CEPR

For Immediate Release: Monday, April 15, 2019
Contact: Karen Conner, (202) 293-5380 x117, This email address is being protected from spambots. You need JavaScript enabled to view it.

The FAMILY Act, introduced to Congress on February 12, 2019, relies on a very small payroll tax to provide workers with paid family and medical leave for up to 12 weeks. According to an analysis by the Center for Economic and Policy Research (CEPR), that modest payroll deduction is far less than the cost of another type of insurance that most working families pay – auto insurance.

For a household in the middle of the income distribution, whose annual income before taxes is $52,431, the average deduction for FAMILY Act paid leave is $123.21 per year. Compare that to $1,034.00 — that’s the average annual cost of auto insurance for households in that income range. For an individual worker earning $10 an hour ($20,800), the payroll deduction is $49 a year — less than a dollar a week.

“One of the arguments raised by opponents of a paid family and medical leave program in the US is that it’s too expensive,” explained economist Eileen Appelbaum, who co-authored the analysis. “So, we compared the cost of providing paid leave to the cost of auto insurance and found that paid leave is a bargain. It costs workers just a fraction of what families pay for auto insurance to pay for 12 weeks of time off work to welcome a new baby, adopted or foster child, or to care for yourself or a sick family member.”

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The FAMILY Act is a national program, modeled on successful programs in California, New Jersey, and Rhode Island, that covers workers in all companies regardless of the number of employees or whether the worker is employed full-time, part-time, temporary, or self-employed. The money deducted from a worker’s paycheck goes into an insurance fund that can only be used for the purpose of paid family and medical leave. A small payroll deduction would pay for the benefit and would not jeopardize benefits from other social insurance programs like unemployment insurance or social security.