Biden's Paid Leave, How Will It Work?

Mish

Paid leave expired in December for illness and caregiving during the pandemic. Biden wants to reinstate and expand it.

What's In the Plan?

  • Coverage for Everyone: The previous Covid package excluded businesses with under 50 employees as well as companies with more than 500 workers. Gig workers and self-employed will get tax credits.
  • How Much: Workers’ wages up to $1,400 a week, or $280 a day. That covers about making up to $73,000, about three-fourths of workers.  Last years' plan was up to $511 per day but limited to two weeks. 
  • How Long: Up to 14 weeks or more of paid leave. 
  • Who Pays: Employers with fewer than 500 workers will receive a payroll tax credit. Large corporations will foot the bill. As of now, just one quarter of companies with more than 500 employees provide some sort of family leave, according to the Bureau of Labor Statistics
  • What's Changed: Also, under a 1993 law, workers are eligible for 12 weeks of unpaid family and medical leave, but roughly half of workers don’t qualify (for example, if they have worked at their employer for less than a year, or if the company has fewer than 50 people). Residents of 15 states and about eight in 10 employees over all have paid sick leave. But the period of leave is often several days, not weeks, and low-income, Black and Latino workers are less likely to have it.

Details condensed from How Biden’s Proposed Paid Leave Would Work.

What's Wrong?

  1. Cash Flow Issues: Small businesses, especially tiny businesses have to pay workers who don't show up, potentially for as long as 14 weeks. They would have to find replacement workers and the same thing can happen repeatedly. This creates a huge potential cash flow problem.
  2. Massive Opportunity for Fraud: The setup is rife for fraud two ways. Employees can take advantage of free vacations. And employers of family-run businesses can pay daughter Susie and son Sam at government (taxpayer) expense when perhaps neither of them is sick.
  3. Uncertainty: How long will someone be gone? Will it be a week or 14? It matters.
  4. Training: If someone is gone for 14 weeks you have to train a new employee. That's an expense.
  5. Returning Issues: After 14 week the employee want to return. To what? A small business already replaced that worker and doesn't need another employee. If you fire them they may file a lawsuit and/or there are unemployment payments to deal with.

Mish

Comments (25)
No. 1-12
Scooot
Scooot

Undoubtedly the average number of sick days per year will rise. In Europe paid sick leave has been compulsory for some time but the average number of days per year taken varies considerably, and it’s obviously not totally due to the healthiness of individual countries. In the EU the employer picks up the full tab, although the statutory requirement (in the UK anyway) is relatively low.

Frilton Miedman
Frilton Miedman

I'm so clueless.

Didn't know I could get a $1400/week credit for 14 weeks, with a tradeoff of 2% fatality risk.

Maybe now I understand why some groups are dead-set against wearing masks.

ohno
ohno

On the flip side it does suck that many people that are sick are still going to work spreading more covid around and giving you more of a chance to catch it. I don't know if it's true but i've heard stories from people at large corps like fedex who are told to get their ass to work even if they're sick. Would be no surprise at all. We've had a couple cases where I work. When it first started they'd clean and send everyone home. Now people just disappear and not a word from anyone or nothing at all done about it.

Eddie_T
Eddie_T

Both the problems you listed will no doubt be problems for us.

Not looking forward to dealing with this, especially when it gets filtered down to the state level, where employers are generally considered the bad guys in disputes with employees over pay and time off.. Guilty until proven innocent.

We already have a hard time holding jobs for women having babies.....for even a month. We literally have to replace people the day they step out.....and then when they come back you have one employee you don’t need....but no way to get rid ro them without paying unemployment.

Sechel
Sechel

Does the employee benefit if covid exposed or covid positive workers show up at the workplace? Sometimes the parties involved need a gentle shove or incentive to do what makes sense. This should have been done a year ago. Think of the meat plants where transmission rates were way too high. Workers came to work sick unable to turn down the pay check

Sechel
Sechel

If workers are sick they should stay home. Period!

Sechel
Sechel

If a sick person comes to work and infects several others the cost to the employer will be far worse. Any employer who opposes this is giulty of short termism. Like shooting one's nose to spite one's face

selimtk
selimtk

Mish is right, somebody filed for unemployment benefits for me while I was at the office! We still do not know who...

Johnson1
Johnson1

Was this paid leave is a pipe dream? Either that or employers are not telling employees about it. I know plenty of people including my self who had COVID and had to use their own vacation time while sick or quarantined.

Rhet
Rhet

"The setup is rife for fraud two ways. Employees can take advantage of free vacations. And employers of family-run businesses can pay daughter Susie and son Sam at government (taxpayer) expense when perhaps neither of them is sick."

In Germany they have a very liberal sick time policy but you do need a doctors note. That seems like a pretty simple fix for your fraud concerns.

You next question is about doctors writing dubious notes. They would be dealt with the same as doctors writing dubious prescriptions.

Bungalow Bill
Bungalow Bill

Can we call this Trumpism on steroids?


Global Economics

FEATURED
COMMUNITY