector for
maximum efficiency and to ensure that payroll taxes
needed to fund existing government programs are not
diluted in order to finance new governmental programs.
Y Federal, state and local governments should address
gaps in access to paid leave benefits for workers not
covered by private sector employer plans to ensure that
workers are protected from the hazards to health,
family and income that may result from a lack of paid
leave.
To minimize disruptions in union workplaces, Federal,
state or local paid leave legislative changes should defer to
the collective bargaining process and not require any party to
a collective bargaining agreement to reopen negotiations of the
agreement or to apply until the existing agreement is
renegotiated by the parties or expires.
______
The Chair. Thank you very much.
We will turn to Ms. Milito.
STATEMENT OF ELIZABETH MILITO, SENIOR EXECUTIVE COUNSEL,
NATIONAL FEDERATION OF INDEPENDENT BUSINESS, WASHINGTON, DC
Ms. Milito. Thank you, Chair Murray and Ranking Member Burr
for inviting me to speak today. I also thank the other
Committee Members and staff who are in attendance.
My name is Beth Milito, and I am an attorney in the
National Federation of Independent Business Small Business
Legal Center. NFIB is a member-driven organization that
represents about 300,000 small and independent businesses
across the Country.
Small businesses employ nearly half the Country's private
sector workforce, and when small businesses succeed,
communities and local economies succeed. Consider the very type
of small businesses you frequent--pizza parlor, auto shop, dry
cleaner, hair salon. Some have employees that are strictly full
time; others, strictly part time or hourly. Some have both.
These are the typical NFIB members who employ five to ten
individuals. Only about 12 percent have a human resources
professional. The business owner or spouse is often the H.R.
point person. Over 50 percent of NFIB members still do payroll
in-house.
I describe our membership to illustrate one of the key
points of my testimony: there is no such thing as a one-size-
fits-all policy that works for every business or every
industry.
I understand the good intentions behind various proposals
to mandate leave. But, NFIB and its members have long opposed
leave requirements for two reasons: inflexibility and cost.
First, innovation and flexibility are critical to small
business survival. The COVID-19 pandemic showcased small firms
that thrive by innovating, pivoting, and adapting to their new
circumstances. Small firms depend on flexibility not only to
boost sales and manage business operations, but to establish
employee benefits, which includes paid time off.
The majority of small businesses provide flexible, mutually
beneficial arrangements that allow employees time off when
necessary in a fiscally responsible way. Small business owners
recognize the value of providing paid leave to employees since,
after all, small businesses need to bid for and retain talent
just like all other firms. And, to the extent that they can,
small businesses provide paid leave voluntarily to remain
competitive and attract talent.
Currently, finding qualified workers is the No. 1 cited
problem for small business owners, surpassing taxes and
regulations. And one of the primary ways in which small
business attract and retain workers is by providing flexible
leave policies that fit the needs of their employees and the
businesses.
To the extent that small firms do not offer paid leave,
this reflects the reality that some small firms simply cannot
financially afford to offer this benefit. If you can only
afford to give your workers 10 days of paid time off and the
government mandates 5 days of paid sick leave, then your
employees have only 5 days left for vacation.
This leads me to my second concern with leave mandates.
Leave, paid or unpaid, is not a free benefit for employees. The
unanswered question with a leave mandate is, who is going to
pay? There is a cost with these proposals and not all business
owners can absorb the cost.
In a small business with a finite amount of resources, this
means less money available for wage increases, health
insurance, and hiring additional employees. It also means more
time and money devoted to complying with workplace laws.
I mentioned earlier that small business owners typically
have few administrative staff and little human resources
experience. Nearly all leave proposals, paid or unpaid, would
impose recordkeeping requirements, including leave tracking,
accrual, notification, documentation, and reporting.
When one state considered and adopted a paid leave proposal
a few years ago, the legislative record was replete with
opposition from small businesses. And consider this submission
from a small business owner.
Quote, we compete in a world market and everything the
state or Federal Government does burdens us with more and more
unfettered mandates that make us less competitive in world
markets. So, now I have fewer employees. And since there is not
enough income after all of my employment costs are met, I end
up not getting paid anything for my family for all the work
that I do.
I could go on and on, but the bottom line is that we
farmers do not make enough to subsidize all the wonderful
benefits that you would like to see employees entitled to. I
have workers asking for work, and there is plenty for them to
do. But, at the high costs that the state requires me to pay, I
have to limit the number that I can hire.
It may seem great to mandate more benefits to employees,
but the hidden costs are fewer jobs.
Small businesses generate 40 percent of U.S. economic
activity. So, the fundamental truth is, we need small
businesses to stay alive in order to maintain a healthy
economy.
Fourteen months after the outbreak of the pandemic, the
small business economy remains fragile, and mandated leave laws
represent a significant challenge for small businesses.
Mandates are generally not flexible, nor affordable.
On behalf of the small business owners of NFIB, thank you
again for inviting me to appear before the Committee.
[The prepared statement of Ms. Milito follows:]
prepared statement of elizabeth milito
Thank you to Chair Murray and Ranking Member Burr for holding this
hearing and inviting me to speak today. I also want to thank the
Committee Members and staff who are attending today.
Introduction
My name is Elizabeth Milito, and I work in the National Federation
of Independent Business's Small Business Legal Center. NFIB is a
member-driven organization that represents about 300,000 small and
independent businesses. NFIB members define our neighborhoods, fill our
communities with character, create local jobs, and homegrown economic
opportunity for small businesses owners and their employees alike:
local hardware stores, independent restaurants, florists and barbers,
plumbers, paper companies, roofers, landscapers and mechanics, fitness
and retail boutiques. These are NFIB members.
Small businesses employ nearly half the country's private sector
workforce. \1\ When small businesses succeed, communities succeed. A
strong, vibrant small business eco-system supports local tax bases,
governments, and schools. It is estimated that 67 cents of every dollar
spent at a local small business is reinvested into the community. \2\ I
trust you all recognize and value the importance of small businesses in
your states.
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\1\ Frequently Asked Questions, Office of Advocacy, U.S. Small
Business Administration (October 2020), available at Frequently Asked
Questions About Small Business, 2020 (sba.gov).
\2\ SCORE (November 2019), available at Infographic: How Do
Americans Support Small Businesses? SCORE.
I describe our membership and the importance small business has on
our economy to illustrate one of the key points of my testimony and
what I think often gets lost in the public policy discussions in
Washington, DC, when it comes to labor and business issues: there is no
such thing as a ``one-size-fits-all'' policy that works for every
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business or every industry.
Consider the varied types of small businesses you frequent--pizza
parlor, auto shop, drycleaner, hair salon--some have employees that are
strictly full-time, others strictly part-time or hourly. Some have a
combination of both. Perhaps others are seasonal employers. Small
businesses face complex issues that are unique to them, and when
solutions to perceived problems are put in place by government,
policymakers too often paint business with a broad brush and fail to
consider the unique structure of Main Street employers.
I am mindful of the well-meaning sentiments behind leave mandates
and sympathetic to those who have suffered the hardships that might
lead to proposing leave mandates. NFIB believes, however, that
inflexible and costly leave mandates inadvertently affect the
livelihood of many and should be considered in the context of the
impact on this country's economic environment and the flexibility many
employees receive from their employers in difficult situations.
Small business owners can and do offer support to employees in
their lives away from work, whether it is for their own care or to care
for a parent, child, or other family member, or to incentivize an
employee to get vaccinated, but they must have flexibility in creating
a policy that works for both the employees and the business. Time-off
for sick and family issues is currently worked out in small businesses
across the country every day without government intervention. Mandates,
whether paid or unpaid, drive up costs and force businesses to cut
jobs.
NFIB has long opposed inflexible or mandated leave requirements for
a variety of reasons. But today, I would like to focus on three
concerns of NFIB and its members: (1) small businesses' fight to
survive during the COVID-19 pandemic highlighted problems with well-
intentioned mandates; (2) flexibility, not mandates, is the key to
making small businesses employers of choice in our communities; (3)
leave proposals generally impose inordinate complexity and costs on
small businesses.
Small Business Concerns About Mandated Leave Policies
1. Small Businesses Fight for Survival During COVID-19:
Problems with Well-Intentioned Mandates
In February 2020, employment rates were at historic highs and the
coronavirus was still novel. Within 4 months, COVID-19 had economically
devastated our country. It hit hardest the small businesses that are
both critical to our economy's growth and vulnerable to disasters.
Whether it was a winery in Oregon, a theater in San Diego, a coffee
shop in Boston, a restaurant in Michigan, a summer camp in Virginia or
a hotel in New Jersey, coronavirus was devastating. According to a
Harvard Business Review study, the vast majority of small businesses
had less than two months of cash on hand to deal with the pandemic's
economic shocks. The median business with monthly expenses over $10,000
generally did not even have enough cash to cover 2 weeks of their
spending. As a result, the outbreak left few, if any, small businesses
unscathed. \3\ Furthermore, the policy responses did not always work
out as planned. As of September 2020, Yelp had estimated that 66,000
small businesses will never reopen, and in the food-service industry
alone, 110,000 businesses, \4\ or 17 of all U.S. restaurants, have
closed, according to a survey from the National Restaurant Association.
\5\ The Federal Reserve more recently reported that the pandemic
resulted in a business closure rate about one-quarter to one-third
above normal with ``130,000 excess firm exits.'' \6\ In short, the
small business half of the economy was significantly damaged by the
COVID-19 pandemic.
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\3\ A Way Forward for Small Businesses, Harvard Business Review
(April 13, 2020), A Way Forward for Small Businesses (hbr.org)
\4\ Yelp Economic Impact Report (September 2020), available at
Yelp: Local Economic Impact Report (yelpeconomicaverage.com)
\5\ National Restaurant Association press release Restaurant
Industry in Free Fall; 10,000 Close in Three Months. National
Restaurant Association (December 2020).
\6\ Business Exit During the COVID-19 Pandemic: Non-Traditional
Measures in Historical Context, The Federal Reserve (April 2021)
(``Taken together along with some prudent guesswork, our sector-level
results suggest economywide excess establishment exit--that is, exit
above and beyond pre-pandemic rates--was likely below 200,000
establishments during the first year of the pandemic, implying an exit
rate about one-quarter to one-third above normal.''), available at
Business Exit During the COVID-19 Pandemic: Non-Traditional Measures in
Historical Context (Federalreserve.gov).
The NFIB Research Center has conducted a series of surveys over the
last 14 months assessing the impact the pandemic has had on small
business owners. These surveys have shown that many small businesses
are still struggling to survive as economic conditions and business
restrictions remain serious since the national emergency declaration
concerning the COVID-19 outbreak. \7\ Owners continue to adjust
business operations with 12 percent of small business owners reporting
that they will have to close their doors if current economic conditions
do not improve over the next 6 months. As the small business half of
the economy emerges from the public health crisis, it is critically
important that small firms have a solid foundation from which to
operate and invest in their business. Relief efforts by the
Administration and Congress have allowed many to remain afloat, but
there is still work ahead.
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\7\ NFIB Covid Small Business Survey 17 (April 23-28, 2021),
available at Covid-19-17-Questionnaire.pdf (nfib.com).
The best path for small businesses to recover is to get as many
Americans vaccinated as possible, and quickly, so Main Street can fully
reopen. In the meantime, some small businesses may continue to need
economic assistance in the form of grants, such as the recently opened
Restaurant Revitalization Fund, or tax incentives, such as the Employee
Retention Tax Credit, to survive. The Paycheck Protection Program (PPP)
was extremely popular with small business owners with 73 percent of
NFIB members receiving a PPP loan in 2020. \8\ Outside of some initial
implementation and funding concerns, the PPP was very effective in
helping small employers maintain payroll as well paying for other
eligible expenses that were critical in business operations.
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\8\ Covid-19-17-Questionnaire.pdf (nfib.com).
But there have also been COVID-19 related programs that have made
life more difficult for small business owners. The paid sick and family
leave mandate enacted within the Families First Coronavirus Response
Act, and specifically targeted at small business owners, was
challenging for many small business owners. Nearly half of small
employers have had employees take COVID-19 related sick leave or family
leave, however, only 41 percent of those have claimed the available tax
credit to reimburse those expenses. \9\ The terms and conditions of the
mandate are complicated, and the credit is difficult to claim for many
small employers who have to navigate both programs themselves.
Moreover, the IRS continues to experience delays in processing employer
reimbursement for FFCRA leave. \10\
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\9\ NFIB Covid Small Business Survey 17 (April 23-28, 2021),
available at Covid-19-17-Questionnaire.pdf (nfib.com).
\10\ IRS Statement about Form 7200 Payments. Internal Revenue
Service.
The effects of the COVID-19 pandemic are ongoing. While some
businesses have largely recovered from the initial decline, others
continue to lag. \11\ Whether business closures become permanent, will
depend in part on policy responses. At a time when small businesses are
confronted with the worst pandemic in more than 100 years, Congress
should not saddle them with a costly new mandate that will further
damage the fragile economic recovery.
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\11\ The Effects of COVID-19 Pandemic on Small Businesses, U.S.
Small Business Administration (March 2021), available at The Effects of
the COVID-19 Pandemic on Small Businesses (sba.gov).
2. Small Businesses and Employee Benefits: Flexibility Makes
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Small Businesses Employers of Choice in Our Communities
The term employer of choice is often associated with big
corporations that have access to Cadillac employee benefit programs and
seemingly endless resources to throw around, but the reality is that it
does not have to be that complex or challenging. Small businesses have
demonstrated time and again that being an ``employer of choice'' means
becoming an employer that potential and existing employees want to work
for. Small businesses do this by offering competitive compensation and
investing in employees and their communities.
Unfortunately, however, mandated leave proposals often envision a
one-size-fits-all mandate that would handicap businesses' ability to
attract workers at a critical time. Across the Nation, small business
owners are seeing a growth in sales but are stunted by not having
enough workers. Finding qualified employees remains the biggest
challenge for small businesses and is slowing economic growth. Owners
are raising compensation, offering bonuses and benefits to attract the
right employees.
The NFIB Small Business Optimism Index rose to 99.8 in April, an
increase of 1.6 points from March. \12\ The Optimism Index has
increased 4.8 points over the past 3 months since January but a record
44 percent of owners reported job openings they could not be filled.
\13\ Finding qualified workers is the number-one-cited problem for
small business owners, surpassing taxes and regulations. \14\
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\12\ Small Business Economics Trends. NFIB (April 2021)
\13\ Jobs Report and Jobs Data from the NFIB Small Business
Research Center, NFIB (April 2021)
\14\ SBET-Apr-2021.pdf (nfib.com) (April 2021).
One of the primary ways in which small businesses attract and
retain talented workers is by providing innovative benefits like
flexible leave policies, designed specifically to fit the needs of
their employees and their businesses. The majority of small business
owners already include paid leave in their compensation package.
According to an NFIB national small business poll, a majority of small
business owners indicated that they already provide flexible leave.
Most small employers (73 percent) offer paid time off (PTO) to the
majority of their full-time employees, and 67 percent of them offer 2
weeks or more of leave. \15\ The number of days offered is dependent on
an employee's length of service in 76 percent of small businesses
offering the benefit. \16\
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\15\ NFIB National Small Business Poll, Employee Compensation and
Small Business (2016), available at http://www.411sbfacts.com/files/
NFIB-SBP-Emp-Compensation2017-v2.pdf.
\16\ Id.
Most small business owners work hard to ensure compliance with
employment and labor laws in a workplace that treats employees fairly,
but their informal and unstructured nature and more limited financial
resources require greater flexibility in creating policies and
solutions. Indeed, small businesses are leaders in flexible working
arrangements, a key benefit for many of their employees.
Studies have shown that small businesses are more likely to allow
employees to change starting and quitting times, work some regular paid
hours at home occasionally, have control over when to take breaks,
return to work gradually after childbirth or adoption, and take time
off during the workday to attend to caregiving or other family or
personal needs without loss of pay. \17\ Flexible work arrangements
like these directly correlate with increased employee satisfaction.
\18\
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\17\ Workplace Flexibility: Information and Options for Small
Business, U.S. Department of Labor Women's Bureau (2015), available at
https://www.dol.gov/wb/WorkplaceFlexibility-508-FINAL.pdf.
\18\ Workplace Flexibility Survey--Strategic Use of Flexible Work
Arrangements, Society for Human Resource Management (2014), available
at https://www.shrm.org/hr-today/trends-and-forecasting/research-and-
surveys/pages/2014-workplace-flexibility-survey-strategic-use-of-
flexible-work-arrangements-(fwas).aspx.
During times of emergencies like now, flexibility is even more
important than ever before. NFIB is monitoring the current situation
and working to support our members. \19\ We have been providing them
with the Center for Disease Control and Prevention's (CDC's) guidance
to prevent workplace exposure, which includes the recommendation that
employers maintain flexible policies to allow employees to stay home to
care for themselves or a sick family member. \20\ Employers must be
prepared for emergencies, as CDC advises, but employers cannot be
saddled with more mandates and costs. A better solution is to reduce
regulations and lower taxes so that employers can weather storms and
adopt flexible policies.
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\19\ https://www.nfib.com/content/legal-compliance/healthcare/how-
small-business-can-prepare-for-coronavirus/.
\20\ https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-
business-response.html.
In summary, expanding leave mandates has two results that impact
flexibility in the workplace. Mandating uniform leave policies for all
employers cuts off an avenue through which small business owners can
shine through unique programs that benefit their businesses, their
customers, their employees, and ultimately their communities. In
addition, leave mandates increase costs for small employers, which
almost always limits the flexibility of small businesses to provide
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benefits that many employees already enjoy.
3. Small Businesses and Mandated Leave: The Complexity of
Compliance and Unforeseen, Unintended, and Hidden Costs
Small businesses depend on predictability to stay competitive.
Mandated leave policies, however, further complicate compliance with
workforce laws for employers and raise costs on businesses. Mandated
leave is not a free benefit for employees; mandated leave comes with a
cost that businesses will have to shoulder and will eventually be
absorbed by the employer, employees, and customers. In a small business
with a finite number of resources, this translates into less money
available for wage increases, health insurance, and hiring additional
employees.
Small businesses, which are the backbone of our economy, are
especially vulnerable to the impact of labor mandates. Small firms
typically have few administrative staff members and little human
resources experience or regular access to legal counsel. Only about 12
percent of small businesses have a human resources professional or
dedicated employee who handles personnel matters. \21\ In the vast
majority of small businesses, all ``HR'' matters are handled by the
business owner or an employee who handles back office and
administrative tasks. This means that the recordkeeping and reporting
requirements mandated by leave proposals will fall more times than not
on the business owner. About 50 percent do payroll in-house. \22\
Adding a Federal leave mandate to existing state and local labor and
employment law requirements would complicate an already difficult legal
and regulatory environment for small businesses and would expose these
businesses to legal challenges.
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\21\ NFIB National Small Business Poll Business Structure (2004),
available at http://www.411sbfacts.com/files/bizstructurepoll[1].pdf.
\22\ NFIB National Small Business Poll Tax Complexity and the IRS
(2017), available at NFIB: The Voice of Small Business--National Small
Business Poll (411sbfacts.com).
Understanding and complying with the complexity of a new mandate is
expensive, both in terms of time and money. According to the Small
Business Administration, workplace compliance costs small businesses 36
percent more per employee than it costs large businesses. \23\ Some
will argue or propose that the solution would be to exempt businesses
with x number of employees as an attempt to protect small employers.
There are a few problems here as well. One would be that it could
discourage growth, hiring, and economic expansion, which is not an
outcome our country can afford.
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\23\ The Impact of Regulatory Costs on Small Firms, SBA Office of
Advocacy (2010), available at https://www.sba.gov/sites/default/files/
The%20Impact%20of%20Regulatory%20Costs%20on%20Small%20Firms%20(Full).pdf
Additionally, whether an employer is subject to the paid leave
mandate or subject to the unpaid leave mandate, leave laws often impose
onerous recordkeeping requirements with which small businesses would
need to comply, including new leave tracking, notification,
documentation, and reporting requirements. Records would need to be
maintained to demonstrate compliance. The Family and Medical Leave Act
of 1993 (FMLA) exempts small employers, those who employ fewer than 50
employees located within 75 miles of a worksite. We encourage you to
consider the impact any mandated leave proposals may have on small
businesses, just as Congress did in 1993 when it chose to exclude the
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smallest employers from the FMLA.
NFIB is a member-driven organization. Through NFIB's ballot
process, members dictate NFIB's positions on Federal and state policy
matters. And NFIB members have consistently opposed Federal and state
leave mandates for good reason. The leave mandates impose new costs on
U.S. employers that would lead to reduced profitability, lost sales and
production, and lost jobs. In 2015, NFIB's Research Center conducted a
study to determine the economic impact of the Healthy Families Act.
Assuming passage and implementation of then-H.R. 932 in 2016, the BSIM
forecast that the sick leave mandate could result in 430,000 jobs lost
over a ten-year period. \24\ The cumulative real output lost during
this period was estimated to be $652 billion. \25\ Job losses at small
firms would have accounted for 58 percent of all jobs lost, and small
firms would bear 50 percent of lost output. \26\
---------------------------------------------------------------------------
\24\ The Economic Impact of H.R. 932 and Mandatory Paid Sick Leave
on U.S. Small Businesses, NFIB Research Foundation (2016), available at
https://www.remi.com/wp-content/uploads/2017/10/320-NFIB-Mandatory-
Paid-Sick-Leave.pdf.
\25\ Id.
\26\ Id.
Ultimately companies and employees should be the ones negotiating
their leave plans. Many small businesses pride themselves in their
benefits and position themselves accordingly as ``family friendly.'' In
a competitive labor market, flexible leave policies are often a benefit
that small businesses use to stand out and attract workers. But leave
mandates curtail flexibility in two ways. First, mandating uniform
leave policies for all employers cuts off an avenue through which small
business owners can shine through unique programs that benefit their
businesses, their customers, and their employees. In addition, as
discussed above, leave mandates increase costs for small employers,
which almost always limits the flexibility of small businesses to
---------------------------------------------------------------------------
provide benefits that many employees already enjoy.
A Federal mandated leave program will further complicate the
patchwork quilt of labor laws that are problematic and confusing for
employers. In recent years, leave laws have passed in a number of
states. Some of these state initiatives were funded via payroll
deductions, only to later be modified to be strictly employer funded.
Many enacted paid leave mandates additionally incorporate private right
of action language, which opens small employers up to an increased
threat of litigation. Nearly all require some form of recordkeeping and
notice provisions. All leave mandates--paid or unpaid--impose new
responsibilities on already overburdened small business owners.
Consider these comments from current NFIB members facing new state
leave mandates: ``With liability and workers compensation costs going
up every year . . . we cannot take another mandate that raises the cost
of doing business. My liability rates went up 22 percent!'' or ``This
increase in payroll costs would force us to raise our prices, decrease
existing benefits, or reduce raises. This will hurt our employees; the
very workers a paid leave mandate would seek to protect.''
As the economy recovers from COVID-19's economic fallout, NFIB
recommends that Congress adopt the principle of ``do no harm.''
Proposals such as those to more than double the Federal minimum wage to
$15 per hour, impose paid leave mandates, and create new Federal
enforcement actions on small businesses will make it even harder for
Main Street to recover. Making it more expensive to operate a business
will only serve to hamper the ability of small firms to survive the
pandemic.
Conclusion
Small business owners get the changing dynamics in the workplace--
they are parents and caregivers, too--and they want to do all they can
to attract and retain the best employees. But when it comes to
benefits, flexibility is key for small businesses. Mandated leave laws
represent a significant challenge for small business owners since
mandates are generally anything but flexible, simple to comply with,
and affordable.
Unlike larger businesses, small firms do not have cash reserves or
profit margins to absorb the increase in labor costs. Now is not the
time to saddle small businesses with a costly new mandate that will
further damage the fragile economic recovery.
On behalf of all the small-business owners of the NFIB, thank you
for focusing on this important issue and inviting me to appear before
the committee. I would be happy to answer questions.
______
The Chair. Thank you.
We will now begin a round of 5-minute questions of our
witnesses, and I, again, ask my colleagues to keep track of
your clock and stay within those 5 minutes.
Ms. Shabo, let me start with you. The pandemic has
disproportionately harmed essential workers, and in particular,
essential workers who are women, people of color, people who
are paid low wages, and they face higher rates of illness
because they cannot work from home. And many, especially in our
low-wage sectors, do not have access to paid sick days and paid
family leave and medical leave.
Based on your expertise, how would have a national policy
ensuring access to paid sick days and paid family and medical
leave impacted workers and the economy during this pandemic?
Ms. Shabo. Thank you for that question. I think the
evidence and the answer is clear that there would have been
multiple effects.
First of all, for all of us, COVID would have been reduced.
We already know that the Families First Act reduced coronavirus
by 15,000 cases per day, and that is even with a law that only
applied to somewhere between 25 and 50 percent of the
workforce. So, imagine----
The Chair. Because people stayed home and did not impact--
--
Ms. Shabo. Exactly. Then, survey after survey from the
Kaiser Family Foundation and the Bipartisan Policy Center has
shown the number, the share, of workers--and it was
significant, it was around 30 percent--who lost a job or left a
job because they were scared of getting sick in their
workplace. So, some of that obviously had to do with PPE, but
some of it had to do with lack of access to paid sick time if
they got sick.
We know that women, in particular, took paid sick--unpaid
sick time--sorry, excuse me--unpaid sick time,
disproportionately, both to care for children who were out of
school and to deal with the care of a loved one. And that has
translated, of course, in part, into two million women who left
the workforce and have not yet gone back.
We know that especially pregnant women during this time
faced really terrible choices between being able to continue to
work and caring for themselves and the health of their
pregnancy, and, then, what did they do with the newborn when
childcares were closed. So, myriad problems that could have
been solved by having a national paid sick days and national
paid family and medical leave program in place.
Workers knew that; voters knew that. Asked whether a
national paid leave program would have helped them through the
pandemic, an overwhelming majority said yes, and there were no
divides, really, across party lines because everybody was
affected by this pandemic and has been affected for years
before. And, that is why we have seen high levels of support
for both of these policies, 70 to 80 percent, with very little
partisan division over the last decade, really.
The Chair. Thank you. I agree with that.
Ms. St. Hilaire-Finn, you have run a successful childcare
and preschool business here in Washington, DC for over 17
years. Over the course of that time here, Washington, DC put in
place citywide paid sick days and paid family and medical leave
programs.
Based on your experience with the city's paid leave
policies, tell us how you believe a national paid sick, family,
and medical leave policy affects childcare providers and other
small businesses.
Ms. St. Hilaire-Finn. Thank you, Chair Murray, for the
question. I think a national program would level the playing
field for small businesses; that businesses will not have to
charge a premium for them to afford a national paid leave.
Also, I think that paid leave would ensure that workers
stay home when they are sick. As a healthcare professional, we
see people come to work sick, and many times I have to
encourage them to stay home. With a national paid leave, they
would know that they could stay home, concentrate on being
well, and receive paid--they will not have to choose between
their health and a paycheck.
Also, this would--it also helps us to value employees. It
helps us to retain the best and the brightest. Like has been
said, most people today are looking for a place where they can
call home; that they know that when they come in, that they can
do their best; and when they have to--when they are sick, they
can stay home and take care of their health.
The fact that women also bore the most caregiving, paid
leave would make it easier for women to take care of their
needs and return to work when they are much better.
Both programs, paid family leave and paid sick leave, would
also help boost the economy because a parent staying home when
they are sick can return and be functional at full capacity,
providing the best to the economy.
Thank you.
The Chair. Thank you very much for that.
Senator Burr.
Senator Burr. Thank you, Madam Chair.
This is fascinating because nobody is opposed to family
leave. All of our witnesses speak in favor of it. And I heard a
couple references to the COVID example, and it makes me think
about the innovators who really responded to something that did
not exist just a year and 2 months ago. Those small incubator
companies that came up with diagnostic tests. They came up with
therapeutic responses. I am not talking about the Pfizers and
Modernas, big companies, but I am talking about the small ones
that had the flexibility to work with technology. And, I
wonder, if they had this series of regulatory mandates, would
they have even existed then? Would they have been able to
respond to this?
In many cases, their employees are made up of employees
that have chosen to work overtime because they are trying to
make a company succeed. And, in some cases, they have
sacrificed pay for some type of stock benefits. Those employees
with that company have made certain decisions about their
finances because they want the company to be successful. That
is their livelihood.
Marcia, your business is a great model. You serve a very
special clientele. My grandchildren potentially could be there.
But, I also remember that downstream from you are the parents
of these children that are working for a small business that
may have been represented by NFIB, and that your success is
reliant on their job and their employment. And if, in fact,
their employers cannot stay in business, then who is going to
pay you for the childcare? They are probably going to miss out
on the educational experience of early childhood learning.
I have a question to Ms. McManus and Ms. Milito. It has
been stated today that a national plan is the answer. However,
national plans do not seem to ever be all they intend to be.
They do not run so well. Look at Social Security as an example.
A national solution does not necessarily mean new national
mandates or new Federal entitlement programs. A national plan
could mean we make it easier for the private sector to do their
job, such as providing tax credits for COVID-19 relief. A 2017
survey showed great support for family leave, but most of those
surveyed think the employers should provide it, not the
government.
My question is this. What could the Federal Government do
to reduce red tape or provide incentives to make it easier for
employers to provide paid leave benefits? Let me go to----
Ms. McManus. Well, thank----
Senator Burr [continuing]. Ms. McManus first.
Ms. McManus. Thank you, Senator, for the question. I think,
as I said in my oral testimony, our view is that what is needed
is a Federal solution that would provide a sort of level
playing field for employers and all American workers to have
access to paid family and medical leave benefits.
But, we do think that there is lots of room for many
components to that solution. We believe allowing employers the
flexibility to leverage private sector solutions and keep doing
what they have been doing. I think you mentioned incubators,
right, creative incubators. Allowing employers to continue to
do that is great.
We see that there is lots of activity at the state level,
and that may have a role, as well, to play because we recognize
that not all employers are IBM, or not all employers are
members of the American Benefits Council. It may take
incentives. That may be another tool in the toolbox to help
employers be able to build the types of leave programs that
would meet a Federal standard.
We are in complete agreement. We think it is needed. We
think all American workers need these types of benefits. And we
think that building upon what is working today, which is,
private sector solutions, but having a Federal standard in
place really would be the most practical way to get at the
issue.
Senator Burr. I want to get to Ms. Milito before my time
runs out. Not all states are California, too, Ms. McManus.
Ms. McManus. Okay.
Senator Burr. Ms. Milito.
Ms. Milito. Thank you very much, Senator Burr.
Small business owners get the change in dynamics in the
workplace. They are parents and caregivers, too, and the
flexibility is key. So, in considering leave proposals, we
would certainly ask that you consider the impact that a
proposal would have on small businesses, just as Congress did
in 1993 when it exempted small employers from the mandate of
the Family Medical Leave Act, too. And as Congress did last
March in the Families First Coronavirus Response Act regarding
expanding the Family Medical Leave Act, that same 50 employee
exemption.
Senator Burr, just real quickly, too, you outlined some,
possibilities in your opening statement, too, which I thought,
Senator Fischer's tax credits were helpful, too, and there were
other flexibility arrangements. Expanding comp time, those sort
of things, that would also be helpful in allowing employees the
time away from work that they need.
Senator Burr. I thank you.
Thank you, Madam Chair.
The Chair. Thank you.
We will turn to Senator Casey.
Senator Casey. Thank you, Chair Murray. I wanted to start
by asking consent. Madam Chair, I would like to ask unanimous
consent to include in the hearing record four letters, and
these letters are from--one is the 100 Day Statement. The
second is the Center for Law and Social Policy statement;
American College of Physician statement; and fourth, Maternal
and Child Health Organization statement. These are four
statements from roughly 120 experts, organizations, and
advocacy groups supporting the need for comprehensive national
paid leave policies.
The Chair. Without objection.
[The following information can be found on page 83]
Senator Casey. Thank you, Chair Murray.
I wanted to start with a question of access. I will direct
one or two questions to Ms. Shabo. The access question, I was
struck by one number. There are so many numbers to contemplate
here in terms of where we are as a Nation, but one number just
kind of leaped off the page when I was reading a memo preparing
for the hearing. It is 20. There is obviously many numbers we
can talk about, but 20, 20 percent. Twenty percent is the
percent of private sector workers that have access to paid
family leave.
Now, I know we are not only talking about family leave. We
are talking about leave generally, paid leave generally. But,
just in that one category of paid leave, family leave, 20
percent of private sector workers. That is where we are today.
I do not think anyone can be and is satisfied with that.
Ms. Shabo, I wanted to start with this question about gaps
in access that are obviously driven by distinctions between
what happens to a worker in a low-income--a low-income worker
and a higher-income worker. We also know that workforces that
currently lack access to leave are disproportionately women and
people of color as you and others have testified to. And, as we
work to create a national approach to these challenges, it is
critical that these programs reach the people that we hoped
they would reach and are structured in a way that would allow
workers to fully take advantage of them.
In your testimony, you discussed how important it is for
programs to be designed to encourage take-up and how important
outreach to workers and families to expand awareness of the
program. So, if you can talk about that. No. 1, how to design
paid leave programs; and second, how to conduct public outreach
to best ensure that workers who need the most will fully
utilize them.
Ms. Shabo. Absolutely. Thank you for the question, Senator
Casey. And I, too, remain very compelled and disturbed by that
20 percent figure, and in particular by the 5 percent figure
for low-wage workers, which has only gone up by 2 percentage
points in the last decade.
To your question, we know from the state programs, and
there are now 10, seven of them are in operation. We know that
there are better and worse ways to design these programs.
High wage replacement for low-wage workers. The newer
programs, Washington State, the District of Columbia,
Massachusetts, and others all have higher wage replacement for
low-wage workers so that they can afford to take the leave that
is needed.
Employment protections. We have talked a lot today about
the 50 employee carve-out in the FMLA, but what that does is
disproportionately carve out low-wage workers, workers of
color, single parents. Particularly in light of the pandemic,
that will be the case.
The Families First Act, which included the ability for
small employers to deny leave to their workers, their parents,
who needed leave. That, according to the Health and Human
Services Department disproportionately excluded single parents
and low-wage parents, as well.
We need to make sure that job protection is in place.
We need to make sure that wages are high enough, wage
replacement is high enough.
We need to make sure that leave taking is available on a
gender-equal basis. We know that men are more likely to take
leave when paid leave programs are in place, particularly when
benefits replace a substantial share of income.
On the outreach and education question, we have learned a
lot about the design of forms, to make sure that application
processes are clear. So, my colleagues at New America did a
whole project on that, and others have, as well.
We need to make sure that there are resources available.
Outreach to both employers, to help them understand why these
programs are beneficial to their workers and to them, as well
as outreach to workers through community-based organizations,
health centers, and others.
With the state paid leave programs, what we have seen
actually is not that there is overuse of these programs, but
that there is underuse, and it is often because the very
workers who could benefit most do not know that these programs
exist.
Last, just on this point of business that has come up,
study after study from California, New Jersey, Rhode Island,
and now New York show that actually businesses, small
businesses, those under 50, those under 100, are overwhelmingly
supportive, that they have benefited. They say it is easier to
navigate the long leaves that their employees might need when
they need them.
We know a lot, and there is a lot of work to do to help
those 80 percent of workers that do not have access to paid
family leave now.
Senator Casey. Well, thanks very much. I will submit a
question for the record, and it will focus on the benefits to
children, to older workers, as well as people with
disabilities.
Chair Murray, thank you for the time.
The Chair. Thank you.
Senator Cassidy.
Senator Cassidy. Yes. Thank you all.
Ms. Shabo--and again, I have been monitoring two other
committee hearings, so if I am asking something that someone
else has asked, I apologize.
But, I gather that you had financed your paid leave with a
payroll tax. Now, what we have seen in some states is that,
say, Google in California is providing a benefit, and when
California comes and the state provides a benefit, all Google
does is pull back upon their contribution and allows the state
to pick up that which formerly Google paid for.
On net, the patient--excuse me, the patient. I'm sorry. I
am a doctor, so I always think this way. The beneficiary does
not get any more money. It is just that which was formerly paid
by a Fortune 10 company is now being paid by taxpayers. Any
thoughts about that?
Ms. Shabo. Yes. I am so glad you asked the question,
Senator Cassidy. I know this has been a concern for you. I
think the evidence overwhelmingly shows that in states that
have adopted paid leave programs, we have not seen the benefits
be reduced. In fact, Google, Facebook, the tech giants that
have led on paid leave benefits, have not reduced their
offerings. Some----
Senator Cassidy. Excuse me. On net. Just on net. Does the
beneficiary get the state plus what they were formerly getting
from the business, or is it that----
Ms. Shabo. No. I believe----
Senator Cassidy [continuing]. It is reduced?
Ms. Shabo [continuing]. Google and Facebook--right. I think
they self-insure, actually, so they do not draw on the state
program at all. I--it was----
Senator Cassidy. What would I be told by others in another
committee hearing is that there is a reduction in the amount
that the company puts up, subtracted by the amount that the
employee would receive from the state program. Are you saying
that is not true or that you are not sure about that?
Ms. Shabo. Well, we should look into that and I can get
back to you on it.
Senator Cassidy. There was testimony in a Senate Finance
Committee hearing last year which established that for--and we
can reference that. I say that because, again, the payroll tax
that you are suggesting would be highly regressive.
But, also, I am thinking a lot about how do we bail out
Social Security and Medicare? If you need to expand payroll tax
to bail out those two programs, in a sense, you have
cannibalized the capacity to do so by already raising it for a
new mandatory benefit. What thoughts do you have about that?
Ms. Shabo. Well, it is true that the state programs are
financed through payroll taxes. That is one model that is
possible for Congress, as well. There is other revenue sources
that are on the table right now. But, I think, the state
experience has shown that the very small payroll taxes that are
levied on employers, employees, or both come back in spades to
benefit both workers and employers. And----
Senator Cassidy. Let me just ask, because right now, the
payroll tax on the employee for Medicare is, like, 7.25, and
equal amount upon the employer. I gather what you are
suggesting, though, would be an increase of that amount. So, it
has been very hard to raise 7.25 to 8.5, for example, with a
total, twice that if you include the employer's contribution.
How much do you imagine we would have to increase payroll tax
if payroll tax was the funding mechanism for a plan such as
yours?
Ms. Shabo. I am glad you asked that question. So, the
Social Security actuaries last year looked at the Gillibrand
DeLauro bill and estimated that it would be a .62 percent
payroll tax increase, so less than 1 percent.
Senator Cassidy. That would be .62 on the employee and
then----
Ms. Shabo. No, total.
Senator Cassidy [continuing]. .62 percent on the employer?
Ms. Shabo. Social Security actuaries said it would be total
.62 percent, which is very consistent with where the states are
in terms of their payroll taxes. And that includes having the
Social Security cap be the wage base. So----
Senator Cassidy. The Social Security cap being what? I am
sorry.
Ms. Shabo. The wage base for that .62. So, you could bring
it down even further by using the Medicare cap instead of the
Social Security cap.
Senator Cassidy. Now, and to my question of whether or not
we are cannibalizing our ability to address the shortfall in
the Medicare and Social Security funds, which are going
bankrupt within 5 or 6 years or 10 years, depending on which
fund you are talking about. And, so, this is a clear and
present danger, if you will. Do you feel as if--I am just
asking--that the amount that we are putting up to this new
mandatory benefit would not impede the ability to perhaps
further raise payroll taxes to bail out these two programs?
Ms. Shabo. I do not think so, because we are going to be
looking at people who have higher wages, higher workforce
participation, more revenues coming into Social Security Trust
Fund and Medicare as a result of higher wages and more people
working. So, I think we----
Senator Cassidy. In a sense, you are dynamically scoring
this, imagining that there would be--despite raising taxes,
there would be even more employment, even though typically when
you raise taxes, you have a fall--you have less employment
because employers seek increases in productivity to offset the
increase in taxes?
Ms. Shabo. Well, yes, and here we are replacing the income
of people who are working and getting them back into the
workforce. We are enabling jobs for people who might have to
leave work otherwise.
I think this is a different case, and I think the question
is, how can we afford not to do this. If we were to finance
through payroll taxes, it would be a small cost for a big
value, especially for those 80 percent of workers that do not
have paid family leave right now.
Senator Cassidy. I will finish with this because I am out
of time--thank you, Madam Chair--just by saying it does concern
me that if Google and other big companies are currently
providing this benefit, and if all--if by increasing or adding
a mandatory Federal benefit, that would just allow them to
offload their obligation upon the Federal taxpayers. That is a
subsidy of the less-well-off for those who are much better well
off, not the least of which would be a huge company.
With that, I yield back. Thank you.
The Chair. Senator Kaine.
Senator Kaine. Thank you, Chair Murray and Ranking Member
Burr, and thank you to all of the witnesses. This is a really
important topic.
Chair Murray, to begin, I have three letters for the record
that I would like to introduce. The first one is a letter from
307 business and management school faculty from 139
universities. The second is a letter from the NETWORK Lobby for
Catholic Social Justice, and the third is a letter from the
Interreligious Working Group on Domestic Human Needs.
[The information referred to above can be found on page
100]
Senator Kaine. When we were prepping for the hearing, I
just asked my staff, hey, just find what we are hearing from
Virginians about this; just who is right again, and I just want
to offer up some thoughts from them.
Kelly, in Chesterfield County, which is in suburban
Richmond, she was off work for 6 years to take time out of the
workforce to care for her two young children, and then she
started back to work after 6 years.
``Our youngest child kept getting sick because she had
never been in a daycare setting before then.''
Kelly tried to negotiate with her employer, flex schedule,
work from home. She was denied. She was forced to use up her
limited personal time off, which quickly went--which went very
quickly because of her children's various illnesses, including
a stay at a local emergency center. As her personal dwindled
and the prospect rose of having to take unpaid leave, she was
laid off from her job.
Shamila, in Fredericksburg, she became paralyzed due to an
underlying health condition right before COVID hit. She was
employed full time. She was able to go out on short-term
disability, but she ended up being hospitalized for over 7
months and was in a wheelchair. When the short-term disability
ran out, her job was not able to accommodate her, so she
applied for unemployment but was deemed ineligible.
Her husband became her primary caretaker. In the absence of
paid leave, he used up his paid time off, and then all the
extra unpaid leave to get her to all her doctor appointments.
Now they are behind on mortgage payments, son had to drop out
of college, depleted most of their savings.
Shamila has been lucky enough to get a new job that allows
her to work from home, and she is now able to walk, but she
still faces serious underlying health issues.
Kind of a different take on this. Amanda, in Norfolk, for
the most part, she did not need paid sick leave for herself.
She needed it for other people because she worked in
restaurants and bars. In those years, she worked with fevers,
coughs, cold, bronchitis, strep throat, and really just any of
the other unnamed infections because she did not have health
insurance during some of those years, so she did not go to the
doctor unless there was imminent threat to her life.
At her job, Amanda preps food, makes tea, coffee, folds
napkins, rolls silverware, serves food, pours drinks, made
desserts. This is her word. ``If it's going into your mouth or
across your face, I had my hands on or near it.''
Working while she was sick was less detrimental to her than
it was unpleasant, uncomfortable, even dangerous for the people
that she served.
Finally, Lee and his husband Randy from Alexandria were on
vacation in 2018 when they noticed--when Lee noticed lower back
pain, went to see an orthopedic surgeon.
At first, the surgeon recommended physical therapy, but
they needed an MRI that showed a tumor. It kicked off a flurry
of hospital visits, scans, and appointments with specialists,
time in the hospital. In the aftermath of this, he had a heart
attack due to a blood clot.
But, the good news is both Lee and Randy had paid family
leave at their employers, and, so, they were able to take care
of their health without worrying about losing their jobs.
These are just four of the many stories that I hear.
Three--two are about the lack of paid health leave causing
somebody to lose their savings, lose their job; one is the lack
of paid health leave causing somebody to go to work sick and
potentially endanger others; and then the fourth is a good news
story about what paid family or paid sick leave can do.
My understanding--Ms. Shabo, I will direct this to you. The
U.S. is the only country in the OACD that does not have
national paid leave.
According to a 2014 international labor organization
report, out of 185 countries and territories with available
information, only in Papua, New Guinea and the U.S. did not
have national policies providing paid maternity leave.
Unpaid sick leave, the U.S. is the only country with a high
living standard, based on the U.N. calculation of what that
means, without a national policy guaranteeing workers paid sick
days.
What does this say about our values when we are so out of
step with nations around the world who think it is good for
workers and also good for the people they serve to not have to
come to work when they are sick?
Ms. Shabo. Yes. I mean, this is a question of values. It is
a question of economics. It is also a question of values. We
talk a lot about how we care for ourselves. We have just come
through an unprecedented pandemic where the need to care for
oneself and one's loved one could not be clearer, and yet 80
percent of workers do not have paid family leave; 70 percent of
low-wage workers do not have a single paid sick day. And, we
are an outlier, as you have said, on paid maternity leave, paid
parental leave, paid family care leave, and paid sick leave.
Senator Kaine. Thank you, Ms. Shabo. I am over time. I
yield back, Chair Murray.
The Chair. Senator Romney.
Senator Romney. Thank you, Madam Chair.
A number of Republicans said--Senator Rubio and myself and
others have introduced legislation that would provide for paid
maternity leave, but do so without imposing new costs on
taxpayers or employers. In our case, we allow people to draw
from the Social Security fund and then to ultimately pay that
back through lower benefits down the road at a time when they
are less in need of the funding.
You note that this is not a big increase, .6 percent, but
for a family earning 40--or $60,000 a year, it is $400, and
that is a big increase for that family earning $600,000 a year.
And, I mean, it seems like a small percent because when
government thinks about raising taxes, it is always a small
percent for us, but it is a very substantial change in the
living standards of our citizens.
Why not consider measures that would allow us to provide
paid maternity leave that do not place additional tax burden on
employers and employees?
Ms. Shabo. I assume that question is for me.
Senator Romney. Yes.
Ms. Shabo. Well, thank you for the question, and thank you
for your interest in the issue. I have looked at your proposal
and appreciate the contribution to the dialog.
A couple of concerns that I have. First, your proposal
would cover just leave for new parents, which is only 25
percent of people who need access to paid leave in a year. Most
people use it for their own serious health issue. Another 25
percent or so need it to care for a family member who is sick.
On the merits itself of the policy, while I appreciate the
intent, what will happen is that those workers who choose to
take paid leave when a child is born will then have to work
longer, and they will take a lifetime benefit cut. So, the
amount that we are talking about, the small contribution that
you would make under the Family Act model, would help those
families who would otherwise lose an average of $9,000 when
they need to take a paid family or medical leave. They would
have access to a family leave benefit that would allow them to
take leave for multiple number of purposes.
Two, these are the very same people, women in particular,
low-wage workers, who have lower lifetime Social Security,
lower earnings, which means lower Social Security benefits. So,
these are the very people who cannot afford a lower Social
Security benefit when they get to retirement. And, they may be
in very physically taxing jobs so that they are not actually
able to delay taking their Social Security benefits when they
get to retirement.
Again, I appreciate the intent, but I worry that the very
same people who are going to need paid leave when they have a
new child are also the people who need more robust retirement
security when they get to that part of their lives. And I do
not think we need to ask those people to tradeoff against
themselves. I think we can create----
Senator Romney. Excuse me.
Ms. Shabo [continuing]. A program----
Senator Romney. There is also provision for people to add
to their working life as opposed to retirement at the same age,
but a little longer period of time.
The challenge, of course, is that if every problem we deal
with is simply by raising taxes, why, we end up burdening the
American taxpayer. We violate the President's pledge not to
raise taxes on people earning under $400,000 a year, and we
depress the economic growth, which allows people to have good
jobs and rising wages.
With regards to childcare and the need for kids to have
childcare, the--broadly speaking, looking at the Democratic
proposals with regards to childcare, there seems to be a very
significant bias toward providing childcare and pre-K education
and so forth, which encourage, if you will, women and men going
into the workforce as opposed to saying, hey, if one of you
wants to stay and raise the child, that is acceptable, too. It
does seem like the Administration strongly prefers getting kids
out of the home and getting both parents into the workforce.
I understand there is an economic reality to that, or
advantage to that, and yet, I also think there is a
developmental advantage to a child--if a parent, if parents,
want to have one or both remain home to raise a child, that
there is a childrearing advantage to that, as well.
Are you concerned--and I guess I am going to direct this to
the member of this panel that is responsible for childcare. Are
you concerned that too much focus on Federal mandates actually
may be detrimental to the effects on children who might
otherwise be raised with the intensive involvement and
investment on the part of the parent, or one of the parents,
for that child?
Ms. St. Hilaire-Finn. Thank you, Senator, for that
question. Yes, I think two things here. For one thing, children
develop better in an environment where they can engage with
others besides their family members. Allowing a child to be in
a setting where they can develop their cognitive and their
social/emotional skills will allow the parents to go to work
and not have to worry about their child falling behind by the
time they are ready for kindergarten.
Senator Romney. Let me just interrupt here. Your first
point was that--make sure I understand--you believe it is----
Ms. St. Hilaire-Finn. Sure.
Senator Romney [continuing]. Better for a child to be--not
be in the home, in their neighborhood, with parents--let's say
a 3-year old or a 4-year old child. They are better being in a
professional childcare center, approved by the government, than
being in their home and in their neighborhood?
Ms. St. Hilaire-Finn. Well, it is more beneficial for the
child. Children learn better in a setting outside the--with
Families First, always the family is the child's best teacher.
Senator Romney. I did not----
Ms. St. Hilaire-Finn. But, in terms of the child's----
Senator Romney. I did not realize I was at a disadvantage
because I was raised by my mom, who stayed home.
I guess what you describe is a perspective on the part of
the Administration, which I find contrary to personal
experience and contrary to the perspective of many parents. I
would think that, as we think about the policies that we want
to have with regards to childrearing, that we would give
authority to the parents to make that decision as opposed to an
administration to make it for them.
Ms. St. Hilaire-Finn. Sir, yes. Senator, again, parents are
the first teachers and the child's preference is to be with the
family. But, if the family cannot allow to do that, it is
greatly beneficial for a child to be in a setting where they
can get the support to develop their social, emotional, and
cognitive skills. We have--studies have shown that our children
outside of the family who are in set--in group care setting do
much better socially, emotionally, and cognitively.
Senator Romney. Thank you.
Ms. St. Hilaire-Finn. I know we do not want to defer for
the Nation to take care of a parent's responsibility, but it is
a partnership and it helps foster the child's development
better than just being with the parent.
The Chair. Senator Hassan.
Senator Hassan. Thank you, Madam Chair and Ranking Member
Burr. Thank you to our witnesses, all of you, for being here
today to discuss a really important issue.
Expanding access to paid leave would help families across
Country balance needs at home and at work.
Madam Chair, before I start my questions, I would like
unanimous consent to enter into the record letters from three
advocacy groups supporting paid leave.
The Chair. Without objection.
[The following information can be found on page 131]
Senator Hassan. Ms. Shabo, according to a report by AARP
and the National Alliance for Caregiving, more than 21 percent
of adults reported caring for an adult or a child in the
previous 12 months. The majority of adults who have both a job
and caregiving responsibilities reported making at least one
change in their employment, such as cutting back work hours,
taking a leave of absence, or leaving their job entirely to
care for a loved one. The demand for caregiving is likely to
only grow as our population is aging.
How do you believe that access to paid caregiving leave
will benefit workers, their families, and our entire economy?
Ms. Shabo. Thank you so much for the question, Senator
Hassan. It is interesting that you ask this question. There was
a study that came out just yesterday in the National Bureau of
Economic Research showing that when caregivers have access to
paid family leave, when a spouse has an injury and cannot be
working anymore, the paid family leave is correlated with more
workforce retention for caregivers. And that is consistent with
research from California, as well, which shows labor force
impact for working family caregivers who have access to paid
leave, both in the short term and the long term.
If you think about it this way, you are in a family, there
is a serious health condition, your child might have a
disability, your child might get sick, might have cancer, you
need to be able to be there with them in the hospital. The
child will recover faster. The child or the person with special
needs will get the care that they need. The person who is ill
will get better faster. There are fewer medical complications.
And the caregiver can either get back to work, or if long-term
care is needed, they can help find a paid caregiver, and that
is another piece of the care economy we need to pay attention
to--paid caregiver to help.
These are families, these are people who are working
middle-class jobs, low-wage jobs. They are doing everything
they can to put food on the table, to keep paying the rent.
Paid leave is a support that helps that. It helps people be
financially independent. It helps them continue to work. It
helps them to have higher earnings over time. And, it is
beneficial to caregivers, care recipients, businesses who do
not have to bear the costs of turnover, who do not have to look
for new workers, and the economy overall.
Senator Hassan. Well, thank you.
I want to follow-up a little. As we have discussed today,
caregiving obligations disproportionately fall to women and can
impact the number of women in the workforce. This has been
exacerbated by the pandemic with nearly two million women who
left work in the last year, still out of the labor force. In
New Hampshire, an estimated 15,000 workers remained out of work
in March because of caregiving responsibilities.
Ms. Shabo, can you discuss how access to paid leave can
help ensure that more women are able to participate in the
workforce?
Ms. Shabo. Absolutely. And this is an issue we saw long
before COVID. It will be an issue that is with us past COVID.
Women, in particular, bear disproportionate caregiving
responsibilities for children and for older adults.
What I am really concerned about and looking at is we have
now had this period of time where the gender norms of
caregiving have now been reinforced by the pandemic. The wage
gap, cultural norms, expectations, dynamics within families,
have led to women doing disproportionate caregiving during
COVID.
Both women and men actually have provided care, and there
is really interesting survey data that has come out recently on
that. But, women are the ones who have disproportionately left
the workforce or cut down on their hours.
I am really actually concerned about the biases that then
get reinforced as employers are then thinking about hiring,
reinvigorating their workforces. What does that mean for their
hiring decisions? What are the biases that they then bring as a
result of this pandemic?
Access to paid leave that is gender equal will help to
mitigate some of that. It will help to mitigate the cost that
employers might fear. But, I think we have to look really
carefully at this. Retail, hospitality, these sectors that are
bringing workers back on are bringing women back on in lower
proportion to their share of the industry workforce.
Senator Hassan. That is helpful. Thank you.
One more question for you. With COVID-19 vaccines widely
available to adults, some workers have cited their lack of
access to paid time off as the reason for not yet getting the
vaccine. So, that is why Congress included employer tax credits
to help cover the costs of providing this leave time in the
American Rescue Plan.
Can you explain the importance of employees' access to paid
leave in order to get the COVID-19 vaccine and how the recent
tax credits can expand this access to more employees?
Ms. Shabo. Absolutely. And it was so good to see the Rescue
Plan expand the purposes for which tax credits can be used. It
has been good to see the Administration doing outreach to small
businesses to make sure that they know that those tax credits
are there for them.
But, if a worker does not have a paid sick day--and 70
percent of low-wage workers do not, 25 percent of overall
workers do not--they might not have time to go get a vaccine,
and they certainly might not have time to deal with the side
effects that we hear the second dose especially provides. And,
if you are fearful about getting that vaccine, that means you
are--continue to be exposed in your workplace. You might
continue to put others at risk.
This is a public health imperative that businesses that are
eligible for that tax credit use it and that other businesses
give workers paid sick days for the vaccination.
Senator Hassan. Thank you, and thank you, Madam Chair.
The Chair. Senator Tuberville.
Senator Tuberville. Thank you, Madam Chair.
As we come out of this pandemic, our small businesses are
in worse shape than they have ever been, and a lot of them are
just hanging on by a thread and they need every bit of help
they can get, from the Federal level.
Ms. Milito, why is now the time to add on another Federal
mandate to small businesses who are already struggling?
Ms. Milito. Thank you, Senator, for the question.
I would say that small businesses have done all they can to
keep their employees safe, their customers safe, and their
communities safe, because it was about protecting the small
business owner him or herself, too. I would say they played a
critical role in helping get the coronavirus under control.
They shut down their businesses, a lot of them. And offering
leave, whether mandated or not, was the best way to protect
their employees and their communities there. And they are now,
once again, being called upon, as Ms. Shabo just talked about,
to play a role in encouraging their employees to get the COVID
vaccine.
At NFIB, we are doing all we can to educate our employees
about that. But, it is a huge challenge. Senator Cassidy--or
Casey, sorry. Senator Casey, it was, talked about the public
outreach, and the employer outreach is so important. I mean,
our survey shows that claiming those tax credits--I mean, this
all sounds very easy and very nice, but the reality is it is
very not. Seventy percent of small business owners did offer
their employees COVID leave under the Families First, but only
43 percent have claimed the tax credit out of those 70 percent,
and the reason is it is too complicated. It is a hassle. And,
the IRS is now woefully behind in issuing reimbursement.
These were small businesses that were promised money, and
now, almost a year later, some of them still have not received
the reimbursement there.
Again, it sounds easy, it sounds noble, but it is
incredibly difficult. But, again, that said, small businesses
by and large offer flexible paid leave benefits because it is
the right thing to do, and they continue to do that throughout
the pandemic.
Senator Tuberville. Yes. A national paid leave program is
another huge step, though. Why can't states decide on a paid
leave program for that works for them, Ms. Milito?
Ms. Milito. That is a great question, too. Because, for
larger employers, I can understand the enticement in having--in
supporting a national paid leave policy that gives an advantage
and all that.
But, Ms. Shabo talked about, the benefits of employers and
I think, states that have paid sick leave--New York, Rhode
Island, Connecticut. I mean, those are just three states, they
are blue states, and replicating what those states are doing on
a national level is just unworkable. I mean, saddling our
Country right now with another national, Federal entitlement
program is just something that we cannot afford to do, and
something--we have asked our members--they would not support.
Yes, there is overwhelming support for, paid leave
programs. On paper, it sounds good. But, when you ask how you
are going to pay for it, support drops dramatically. And a Cato
study from 2018 showed just how much it drops when you ask
about, the tradeoffs, higher payroll taxes. People do not want
that. Giving up raises. People do not want that.
Senator Tuberville. Thank you.
Ms. McManus, we certainly appreciate your insight and
experience dealing with this position from a large company like
IBM. How would these same policies play out in a small business
versus a large corporation?
Ms. McManus. Thank you, Senator, for the question. Yes, I
think the--the issue for the large employer, as I tried to
articulate, is that we are in multiple states, and so it is
enormously difficult for us to--us, IBM, a technology company,
to keep up with the rapid pace of legislation that is happening
at the state and local level. And, frankly, we want to provide
a benefit that is uniform to all of our employees. It should
not matter what state you work in from an IBM perspective and
from the Market Benefits Council perspective. These employers
want to be equitable and fair to all employees.
Frankly, it is really challenging for employees. They, as I
articulated in my oral testimony, may be covered by many, many
different laws, and that leads to a suboptimization in terms of
how they are using their benefits, which nobody wants. They
have very generous benefits available to them because they work
for these large, multi-state companies, but they may not be
using their benefits to the best of their ability because,
frankly, it is just too confusing for them.
We recognize that small business has a different set of
challenges. But, we actually go back to the fundamental need of
all American workers to have a level of protection for their
own medical issues, taking care of their family when that is
needed to happen, and we think that a Federal standard
leveraging on what is working now in the private sector is
really the way to go.
Senator Tuberville. Thank you. We keep going back to
talking about Social Security a little bit, about leaning on it
and another small tax compared to that. You have to remember,
now, Social Security is almost broke. We have overspent it and
we have not been very diligent with it. So, I hope that we
really consider taxing the American people and taxing, our
small businesses at a very tough time, especially during this
pandemic.
Thank you very much.
The Chair. Senator Smith.
Senator Smith. Thank you, Chair Murray and Ranking Member
Burr. And thanks to everybody on our panel today. It is such an
important topic, and I am just really grateful for the chance
to hear what you all are saying.
I am going to direct my questions to Ms. Shabo, and this is
what I want to talk about. So, earlier this year, I had a
really interesting conversation with Secretary Yellen about how
we grow our economy looking forward and what impact workforce
participation has on our competitiveness. And, one of the
things that we talked about was the challenges that women have
faced in employment in the current economic environment.
She pointed out something really interesting, which is that
women's workforce participation, the rate of workforce
participation for women in the United States, has typically
been higher than in Europe until recently when we began to fall
behind. And one of the major reasons that we are falling behind
in women's workforce participation is because of the lack of a
national family--paid family leave policy in the United States.
So, as we discussed this, this is really, as we were talking
about it, an issue of international competitiveness.
Ms. Shabo, could you just talk a little bit about this? Do
you agree that a national--lack of a national paid leave policy
is contributing to lower workforce participation rates and has
an impact on our overall competitiveness?
Ms. Shabo. Absolutely. There is many, many studies out
there, many analyses, that show reduced labor force
participation among women and among caregivers when paid leave
is unavailable. There is quantification--a loss of $500
billion, to the U.S. economy that predated COVID.
Conversely, if we had a national paid leave program and
other policies that promote women's labor force participation,
McKinsey estimates that we could grow our GDP by $2.4 trillion
by 2030 if we put policies in place now.
AARP just did an analysis showing that we could add $1.7
trillion to GDP if we supported family caregivers.
Obviously, there is some overlap in those two modeling--
models to show that. But, the bottom line is, yes, our labor
force participation had been dropping prior to COVID. Our
women's labor force participation is now at nearly a 40-year
low with women's labor force at levels not seen since the
1980's.
Obviously, some of this will be alleviated as the pandemic
ends, but we have to solve this problem if we want to have the
kind of competitive economy in the global marketplace.
Senator Smith. This question is about an abstract question
all across Minnesota where I talked to business owners across
the spectrum who were telling me--regardless of what industry
sector they are in, they are telling me about the significant
challenges that they are having to find workers to fill the
jobs that they want to create. This could be in the ag sector,
in the service sector, in the healthcare sector. This is a
story across the board.
We have had--I have heard some of our panelists and some of
my colleagues suggest that this, a paid family leave policy,
perhaps, like what we would propose in the Healthy Families Act
or the Family Act, that we just cannot afford it, that it is
too expensive.
How do you square that argument with this competitiveness
issue that we are talking about, Ms. Shabo?
Ms. Shabo. Well, I just think there is no data to bear out
any of these arguments. Paid sick days and paid family leave
operate a little bit differently.
But, with respect to paid family leave, we know that the
certainty that is created by workers having access to paid
leave benefits both workers and especially small employers.
We know that in states that have a contributory payroll
contribution model, this creates the predictability and
certainty for employers so that they can mitigate their costs
so that they can hire replacement workers if they need to.
With respect to paid sick days where there is a direct cost
to providing the earned benefit to workers, a few days a year
for sick time, there is no evidence from any state or city that
this has contributed to job loss or wage declines or inflation
or the reduction of other benefits. So, I understand the
theoretical concerns, but these are not borne out by the data,
and we now have, a decade or more of experience with these
policies.
The sort of idea that blue states are somehow different, it
does not really pan out when you are looking at states that
have large and diverse economies as the states that have paid
leave do.
Senator Smith. I was once the owner of a small business
myself, and I can appreciate that small businesses are
different than large businesses. But, I also can appreciate
that it is almost impossible for a small business to try to
solve this kind of a problem on their own if they want to offer
paid family and medical leave, and that is why I think
solutions like the Family Act or the Healthy Family Act are the
right solutions. And especially, when you think about the
significant, dramatic inequity with less than one in three low-
wage workers having access to a single paid sick day, while
high-wage workers in this Country in the private sector, 94
percent of them have access to paid family and medical leave. I
think it really demonstrates the inequity here, also.
Senator Smith. Thank you, Madam Chair.
The Chair. Thank you.
Senator Braun.
Senator Braun. Thank you, Madam Chair.
Interesting discussion, because running a small business
for so many years and the idea of paid family leave makes
sense. And I think it is another thing that if we could just
afford to do it, it would be nice to have it, and I can see the
proposal currently out here does not sound like a lot.
Currently, I think employers and employees split the burden
of Social Security and Medicare, 7.65 percent each, 15.3. This
adds a small percentage.
But, I think my question, since the merits of paid family
leave is not, in my mind, that debatable, it would be nice if
we could have it if we could afford it. It does beg the
question that in the drivers currently of payroll taxes, Social
Security and Medicare, I think we have 5.5 years before the
Medicare Trust Fund is depleted. We have been paying into that
since the 60's. And the Social Security Trust Fund I think has
got 12 to 13 years. But, to me, you probably would not even
need to put any more burden on employers and employees if you
could just bring those two programs into some type of fiscal
order.
Healthcare, for instance, is to where we can gain the most
dividends if we would just embrace competition, transparency,
get rid of the barriers to entry, get an engaged healthcare
consumer. You could bring that trust fund probably back into
solvency quickly.
Social Security, we know the variables there, too. You are
going to need to probably raise the age at which you are going
to be eligible for it, means tested. I do not think you are
going to get very many people wanting to put heavier burdens on
employers and employees.
My question is for Ms. Milito. What do you think, through
the eyes of the NFIB, not on the subject matter of paid family
leave, what do we do with the two big issues in the room? Where
is the NFIB on addressing Social Security and Medicare costs?
Because it is going to make all the rest of this a moot point
soon.
Ms. Milito. Thank you, Senator, for that question. And
certainly the unfunded liability with regards to Social
Security is something that our members have expressed concern
about, and that is why they are very concerned about any
additional taxes or burdening the Social Security system any
more with what I, said would be essentially, depending on the
proposal, a new Federal mandate.
I mean, again, we all want to be Santa Claus. It is nice to
come up with these great, robust benefits, as, I think one of
the witnesses called them there.
But, the reality is that not all businesses can afford to
offer the same plethora of benefits. And it sounds nice, but
they just cannot do it. But, most of them do it because it is
the right thing to do, and that is how they retain and attract
the best talent out there. They are competing with IBM, and it
is hard to do it, but they are managing to do it.
Again, a big part of our economy is small businesses, so we
need to consider small businesses and the imposition that a new
mandate would have on small businesses, both the employers and
the employees.
What is it that these small businesses can afford to offer,
and what is it their employees want? I was talking to a
business owner last week. He is an HVAC operator, desperately
trying to hire new employees.
He is--his candidates are looking for money. That is what
he said. It is about money. It is about cash. I do not think he
has candidates necessarily that are coming in asking for paid
family leave or paternity leave. Not that those are not good
benefits, but right now, he has, candidates that are asking for
top dollar. That is what they want, cash in hand. What is your
bonus at the end of the year? Maybe they are asking about
vacation time, but they are not asking necessarily----
Senator Braun. Real quickly before we run out of time. I
know that the NFIB is behind transparency ideas on healthcare.
When it comes to Social Security in terms of means testing,
raising the age, some of the more difficult questions, and we
got more time for that, does the NFIB have any position on what
to do with it?
Ms. Milito. We would be happy to study any proposals,
Senator, and we would get back to you on that.
Senator Braun. If we cannot grapple with that discussion,
to me, it is a moot point on any of the rest. It would be good
ideas that would be ignoring, what is going to occur with those
two trust funds being in big difficulty soon.
Thank you.
The Chair. Thank you.
Senator Rosen.
Senator Rosen. Thank you, Chair Murray. I appreciate this
hearing. Thank you for everyone for being here today. I really
appreciate you.
I really want to talk about making paid leave work for
small business owners because that is really the crux of what
we have to do. That is what all these conversations boil down
to.
Ms. St. Hilaire-Finn, I am pleased you could join us today,
really, to offer your views as the owner of your own small
business, and also, I understand, as a member of the Main
Street Alliance, an organization of more than 30,000 small
businesses.
Myself, I am a member of the HELP Committee, but also the
Senate Small Business and Entrepreneurship Committee, and I
represent Nevada where small businesses make up over 99 percent
of businesses in my state. And, so, I think it is critical that
we bring workers and small business together to find these
pragmatic solutions that provide real relief for working
families, particularly as Senator Smith talked about, the
women's labor force, that decline. It is really concerning that
we lose women's talent in the marketplace.
You have noted your support for the Healthy Families Act,
Chair Murray's paid sick leave legislation. I am proud to be a
cosponsor of that. So, as a small business owner and member of
the small business advocacy group, can you tell us why you
think the approach in this specific bill will work well for
small businesses?
Ms. St. Hilaire-Finn. Thank you, Senator Rosen. As a nurse
and as a childcare owner, it is clear that we need a
commonsense paid sick day standard like the Healthy Families
Act to ensure that all employees have access to paid sick time
without losing wages or their job.
Also, without sick days, workers show up to work sick,
costing us all more in the long term. Or, they stay at home and
risk losing their jobs, which costs the economy, as well.
Paid sick time is a basic, minimum work standard like
workplace safety or the minimum wage. We all do our part, and
we will all benefit.
Also, studies of cities with paid sick day policies have
been implemented show that small businesses can adapt and
support the program.
Senator Rosen. Well, thank you. I really believe that all
of our communities, what is the backbone for everything in this
Country? It is our families and how we care for them, so it is
really important.
What do you think the Federal Government, how can we
provide any more useful resources to small businesses about
offering these paid leave policies, maybe through the SBA or
Department of Labor?
Ms. St. Hilaire-Finn. Thank you again, Senator, for the
question. Most small businesses need extra help finding out
more about these programs. The typical small business has no
H.R. department and limited resources, so we need an intensive
outreach and education effort to reach small businesses way in
advance of programs being launched. Okay?
I found out a lot about Families First from Main Street
Alliance. Engaging small business organizations should be part
of this effort. This will also help small business compliance,
and also help ensure that more employees find out about and can
apply for the program.
Senator Rosen. Thank you. I appreciate that answer.
I would really like to turn to some of the benefits of paid
leave to business. So, Ms. McManus, I am going to direct this
question to you.
Again, Senator Smith said we could grow our GDP maybe by
over $2 trillion if women re-enter the workplace, so I know
this is going to be important.
Ms. McManus, I am pleased to see the American Benefits
Council, that you have a statement on the principles of paid
leave and that many of your members, of course, do provide paid
leave to their employees. And I really recognize and appreciate
the number of employees in this Country that are really doing
their best to keep their workers, their families, their
communities safe and healthy. I am really glad you brought this
perspective here today.
Can you tell us about the benefits that your members have
seen from voluntarily offering paid leave benefits, especially
during the pandemic?
Ms. McManus. Absolutely. Thank you, Senator, for the
question.
IBM has had a long history of commitment to developing
programs to help employees better manage their work, their
family, and their personal responsibilities. And, frankly, we
think that is key to having an engaged and productive
workforce. And I think that is a shared sort of vision for the
Council companies, as well.
Our programs will offer solutions around, dependent care,
medical care, care to take care of a family member or--and, I
would point out, as you did, the pandemic. We had to really
quickly sort of enhance our package in recognition of the
public health emergency to provide for backup care, for
example, for folks who are caring for children, schools were
closed; or, elderly or other relatives who needed care and the
caregiver could not be available.
What we saw, which was quite dramatic--we measure
engagement all the time at IBM, and what we found was our
engagement score actually went up by 3 percentage points in 1
year, and that was the year when everyone was traumatized with
the public health emergency. Why? Because our employees felt
supported. And when they feel supported and they are more
engaged, they are better at their jobs, and that is good for
American business.
Senator Rosen. Well, thank you. I see my time is expired.
That is a great note to leave it on. Our workers have families,
too. Thank you.
The Chair. Thank you.
Senator Lujan.
Senator Lujan. Thank you, Chair Murray and Ranking Member
Burr for holding this hearing to discuss the importance of
expanding access to paid leave to support families. And thank
you to our witnesses today for making yourselves available and
for making a difference.
Ms. Shabo, Latinos are typically paid just 55 cents, and
Native American women just 60 cents for every dollar paid to
White, non-Hispanic men. This wage gap illustrates the high
cost women pay for our Nation's leave policy failures,
especially for unpaid time spent out of the workforce. The
United States offers little support for working caregivers,
especially paid family and medical and sick leave. We need a
national policy now not only to close the wage gap, but to
boost our economy and recover from this pandemic.
Ms. Shabo, would enacting a Federal paid leave policy help
to close the wage gap for women?
Ms. Shabo. Yes, sir. Great question, Senator. And these
issues are so inextricably connected. So, women are more likely
to take leave if they are in a two-parent family or if they are
part of a larger family with, male siblings and female siblings
because of the wage gap. That means that they have lower
earnings over their lifetime. That means they have more work
interruptions.
There is an inextricable link, and it would help to close
the wage gap if we had paid family and medical leave,
particularly for Latinas.
Senator Lujan. You stated in your testimony that critics of
new spending focus on what paid family and medical leave will
cost rather than on costs already borne by society. Ms. Shabo,
how many women have lost jobs since the start of this pandemic?
Ms. Shabo. Four point five million women have lost jobs
overall, and two million have still not returned to the
workforce.
Senator Lujan. You also state that paid leave would
strengthen our economy. And according to the National
Partnership for Women and Families, how many jobs could the
United States add to its labor force by enacting a national
paid leave program along with affordable childcare?
Ms. Shabo. Yes. I believe we could add, or what the
National Partnership estimates, we could add five million jobs.
Paid leave and childcare are both job creating, job enabling,
and job enhancing, and that translates into GDP increases for
the whole Country, as well as greater economic security and
retirement security for families.
Senator Lujan. Now, you mention GDP. Nationally, how much
GPD could we add to our economy if a national paid leave policy
were in place?
Ms. Shabo. Pre-pandemic, DOL estimated $500 billion, along
with other interventions to help close the gender gap in
occupation and work. McKinsey estimates $2.4 trillion. So, we
are leaving a lot of money on the table by our unwillingness to
enact these policies.
Senator Lujan. I appreciate that. Thank you so much for
your responses.
A national paid sick days and family and medical leave law
would enable millions of working families, including Latinos
and Native Americans and African Americans, to not have to
choose between their health and a paycheck.
I am a proud cosponsor of the Family Act and the Healthy
Families Act, which together create a national paid leave
program by providing workers with up to 12 weeks of paid leave
and seven paid sick days a year.
However, without these laws, we see huge disparities in
workers' access to paid leave. Latinos have the highest labor
force participation rate and are the fastest growing segment of
the workforce, yet they are the least likely to have access to
paid sick leave. Fifty percent of Latinos report having no
access to paid time off, compared to 34 percent of White
workers. And Native American workers are 100 percent less
likely to take leave when needed according to the National
Partnership for Women and Families.
Ms. Shabo, yes or no. Are workers without paid sick days
and family medical leave disproportionately African American,
Hispanic, and Native American?
Ms. Shabo. Yes, they are.
Senator Lujan. Ms. McManus, your company provides generous
paid sick, family, and medical leave benefits. Why did your
company choose to provide these benefits? And how has it
impacted your business and workers, especially workers of
color?
Ms. McManus. Thanks for the question, Senator. Well, IBM,
like many employers, decided to offer these benefits because,
one, we recognize that there is a fundamental need for that,
people do need time off to take care of themselves and their
family members.
Second, we are in a competitive talent market and we know
that we need to offer an attractive package in order to attract
the best and brightest to come and work for IBM and the
companies that I am representing today in the American Benefits
Council. So, that is another reason.
I think, I referenced earlier that, we see a huge uptick in
our engagement, which is really tied to productivity, and also
to retention, right, to keeping our employees on the job and
happy, doing their job, doing their best job, by offering these
types of programs. If we are there when they need us, then they
really want to stay and they want to do their best job for us,
so it is really good for the business, as well.
Senator Lujan. Thank you. And Chair Murray, my time has
expired. I do have a question for Ms. St. Hilaire-Finn, but I
will submit the question to just learn more about what this
would mean to her business employees with the national paid
leave policy.
I apologize I could not get to it, but I will make sure I
submit the question. I look forward to learning from you, as
well.
The Chair. Thank you so much.
Senator Hickenlooper.
Senator Hickenlooper. Thank you, Madam Chair. And I want to
thank each of the panelists for the time taken not just to be
here today, but for all the preparation and for all the work
they have been doing.
Let me start. Ms. Shabo, last year, in the midst of this
coronavirus pandemic, Colorado voters--so this is a state-wide
voter initiative--overwhelmingly chose to create a state-wide
paid family and medical leave program. I think, to my
knowledge, the first state in the Country to do this by ballot
initiative.
I thought what was really unusual about this was that the
support was high all across the state, across all demographics,
in, highly Republican El Paso County, in highly Democratic
Denver County, but also with voters in urban and rural areas.
And I thought I would like to----
If you could, just speak a little bit more about the
benefits of paid leave and paid sick days for people who live
in rural areas, like the eastern plains of Colorado or some of
the mountain towns of Colorado.
Ms. Shabo. Certainly. And yes, the Colorado victory is a
huge testament to the bipartisan appeal of this policy. It has
been true in polls nationwide and in every state, but Colorado
was the first test of that at the ballot, and it was wonderful
to see that happen.
Colorado also adopted a paid sick days law in the middle of
the pandemic through the legislature. So, congratulations to
your state for being a leader, Senator.
I am glad that you bring up this question of access in
rural areas. We know that paid sick days--workers are less
likely to have paid sick days in rural areas. They are less
likely to have paid family and medical leave. And, yet, the
distances that rural people need to travel to get to
healthcare, to visit a loved one, to seek a specialist's
attention or input, the distances are higher, access to care is
harder to get. And for parents, access to infant care is more
difficult because of childcare deserts.
There is a huge need in rural areas and, that really speaks
to why a paid family and medical leave program is important not
just for people, in cities, but, really, across the Country.
Senator Hickenlooper. Thank you, and I could not agree
more. And I do--when you see a voter initiative like this do so
well across all demographics on a bipartisan level, you do
begin to get a sense that this is an issue that is ready for a
national solution.
Ms. St Hilaire-Finn--and I am also a former small business
owner, and certainly I always--like almost every small business
owner, I wanted to do right by my employees, but I was always
cognizant and being aware of the costs of those efforts. Last
year's COVID relief package, which included tax credits for
small business owners, middle size business owners who provided
paid leave, how did that impact your small business costs and
what lessons to policymakers--what did you learn about how to
design a national paid leave policy based on your experience
over this past year?
Ms. St. Hilaire-Finn. Thank you, Senator, for the question.
Well, what COVID taught me and I think other small businesses
is it calls for paid national family leave. We had to cobble
together different funding to allow families, our employees, to
take time off, to feel comfortable coming to work and being
exposed to a virus.
As a small business, what I learned is that having the
Family First CARES Act, really helped. It was pretty much a
lifeline for us, as I alluded to, because without that, I do
not know how I could reassure my employees that they could take
time off when we were exposed to the pandemic, that they would
be--they would have gotten paid, to continue to provide meals
and shelter for themselves and their families.
I think what this has taught me is that we need this on a
national level. We cannot afford to continue to charge high
fees just because only some can afford it. But, also, on a
national level, that all business would have access to provide
paid sick and family leave. So, this is what it taught me more
so we had been exposed.
This patchwork of emergency just because of a crisis, we
should have this on a permanent and everyday level where
workers, especially low-paid workers, can feel security in
their jobs and the work that they perform.
Senator Hickenlooper. Well, we agree on that. I appreciate
that.
Again, I want to thank everybody for putting in the time on
this panel.
I yield my time back to the chair.
The Chair. Thank you.
Senator Burr.
Senator Burr. Thank you, Madam Chair. Just one last
question. I will direct it to all of our witnesses, and it is
really a yes or no answer.
Federal Government allows its employees to use comp time or
flex time. In other words, comp time for Federal employees is
one paid hour off for each 1 hour of irregular or occasional
overtime that has been worked. For example, if you work on a
Saturday, which is an irregular time, for every hour you
routinely would have an hour off, then you may be compensated
for that time.
Here is my question. If the benefit is good enough for
Federal, state and local workers, wouldn't it be fair to allow
private sector workers to get the same generous comp time
benefit?
Ms. Shabo, yes or no?
Ms. Shabo. No. People should not be required to tradeoff
time and money. They need both.
Senator Burr. Marcia.
Ms. St. Hilaire-Finn. I concur. They need both.
Senator Burr. Ms. McManus.
Ms. McManus. Could be part of a solution, not necessarily
the only solution. I know that was not a yes or a no, Senator.
Senator Burr. Ms. Milito.
Ms. Milito. Yes, NFIB supports that flexibility.
Senator Burr. Well, we are beginning to build a bank of
solutions. I thank each of our witnesses. I thank the chair.
The Chair. Thank you, Senator Burr.
Ms. Shabo, I just had one other question. You alluded
several times to the millions of women who have left the
workforce during this pandemic and have not yet returned.
Oftentimes, that is women of color, women in low-wage
occupations, as you talked about. Clearly, our economy is not
going to fully recover from this pandemic unless working women
recover. To me, that means better childcare and national paid
leave policies. Can you comment on that?
Ms. Shabo. I 100 percent agree with you. I think we have
heard too often, failed to invest in a care infrastructure or a
care economy that recognizes that people have personal lives
and people have work lives and they are inextricably connected.
We cannot go back. We have to go forward, and that involves
investments in paid leave, investments in childcare,
investments in home-and community-based care. Just like roads
and bridges, this is essential for people to get to work, stay
at work, and be successful.
The Chair. Thank you.
I ask unanimous consent to put in the record five letters
in support of national paid family, medical, and sick leave
policies from individuals and groups including advocacy groups
for workers, women, and families, stories from workers around
the Country.
Without objection.
[The information refered to can be found on page 139]
That will end our hearing for today, and I really want to
thank all of my colleagues for the thoughtful discussion.
I want to thank all of our witnesses--Ms. Shabo, Ms. St.
Hilaire-Finn, Ms. McManus, Ms. Milito--for sharing your time
and your insights today.
For any Senators who wish to ask additional questions,
questions for the record will be due in 10 business days, on
Wednesday, June 2, at 5 p.m. The hearing record will also
remain open until then for Members who wish to submit
additional materials for the record.
This Committee will next meet in executive session May 25
at 10 a.m. to consider several bipartisan bills.
With that, the Committee stands adjourned.
ADDITIONAL MATERIAL
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______
QUESTIONS AND ANSWERS
Response by Vicki Shabo to questions of Senator Casey
senator casey
Question 1. Paid sick leave and paid family and medical leave are
essential to workers to ensure that they are able to take time off to
care for themselves and to care for loved ones. Paid leave benefits can
prevent workers from unnecessarily dropping out of the workforce, help
increase lifetime earnings and promote a range of positive worker
outcomes. However, in addition to benefiting workers directly, in your
testimony you also mention the benefits paid leave can provide to the
individuals who workers are able to care for when they have paid time
off, such as their children and older family members. Can you provide
any additional information about how paid family and medical leave can
benefit children, older Americans and individuals with disabilities who
are the recipients of care from family members?
Answer 1. Thank you for your thoughtful question for the record
arising from the HELP Committee's May 18, 2021, hearing, Paid Leave for
Working Families: Examining Access, Options, and Impacts. As your
question correctly posits, when paid leave is available for a working
family caregiver, their care recipient also benefits. For example--
With respect to children:
New children whose parents have access to paid leave
are more likely to be taken to well-baby visits and more likely
to be immunized on the medical community's recommended
schedule.
In California, where a paid family leave program was
passed in 2002 and implemented in 2004, children are less
likely to be hospitalized, less likely to experience head
trauma (perhaps because of reduced parental stress) and more
likely to have better educational outcomes and fewer behavioral
problems in elementary school.
Child mortality also declines when parents have
access to paid leave.
With respect to older or ill loved ones:
Children recover more quickly when a parent is able
to be with them.
In California, nursing home utilization declined by
11 percent when paid leave became available, meaning care
recipients were better able to receive care in their homes
presumably from a family member, and public spending on nursing
homes via Medicaid was reduced.
According to the American Cancer Society's research,
caregivers who had paid leave were much more likely to be able
to help their ill loved ones get to medical appointments and
treatments and to provide care for them.
With respect to individuals with disabilities:
Access to paid leave means caregivers are better able
to meet the needs of their disabled children and older loved
ones physically and emotionally and financially.
Paid leave benefits workers and families' health and economic
security, businesses' profitability and retention, the economy and
taxpayers. It is well past time for the United States to adopt a
comprehensive national policy. I look forward to further questions and
to providing technical assistance to your staff, the Committee and
other policymakers as Congress considers the paid leave proposal in the
President's American Families Plan this summer.
______
Response by Marcia St. Hilaire-Finn to questions of Senator Lujan
senator lujan
Question 1. I agree that paid leave is a matter of racial and
gender equity. What would it mean to your business and employees if a
national paid leave policy were enacted?
Answer 1. I opened Bright Start with the idea that to provide the
care our children deserve, the caretakers should be fairly compensated,
which includes access to paid time off. During the early days of Bright
Start, we provided 1 week paid sick time, and 2 weeks paid vacation
time--well above industry standards at the time. This was an
intentional and conscious choice on my part to attract the best and
brightest employees, despite the additional cost burden. As I have
grown my business, I have been able to add additional benefits--and now
provide partial health insurance coverage, another week of paid leave
in addition to sick and vacation time and unpaid leave. My business
model, which relies on a large portion of fully private pay parents and
higher fees, makes my employee compensation choices possible. Yet even
with this model, I have not been able to meet the full needs of my
employees. Our 4-week paid leave policy is all we are able to do right
now. A national paid leave program that provides 12 weeks paid leave
would allow us to more fully meet the needs of our employees. That's
why I, along with a strong majority of small business owners, support a
national paid family and medical leave program.
Small businesses can't afford paid leave on their own
like many larger businesses can. Small businesses generally
lack the capital and the scale to provide paid leave, even when
owners want to provide that benefit. Moreover, private insurers
generally do not offer affordable, adequate paid leave policies
to small businesses. As a result, as of 2019 only 14 percent of
workers in firms with 99 or fewer employees had access to
employer-provided paid family leave, compared to 29 percent of
workers in firms with 500 or more employees.
Our businesses benefit when employees can take time
to care for their families and return ready to work. Paid leave
helps reduce turnover and boost employee morale and loyalty,
increasing productivity and cost savings for our small
businesses. Paid leave makes good business sense.
Paid Leave is a matter of racial and gender equity.
The racial wealth gap means employees and business owners of
color like myself have less of a financial cushion for taking
time off, but they also have more limited access to paid leave.
And, with most caregiving still falling to women, paid leave is
an important gender equity measure for business owners and
employees alike. These facts have been further heightened
during the pandemic. With higher rates of COVID-related
illnesses, death, and business closures, the need for paid
leave is higher than ever in Black and Brown communities. A
robust, permanent paid family and medical leave program is
essential for supporting Black-and Brown-owned businesses,
their employees, and the communities they serve.
Addressing workforce shortages. Over the past year
women have left the workforce in droves--and the lack of paid
leave and child care was a major contributing factor. Closing
these care infrastructure gaps will be a major factor in
addressing our current labor shortage. We can't afford not to
use every tool in our toolbox to support a rebounding and
growing economy.
Economic Recovery on Main Street. For small
businesses and Main Street economies to recover, we need more
customers spending on Main Street and the safe return of our
labor force. Comprehensive paid family and medical leave
programs have been shown to significantly increase mothers'
attachment to the workforce and caregivers' participation in
the labor both short and long-term. Paid leave dollars go back
into the local economy, boosting consumer demand at small
businesses, as working people spend their leave to cover
basics.
Question 2. Ms. St. Hilaire-Finn, you state in your testimony that
providing paid leave to your employees has had a significant impact on
the children at your center, and also on family members at home. What
would a national paid leave policy mean for your workers and the
children in their care, especially through the lens of child welfare
and well-being?
Answer 2. As the mother of a young daughter, I searched for a child
care center in my neighborhood that would fit my unique schedule and
provide quality care, but couldn't find one. So, in 2002, I decided to
start my own small business in my basement, launching Bright Start
Early Care and Preschool. I opened Bright Start with the idea that to
provide the care our children deserve, the caretakers should be fairly
compensated, which includes access to paid time off. Providing good,
competitive benefits has created a virtuous cycle. We experience
exceptionally low turnover, which saves us in recruitment and training
costs. Our average tenure for staff is 7 years--far and above the
industry standard. With recruitment costs topping 250 percent of an
employee's annual salary, these small benefits costs end up paying for
themselves over time.
As all parents can appreciate, caring for children is truly a labor
of love--but it's also grueling work! That is why it's so important
that my employees are able to take care of themselves and their
families. Over the past two decades, I have had numerous employees who
needed to take additional time off to care for themselves or a loved
one. Several employees had the joy of welcoming a new baby into their
families. And two employees have had to deal with the shock of cancer
diagnosis and take time for surgery, treatment, and recovery. They have
since told me that they believe they recovered more quickly just
knowing they could take care of themselves and having that peace of
mind that they had a job to come back to. They truly felt valued and
came back to work even more grateful and energized.
Just as importantly, our families benefit from the continuity and
know-how of our staff. We have several staff who have welcomed babies
to our center, care for them through the program graduation, and also
welcome other siblings to the program. This continuity of care is
tremendously valued by our families. This helps our center grow and
expand. And through this growth we are able to create upward mobility
for our staff with additional administrative positions benefiting their
families and our community.
______
Response by Ms. McManus, Marcia St. Hilaire-Finn and Ms. Milito to
questions of Senator Murkowski
senator murkowski
Question 1. Ms. McManus, in your written testimony, you recommended
that Congress pass legislation that ``preserves effective employer
benefit programs and provides employers a single set of standards
nationwide would advance employee equity and consistent benefits while
eliminating the cumbersome compliance burdens.'' Could you be more
specific about what nationwide standards would work for our Nation's
employers--both employers like IBM that provide paid leave benefits and
those (especially small employers) that do not, and what compliance
burdens should specifically be avoided?
Answer 1. As discussed in both written and verbal testimoneys, we
at IBM recognize the important role paid leave benefits have in the
lives of our workers and agree that paid family and medical leave as
well as sick leave are essential for workers needing personal or family
care. IBM and the American Benefits Council (the ``Council'') support a
Federal legislative solution that would provide employers with the
flexibility to offer a paid leave program that meets a single set of
standards to employees nationwide while also expanding access to paid
leave. Any Federal solution should account for the generous leave
programs already provided by nationwide employers who are at the
forefront of innovative benefit solutions for their employees.
While we cannot speak on behalf of small employers or other types
of employers, we recognize that small businesses and nationwide
companies may need different options as part of a broader Federal
solution and there is not a one-size-fits-all remedy for all employers.
Large corporations with locations in multiple states who already offer
generous and comprehensive paid sick and family and medical leave
benefits are looking for a single set of nationwide standards that
will:
Provide all employees across the U.S. with access to
a consistent, minimum amount of essential paid sick leave and
paid family and medical leave benefits.
Enable nationwide employers to offer uniform paid
leave benefits, along with uniform processes to obtain those
benefits, to employees regardless of where they work--ensuring
fundamental fairness and equity for employees nationwide.
Provide relief to employers who already provide a
specified level of paid leave benefits from the patchwork of
inconsistent state and local laws and their cumbersome
administrative demands
Reference the Federal Family and Medical Leave Act
(``FMLA'') as a framework for establishing a single set of
nationwide definitions and standards. The FMLA is attractive
because medium and large employers understand and have been
complying with the FMLA for more than 25 years.
The essential point is that a Federal standard be
available throughout the US, and employers with employees in
more than one state who meet that standard should benefit from
relief from inconsistent, different state or local
requirements.
The significant compliance burden that must be
avoided for nationwide employers is the challenge and
complexity of administering the numerous state and local paid
leave mandates. In the Council's recent informal poll of large
employers on state paid leave laws, 45 of 66 (68 percent)
nationwide businesses characterized the administrative burden
imposed by multiple state and local paid leave laws as ``very
significant,'' with an additional 18 (27 percent) calling it
``somewhat significant.''
Thank you again for the question and we look forward to working
with the Congress and Administration toward a solution so that all
workers in the United States have access to robust paid family, sick,
and medical leave benefits.
Question 2. Ms. St. Hilaire-Finn, you testified that the District
of Columbia Paid Family and Medical Leave program was beneficial to you
as a small employer and to your employees. This program requires all
employers to contribute 0.62 percent of the wages of each of its
covered employees to the Universal Paid Leave Implementation Fund. Has
the Main Street Alliance done any recent survey of its members to
determine if that level of contribution is affordable for the majority
of the Alliance's small business members? If so, what were the results?
Answer 2. Main Street Alliance (MSA) has not asked that specific
question to our membership. However, MSA's own surveys and other
surveys do show strong small business support for paid leave--even when
it includes a shared contribution from business owners and their
employees.
MSA's latest national Survey (2020) of 600 small business owners
showed widespread support, across party identification, for a national
paid family and leave program.
Among Democrats, 80 percent favor and 9 percent
oppose
Among Independents, 52 percent favor, and 33 percent
oppose
Among Republicans, 55 percent favor, and 33 percent
oppose
MSA's last major survey (2017) of nearly 1,800 small business
owners in 17 states found:
64 percent of respondents supported a nationwide paid
sick days minimum standard like the Healthy Families Act. This
increased to 73 percent when just looking at women small
business owners and business owners of color.
Small businesses that were not able to provide family
and medical leave to employees overwhelmingly identified a
social insurance program as what they most needed to be able to
provide this benefit (79 percent selected this option, while
only 8 percent identified a tax credit).
When asked about how best to pay for a PFML social
insurance program, the overwhelming majority of respondents, 76
percent, view the funding of such a program as a shared
responsibility, with a joint employer and employee
contribution. Eleven percent thought the program should be an
employee-only contribution. Three percent believed just the
employer should contribute, and 10 percent noted another source
of funding for the program.
As a small business owner myself, I find the costs of the DC paid
leave program negligible, especially when compared to the costs of
having an employee out for an extended period (without a leave program
when one is covering both the employee and the costs of a replacement
worker all at the same time) or when compared to the costs of losing a
valued employee.
Question 3. Ms. Milito, you testified that NFIB opposes paid leave
mandates because they drive up costs and result in lost jobs,
burdensome paperwork requirements, and higher costs. Can you inform the
committee about the impact to NFIB's small business employer members in
states that have enacted paid leave laws?
Answer 3. NFIB members have consistently opposed new paid leave
mandates at the state level due to cost and compliance difficulties.
For states that enacted such laws our members have done their best to
comply to the fullest extent of the law but have continued to
experienced difficulties with both compliance and cost.
Question 4. Ms. Milito, you also testified that our Nation's small
business owners recognized the need for flexible hours and to be
``family friendly'' as they compete for employees. Has NFIB any data to
show what percentage of our Nation's small businesses are providing
family friendly leave policies in states that have not enacted paid
leave requirements?
Answer 4. Small business owners understand the importance of a
flexible workplace. The vast majority of small businesses already offer
paid time off (PTO), time that can be used for any type of leave, to a
majority of their full-time employees. According to a 2016 NFIB small
business poll, 73 percent of small business owners offer their full-
time employees paid time off, and 67 percent offer 2 weeks or more of
leave--without government mandate. \1\ Seventy percent of firms with
one to nine employees report offering the benefit, compared to 87
percent and 83 percent of firms with ten to 19 employees and firms with
20 to 249 employees respectively. \2\
---------------------------------------------------------------------------
\1\ Employee Compensation and Small Business, NFIB Small Business
Poll (2016), available at NFIB-SBP-Emp-Compensation2017-v2.pdf
(411sbfacts.com).
\2\ Id.
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[Whereupon, the hearing was adjourned at 11:57 a.m.]
[all]