We’ve had a long six months in Colorado, in the nation and in the world. COVID-19 has tested us all – personally and professionally. We remain confident that we are doing everything possible to ensure Colorado is on track to recover and rebuild – and most importantly, rehire – from this pandemic. Compared to other states, Colorado ranked 48th for the percentage of our workforce who filed first-time unemployment claims, and 93% of Colorado was still working as of the end of August.
What’s clear to everybody is that going into a challenge strong, makes a difference. We created the strongest economy in the nation before the pandemic hit, and together, we are taking steps to ensure we slow its impact by washing our hands, wearing masks, social distancing and working from home when possible to ensure our businesses can continue to reopen and employees either continue to or get back to work quickly.
So now is not the time to add additional pressures on employees and employers with an expensive new government program.
Proposition 118 does just that. Proposition 118 would establish a $1.3 billion, state-run paid family and medical leave program by mandating a payroll tax on employees and employers.
Don’t get us wrong – we strongly believe that paid leave is a critical benefit. That’s why many of our 3,000 members already provide such leave today, and we are always working to expand the benefit to even more employees. But a one-size-fits-all, huge government program is not the way to achieve this goal.
Here are some of the key details about Proposition 118.
- It would cover up to 12, and in some cases 16, weeks of partially paid leave for qualifying events, including having a baby, caring for family member or for other personal medical reasons.
- The definition of family in this case is among the broadest for a program of its type in the country and will create confusion about who is and isn’t covered. The definition includes spouses, children, grandparents, grandchildren and domestic partners, which is what many current employer-provided leave programs cover. But then it adds a new definition: “Any other significant bond that is or like a family relationship, regardless of biological or legal factors.” Nobody in the country knows who would or wouldn’t qualify under that definition.
- Wages would be replaced on a sliding slide – 90% for lower-wage earners and 42% or less for higher-wage earners – meaning this is a lesser benefit than many employees currently receive who have paid family leave today.
- The program would be funded via a payroll tax of 0.9% on earnings, which can be escalated to 1.2% without further voter approval. This represents a 20% increase in income taxes for employees in Colorado.
- Local government employees are exempt from the program, leaving out a significant percentage of workers in our state – meaning we wouldn’t have a universal leave program at all.
While proponents have pushed this program as a way for workers to have guaranteed income when they take leave, we’re worried the opposite is true. Our greatest fear is that the program won’t be financially viable, leaving employees in a terrible position when they need those benefits. Between PERA’s unfunded liability, our empty unemployment insurance trust fund and our recent experience with reinsurance, it’s clear that our state doesn’t have a good track record of managing large programs.
In fact, the Common Sense Institute says it “is very likely that the cost of the program will rise substantially higher than the initial premium rate of 0.9% and could even be made to move higher than the current statutory cap of 1.2% to remain solvent, as the benefit levels of the proposed paid leave program under Proposition 118 are more generous than any other state with a history of established utilization data.”
What happens if people need more money for paid leave than the fund has? Again, employers and employees will be forced to pay more. The state can increase the amount taken out of every paycheck and payroll to 30% more than the initial amount – without approval from voters. We think employees should have a voice in how much they must pay for such a benefit.
Most importantly, this program would hurt the very people it’s trying to help. Nearly 726,000 Coloradans have already filed for unemployment since March. When you add costs to employers, you limit their ability to create jobs, and we know that the longer you’re unemployed, the greater the financial consequences and the harder it is to get those jobs back. When it comes to benefits, our smallest employers will be left with hard choices about what benefits they can continue to afford, like health insurance and vacation leave and retirement.
We worked extensively with lawmakers last session to address the problems that we see with this program. We are committed to expanding paid family leave in our state, but not with poorly crafted policy on your ballot. We ask you to vote no on Proposition 118. Learn more at votenoon118.com and read the Common Sense Institute report on Proposition 118.
Kelly Brough is the president and CEO of the Denver Metro Chamber.