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Will D.C.’s new paid family leave policy help or hobble business?

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  • HARI SREENIVASAN:

    This week, Washington, D.C. passed one of the most generous paid family leave laws in the country. The district now joins California, Rhode Island, New Jersey and New York in approving similar measures.

    Our economics correspondent Paul Solman has the story. It's part of our weekly series, "Making Sense," which airs Thursdays on the "NewsHour".

  • PAUL SOLMAN:

    Diana Alvord feels lucky — lucky that her daughter was born in September without complication, lucky that she came home just days after she was born, because four years ago, Alvord's son was born, prematurely, at just 24 weeks.

  • DIANA ALVORD:

    We wondered for weeks and weeks if he would live.

  • PAUL SOLMAN:

    Alvord, who kept vigil over him in the neonatal intensive care unit for months, also wondered how either of them could have endured the trial if she hadn't worked for an accommodating non-profit in Washington, D.C.

  • DIANA ALVORD:

    I was given the opportunity to just take a leave of absence, and so, I was one of the few, probably, who could return to their jobs at the end of our ordeal. But, I know.

  • PAUL SOLMAN:

    Unpaid, unpaid leave?

  • DIANA ALVORD:

    Unpaid leave. But I know that there are many people, that isn't a choice that they have. And most people have to go back to work. And it's really, an impossible choice that families face. Do I stay here and hold my baby's hand? Do I go to work and keep the roof over our heads? How do you put a price on whether you stay or go?

  • PAUL SOLMAN:

    Many can't afford to take unpaid leave. Yet, just thirteen percent of American private sector workers get any paid leave.

    Alvord has seen the results.

  • DIANA ALVORD:

    When I sat at his bedside in the NICU, very, very often, I was alone. Very often, I would look around the room and there would be 20 babies in all their separate isolettes, and there weren't 20 sets of caregivers around them.

  • PAUL SOLMAN:

    The U.S. is the only industrialized country that does not mandate any paid family leave, giving the responsibility to states and cities, like the District of Columbia.

    In D.C., supporters lobbied for a paid leave law for more than a year.

  • WOMAN:

    This is an urgent thing for me personally.

  • PAUL SOLMAN:

    But businesses and the mayor balked at the cost.

  • WOMAN:

    Councilmember Silverman.

  • WOMAN:

    Yes.

  • PAUL SOLMAN:

    Despite the backlash, though, this week, D.C.'s city council passed a scaled-back version of the bill.

  • MAN:

    The measure passes.

    (CHEERS)

  • PAUL SOLMAN:

    This means D.C. parents who work in the private sector can now take eight weeks off at up to 90 percent of their pay, funded by a roughly half-a-percent payroll tax on all non-government employers.

    And that, says Heather Boushey, who studies work-life balance, will be good for the local economy.

    HEATHER BOUSHEY, Washington Center for Equitable Growth: It boosts our labor supply, especially among women and people who have care responsibilities, it increases job retention for people, people are more likely to keep their job when they actually have the tools to actually make it possible to balance all of these competing challenges in their daily life. And all of that means the economy is able to tap into that talent.

  • PAUL SOLMAN:

    True, says Georgetown University economist Harry Holzer, but —

  • HARRY HOLZER, Georgetown University:

    There is a strong need to balance the benefits that workers and their families get from paid family leave with the costs on employers.

  • PAUL SOLMAN:

    Holzer worries the D.C. plan will hobble local businesses.

  • HARRY HOLZER:

    They're providing 90 percent wage replacement up to close to $1,000 a week. You're giving the worker almost no incentive to limit the amount of time they ask for. Other states that have done this provide 60 percent, maybe 70 percent.

  • PAUL SOLMAN:

    But what would an employer do if it was too expensive — the cost was too high?

  • HARRY HOLZER:

    So, employers can be quite ingenious in terms of figuring out ways to get the work done with fewer workers. Another possibility is that employers simply might move across the river to Arlington, Virginia. Keep in mind that in the state of Virginia, no one is required to provide paid leave to employees.

  • PAUL SOLMAN:

    But D.C. restaurant operator Greg Casten now will be. So, will he skip town?

  • GREG CASTEN, President, ProFish:

    You can't just pick up a restaurant and move it over the state line to avoid the tax because restaurants are, you know, the three most important things: location, location, and, of course, location.

  • PAUL SOLMAN:

    Casten, who also co-owns a seafood supply company, complains the D.C. government already imposes a host of costs on businesses, including a recent minimum wage hike.

  • GREG CASTEN:

    This just gives an idea of how many different laws an employer has to put up with. I'm not saying any of them on the face are bad. All I'm saying is, there's a lot, a lot.

  • PAUL SOLMAN:

    Casten insists most employers will ultimately pass on the cost to the employees themselves.

  • GREG CASTEN:

    Not getting the raise, maybe cutting the number of hours a week, maybe cutting some of your staff back so you have less people.

  • PAUL SOLMAN:

    But not every employer.

  • ROGER HOROWITZ, Co-Founder, Pleasant Pops:

    For us, it just really would be extremely helpful as a way to retain good employees.

  • PAUL SOLMAN:

    Roger Horowitz is the co-owner of Pleasant Pops, purveyor of popsicles and coffee.

    A major labor cost? Employee turnover.

  • ROGER HOROWITZ:

    Between $2,000 and $3,000 is how much it costs us every time an employee leaves, to train someone and to fill their position.

  • PAUL SOLMAN:

    That's more than the $2,000 Horowitz estimates the new family leave tax will cost him.

    Plus, he will be able to offer a benefit he can't currently afford. Horowitz himself returned to work just two days after the birth of his daughter in June.

  • ROGER HOROWITZ:

    We have an employee who will in three months and will not be able to, you know, have paid leave because we don't have the financial resources to make that happen right now.

  • PAUL SOLMAN:

    So, key for you is that this functions as an insurance policy?

  • ROGER HOROWITZ:

    Absolutely. Being part of a larger pool and working with all the other small businesses and having all that money be administered by the city would be very helpful for us.

  • PAUL SOLMAN:

    So Pleasant Pops pays a small tax into the pool, like all the other firms in the city. And in return, it's insured, so it can draw from the pool to cover its costs if its employees need family leave.

    But economist Holzer worries other firms will be discouraged from employing low-income workers if they think those workers would be the most likely to take paid leave.

  • HARRY HOLZER:

    They could simply cut back on less educated young women in the childbearing age and just replace them with other employees. They would presumably try to hire employees who would take less leave.

    So, for instance, young men in the same age are less likely to take leave because they're less likely to have custody of the kids or the men take leave less frequently.

  • PAUL SOLMAN:

    But restaurant server Shanae Bond illustrates just how vulnerable workers are as things currently stand. While pregnant with her daughter Zane, Bond's employer axed her.

  • SHANAE BOND:

    I believe I was taken off the schedule because I was pregnant. I think that it was just easier to accommodate other servers wanting more hours.

  • PAUL SOLMAN:

    Out of work, Bond has gotten by only because her father moved in and helps with the bills.

  • DANTE CHURCH:

    She's always held down a job. She's always paid her bills on time. She never really had to ask me or her mother for any help, you know, until, you know, this pregnancy and I know it was hard for her to come to me.

  • PAUL SOLMAN:

    As for Diana Alvord, that dangerously premature baby is now this fellow — an imaginative four year old. Alvord says the early days she spent at her son's side were critical to his development.

  • DIANA ALVORD:

    Children's outcomes are better if they have skin-to-skin contact, it's called kangaroo care, you do it in the NICU, and it's shown to lower babies' stress hormones, it's shown to regulate their heart rate, they are able to regulate their own body temperature sooner, their breathing is more regular. And the economic argument part of it comes in when you think about the services and the care that the city would otherwise provide to these families and these children later on down the pipeline, rather than investing right at the first moment where you can make a greater impact from day one.

    What were you doing with the Legos?

  • CHILD:

    Making that and that.

  • PAUL SOLMAN:

    Oh, you made another rocket ship.

    And just look how far her son has come.

  • DIANA ALVORD:

    We were told that it was in the single digits that he would even come out of his birth surgery without incredible complications like cerebral palsy and all sorts of things. I mean, we were lucky, maybe. Or, or maybe we did all the things that there are out there to do.

  • PAUL SOLMAN:

    Things more Washingtonians will now be able to do, because of paid family leave.

    In Washington, D.C., this is economics correspondent Paul Solman.

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