Testimony by Nancy Rankin, Vice President for Policy Research and Advocacy
Community Service Society of New York
Before the New York State Senate Labor and Social Services Committees
Joint Hearing on Policies to Assist Working Families in New York State
March 24, 2015
Thank you for the opportunity to testify today in support of paid family leave. Along with child care subsidies and equal pay, these actions are needed to bolster family earnings and drive economic growth by enabling women to fully participate in the labor market.
My name is Nancy Rankin. I am Vice President for Policy Research at the Community Service Society of New York, a nonprofit organization that works to advance upward mobility for low-income New Yorkers. Today, CSS continues its remarkable 172-year legacy in using rigorous research to drive changes in public policy to reduce poverty and economic inequality.
Paid family leave is an economic necessity for all working families in New York State, but especially for working women and those struggling to survive on low wages. They cannot afford to take unpaid leave or risk losing their jobs when a new baby arrives, an aging parent survives a devastating stroke, or a child is stricken with cancer. According to the latest BLS statistics (March 2014 National Compensation Survey), a mere five percent of workers in the bottom wage quartile have paid family leave from their employers. Because many are working for smaller employers, they do not even have federal FMLA protections of unpaid family leave.
In New York City, where my organization is based, one out of four working women lives in a low-income household. That’s close to half a million working women, struggling to get by on less than $38,000 for a family of three. Almost two-thirds of them are black or Latina. Their jobs and earnings are essential for keeping their families afloat. These same workers are the customers of local businesses, so sustaining their employment through normal life events is also essential for keeping local economies growing.
Some will argue workers could use saved up vacation and sick days to deal with family needs. But that ignores the stark reality that half of low-wage workers do not get any paid vacation according to 2014 BLS statistics, and outside of New York City, workers do not even have a right to a few paid sick days. Low-paid workers are unable to save anything from their inadequate wages to sustain themselves and their families for days, much less weeks, without a paycheck. According to CSS’s latest annual Unheard Third survey, close to half (46%) of low-income working mothers in New York City have $500 or less to fall back on in an emergency. For someone earning the current minimum wage, seven days lost pay would entirely wipe out their life savings.
When critical family needs trigger job loss, a low-income family’s hardships skyrocket. CSS’s survey found that among low-income households reporting job loss, the proportion failing to meet their rent doubled, and the number unable to fill a needed prescription shot up to 47 percent from 19 percent. Compared to low-income families that did not experience job loss in the past year, those that did were 24 percent more likely to report being on Medicaid and 32 percent more likely to receive food stamps.
Modernizing our existing Temporary Disability Insurance system is a smart, affordable, self-sustaining way to provide paid family leave. Three of the other five TDI states—California, New Jersey and Rhode Island—have already moved forward to provide paid family leave. To be meaningful, however, benefits must be adequate. The current TDI cap of $170 a week, frozen since 1989, lags dramatically below every other TDI state. So we need to gradually raise the maximum concurrently for existing purposes and paid family leave to half the statewide average weekly wage. Weekly benefits below the cap should be set to two-thirds of an employee’s own average weekly wage, because for a low-wage worker, half a normal paycheck is simply not enough to survive on. This is especially true with medical bills to pay and a new baby to care for. Some press accounts on the paid family leave proposals have not been clear about how weekly insurance benefits would be calculated. So I want to reiterate that half the statewide average weekly wage, which would equal $606 now, is the maximum benefit, and that would only be reached after four years of gradual increases. All workers would not get the maximum of $606; their benefits would be based on a proportion of their own average weekly wage, up to that maximum.
The need for paid family leave affects us all, and all private sector employees will be paying for coverage, so it should cover all size employers, just as TDI does. Failing to cover smaller firms, as some have proposed, would leave out a large number of workers. Using census data, we estimate that 2 million workers, or 31 percent of private sector employees statewide, work for employers with fewer than 25 employees (Source: CSS calculations using the March 2010 CPS to determine share of workers by employer size, and the March 2014 CPS for current employment. Analysis excludes self-employed who are not covered by TDI.)
Growing up as the daughter of a small business owner, and having managed small operations, I understand the concerns raised by some that it will be harder for small businesses to manage a worker’s temporary absence. The experience of California and New Jersey, however, shows that those fears are simply not borne out. In part, this is because the vast majority of use of paid family leave will be by parents of newborns. Caring for a new child accounted for 81.5% of paid family leave claims in New Jersey and 87 to 89% of claims in California. Employers therefore have time to figure out how to handle an expected absence. This is something most employers do now; the big difference will be that with paid family leave, an employee will be able to draw modest insurance benefits to avoid severe financial hardship and return to their jobs.
A survey by Milkman and Appelbaum of how California employers covered the work of employees on family leave found that the vast majority assigned work to others; this includes small firms of under 50. But if a business is not able to do that, it can increase the hours of other workers or hire temporary replacements using the savings from not having to pay the worker on leave. Another concern has been fear of abuse. The California study found that 91% of employers reported that they had not experienced any cases of paid family leave abuse.
But we need not look all the way to California, we can look right here in our state, to New York City, where very similar concerns were raised that requiring small businesses to provide paid sick days would be a “job killer”. What’s happened in the year since paid sick time went into effect? New York City has experienced record job growth and is the strongest local economy in the state according to a recent report from the New York Federal Reserve Bank.
Fortunately, New York is poised and ready to become the next state to provide paid family leave.
• Not only do we have a TDI program already in place as the foundation, but
• We have the administration’s own Medicaid Redesign Team that made enacting paid family leave one of its top three priorities in its October 2014 report. This respected group of statewide leaders, that I had the honor of being part of, cited ample research showing the benefits to maternal and child health, as well as projected long run savings from improved health outcomes, averting job-loss induced Medicaid enrollment, and reducing hospital readmissions by enabling family caregivers to assist with increasingly complex post-discharge needs.
• And we have widespread public support. Eighty-four percent of New York City adults polled in a 2014 CSS/Lake survey support modernizing TDI to provide paid family leave. Most striking is the growing intensity of that support; two-thirds now strongly support the idea, up from 42 percent a decade ago. Support crosses party lines with 89 percent of Democrats, 83 percent of independents and 65 percent of Republicans all favoring paid family leave legislation.
Paid Family Leave is an idea whose time has come.
Let me close with a story told to me by Marjorie Salas, a pediatric oncology nurse in Manhattan.
She recounted her experience translating for a physician about a child's condition to her family:
I could see her mother's eyes fill with tears and the father hold his daughter a little bit tighter in his arms as I gently told the family nothing else could medically be done to save their 3 year-old’s life. The sadness in the room was overpowering. After explaining what they might encounter in the next few days, the conversation changed direction dramatically. Could the father take time off from work to spend the last few days of his little girl's life by her side? He chose to be with her and go a week without pay. A week without pay would take a serious financial toll on the family because his wife didn't work, they had another child to support and they had mounting medical bills to pay. How do you ask a parent to make a decision between supporting their family and spending what little time is left with their tiny daughter before she dies?
Your consideration of the legislation being debated today can bring us one step closer to no longer asking parents to make such impossible choices.