(Source: MIRS.news, Published 08/25/2023) The Michigan Manufacturers Association (MMA) expressed concern Friday that Gov. Gretchen Whitmer 's idea to create a paid family and medical leave policy would be paid for through a payroll tax similar to what was done in Minnesota.
In Minnesota, starting in January 2025, employees would receive 12 weeks of approved medical leave and 12 weeks of approved family leave while still receiving between 90% to 100% of their weekly wages. A payroll tax that equates to .7% of eligible wages would cover the program's costs.
Whitmer is not expected to dive into details Aug. 30 during her "What's Next Address" about what exactly she's looking for in a paid family and medical leave law. She is not expected to suggest a payroll tax, MIRS has learned, opting instead to let specifics be ironed out through the legislative process.
Sen. Erika Geiss (D-Taylor)' SB 332 and Rep. Helena Scott (D-Detroit)'s identical
HB 4574 provide for 15 weeks of family leave to cover the birth or adoption of a child, a child's sickness, a physical or mental health issue, or a sickness in the family. The bills allow those on the lower end of the income scale to receive 90% of their weekly wage. Overall, nobody can earn more than 65% of the state's average weekly wage.
The amount of a payroll tax to cover the cost of the program would be set annually by the Department of Labor and Economic Opportunity director, under Geiss' bill.
Dave Worthams, the MMA's director of employment policy, urged the Governor and legislative leaders to "move cautiously" on creating a program in the face of "labor shortage headwinds," economic uncertainties, and "supply chain difficulties."
Asked if he could see a similar program created without a payroll tax, Worthams said if Michigan had any American Rescue Plan Act (ARPA) money left, that would be a possibility. However, it does not. The state's surplus all but disappeared in the most recently passed budget.
In Minnesota, this program is estimated to cost $1.2 billion. Worthams figures it will run around $1.5 billion in this state.
"Where else do you get that kind of money, unless you win the Powerball?" Worthams quipped.
However, a payroll tax isn't the only way to pay for this program, MIRS has learned. The legislature could pass a direct mandate on employers instead of creating an "unemployment insurance (UI)"-like system run by the state.
Another idea is a cost-share model that splits costs between businesses and the state. MIRS was reminded that other larger corporations are already offering a paid leave policy as a way to keep talented staff.
