• Monthly
  • $25
  • $50
  • $100
  • $other
  • use PayPal

Spring Donation Drive

CounterPunch is a lifeboat piggybank-icon of sanity in today’s turbulent political seas. Please make a tax-deductible donation and help us continue to fight.

Paid Family and Medical Leave: a Bargain Even Low-Wage Workers Can Afford

The FAMILY Act was reintroduced in the 116th Congress by Kirsten Gillibrand in the Senate and Rosa DeLauro in the House. It would provide workers with income when they need to take time off for their own health including recovery from childbirth, to care for a seriously ill family member or spouse, or to bond with a new baby or an adopted or foster child. One of the arguments against paid family and medical leave that opponents frequently use to try to discredit this popular social insurance program is that workers can’t afford it. The payroll deduction, technically a tax, is actually an insurance premium that finances these paid leaves.

The money deducted from a worker’s paycheck goes into an insurance fund that can only be used for one purpose: to replace two-thirds of workers’ lost wages, up to a capped amount, for up to 12 weeks when they need to take a leave. Lower- and middle-wage workers would fall under the cap. The FAMILY Act covers workers in all companies regardless of the number of employees or whether the worker is employed full-time or part-time. It covers temporary workers as well as the self-employed.

The cost of the program is modest and can be funded by small employee and employer payroll contributions, with each contributing two-tenths of one percent of monthly pay. Total cost is just 0.4 percent (0.004) of payroll.[1]

To provide a context for understanding whether a payroll deduction of 0.2 percent of payroll places a large burden on workers, especially those earning low wages, we compare the required payroll deduction for paid family and medical leave for households in each quintile of the earnings distribution with what households in that quintile pay for auto insurance.

We use data from the 2017 Consumer Expenditure Survey to make this comparison. An advantage of this data source is that it includes payroll earnings of all members of the household, so it captures the situation of households with multiple earners. It provides both average income and average auto insurance premiums for households in each quintile, making it possible to compare the payroll deduction or premium for paid family and medical leave with the premium for auto insurance at various income levels. We can see this most clearly in Figure 1.

However, the bottom quintile of household earnings includes many retiree households as well as households with disabled workers or workers who are unemployed. Households in higher income quintiles may have income from owning stocks, bonds or real estate. Average payroll earnings are likely to be lower than average income for households in each quintile. Applying the payroll tax to average income overstates the actual payroll deduction.

To address this issue, we use data from the 2018 Annual Usual Weekly Earnings of Wage and Salary Workers. It provides payroll earnings for workers 25 years of age and older at various points on the wage distribution. This data allows us to calculate the payroll deduction for individual workers at different points in the wage distribution. We report the payroll deduction assuming that it is applied only on wages that are covered by social security. In this case, as we observed earlier, the payroll deduction is 0.235 percent (0.00235) of wages.

A low-wage worker at the 10th percentile, earning $458 a week, would see a payroll deduction of just $1.08 a week to provide insurance that replaces two-thirds of lost wages when the worker is out on a family or medical leave. The typical (or median worker), earning $932 a week, would see a payroll deduction of $2.19. Compared with the cost of other forms of insurance – auto insurance, renters’ insurance or homeowners’ insurance, the cost to workers of up to 12 weeks of family or medical leave are quite modest.


[1] This assumes that the payroll deduction is applied to all wage income. If, instead, the deduction applies only to wages subject to the deduction for social security, then the total cost rises slightly to 0.47% of payroll, with the workers’ share equal to 0.235 percent of pay. We provide estimates of the cost to workers for both of these scenarios.

This article originally appeared on CEPR’s blog.


Weekend Edition
May 17, 2019
Friday - Sunday
Melvin Goodman
Trump and the Middle East: a Long Record of Personal Failure
Joan Roelofs
“Get Your Endangered Species Off My Bombing Range!”
Jeffrey St. Clair
Roaming Charges: Slouching Towards Tehran
Paul Street
It’s Even More Terrible Than You Thought
Rob Urie
Grabby Joe and the Problem of Environmental Decline
Ajamu Baraka
2020 Elections: It’s Militarism and the Military Budget Stupid!
Andrew Levine
Springtime for Biden and Democrats
Richard Moser
The Interlocking Crises: War and Climate Chaos
Ron Jacobs
Uncle Sam Needs Our Help Again?
Eric Draitser
Elizabeth Warren Was Smart to Tell FOX to Go to Hell
Peter Bolton
The Washington Post’s “Cartel of the Suns” Theory is the Latest Desperate Excuse for Why the Coup Attempt in Venezuela has Failed
Doug Johnson Hatlem
Analysis of Undecideds Suggests Biden’s Support May be Exaggerated
Peter Lackowski
Eyewitness in Venezuela: a 14-year Perspective
Karl Grossman
Can Jerry Nadler Take Down Trump?
Howie Hawkins
Does the Climate Movement Really Mean What It Says?
Gary Leupp
Bolton and the Road to the War He Wants
Jill Richardson
Climate Change was No Accident
Josh Hoxie
Debunking Myths About Wealth and Race
David Barsamian
Iran Notes
David Mattson
Social Carrying Capacity Politspeak Bamboozle
Christopher Brauchli
The Pompeo Smirk
Louis Proyect
Trotsky, Bukharin and the Eco-Modernists
Martha Burk
Will Burning at the Stake Come Next?
John W. Whitehead
The Deadly Perils of Traffic Stops in America
Binoy Kampmark
The Christchurch Pledge and a Regulated Internet
David Rosen
Florida’s Sex Wars: the Battle to Decriminalize Sex Work
Ralph Nader
Trump: Importing Dangerous Medicines and Food and Keeping Consumers in the Dark
Brett Haverstick
America’s Roadless Rules are Not Protecting Public Wildlands From Development
Alan Macleod
Purity Tests Can be a Good Thing
Binoy Kampmark
Modern Merchants of Death: the NSO Group, Spyware and Human Rights
Kim C. Domenico
Anarchism & Reconciliation, Part II
Peter LaVenia
Game of Thrones and the Truth About Class (Spoiler Warning)
Manuel E. Yepe
The Options Trump Puts on the Table
Renee Parsons
The Pompeo/Bolton Tag Team
David Swanson
Where Lyme Disease Came From and Why It Eludes Treatment
Cesar Chelala
Lowering Your Risk of Alzheimer’s Disease
Kollibri terre Sonnenblume
Our Problems are Deeper than “Capitalism” (and “Socialism” Alone Can’t Solve Them)
Chris Zinda
Delegislating Wilderness
Robert Koehler
War’s Unanswered Questions
Robert P. Alvarez
Let Prison Inmates Vote
Barbara Nimri Aziz
A Novel We Can All Relate To
David Yearsley
Carmen’s Mother’s Day Lessons
Charles R. Larson
Review: Ziya Tong’s “The Reality Bubble”
Elliot Sperber
Pharaoh’s Dream
Elizabeth Keyes
Somewhere Beyond Corporate Media Yemenis Die