It has been more than 22 years since the federal Family and Medical Leave Act (FMLA) was signed and eligible workers received some job protections when they need to take time (up to 12 weeks) to care for their own health, a new child, or their families. FMLA does not require, however, that employers compensate their employees for this time. In three states – California, New Jersey, and Rhode Island – existing temporary disability insurance (TDI) systems were expanded to provide paid family leave through a social insurance program. In many state and local jurisdictions across the country, legislatures are considering proposals to provide paid family and medical leave, but few have TDI systems in place and would need to build a new social insurance system.
This report provides cost estimates for a series of policy scenarios for private employers in the District of Columbia and other employers of DC residents based on existing policy ideas and representing a range of eligibility criteria and benefit levels. It uses an existing simulation model that estimates leave- taking behaviors for workers and the characteristics of the leaves they take under different program designs. The costs of leaves are divided into three categories: costs of program benefits, wages paid by employers to the workers out on leave, and the value of uncompensated time for workers.
Policy scenarios are compared to a baseline model for the current policy climate, which is one where some workers receive compensation while taking leave, but there is no program benefit. We find that DC private employers pay about $123.3 million per year for family and medical leaves taken by their employees, but private employees working in DC take the equivalent of $415.2 million annually in uncompensated leave. Under the three alternative paid leave policy scenarios examined in detail in this report, the cost for the new wage replacement benefits ranges from $30.8 million to $150.9 million per year. These new benefits reduce the amount of uncompensated time taken by workers by at least $10.6 million up to $84.4 million.
The results highlight the importance of program design issues such as eligibility criteria, number of days or weeks benefits may be received, and reasons for accessing program benefits. More generous program designs perform better at reducing the levels of uncompensated leave taken by more vulnerable groups and reduce one aspect of labor market inequality. The report concludes with some additional notes on financing and cost estimates for program start-up and administration.