DENVER (CBS4)- The November election is now under seven weeks away, and Colorado voters will soon be deciding whether to approve an initiative that could provide extended paid family or medical leave to the state’s workers.
The measure, Proposition 118, would give almost every family in Colorado 12-16 weeks of paid family or medical leave with wage replacement starting at 90%. Whether you use it or not, you pay for it. The ballot measure would create a $1.3 billion per year state run insurance program.
Democratic state Sen. Faith Winter and Democratic state Rep. Matt Gray penned an opinion piece for Colorado Politics that argues that the need for a program like this is “clearer than ever” amid the coronavirus pandemic.
“For the essential workers in our community, like nurses, grocery workers, delivery drivers, and more, we need to ensure they’ll be able to take care of themselves or their loved ones should anyone in their family contract a prolonged illness. Giving workers paid leave to recover from a serious illness like COVID-19 will keep our communities safer and prevent the spread of this devastating virus, all while making sure businesses don’t lose the employees they depend on.“
However, there are questions about the stability of the potential program when considering the costs to employees and businesses.
“It’s important to know what’s the financial stability of a billion dollar program like this. What are the potential risks associated with the program?” asked Kristin Strohm, an associate at the Common Policy Institute.
The biggest risk, according to Strohm, is if too many people use the benefit. The insurance is paid for with a tax or premium of 0.9-1.2% that would be split between the employee and employer. For businesses, that would mean an increased cost of $570-880 million per year. For a worker making the median wage of about $50,000, it would mean an extra $225-300 per year.
“You have to ask yourself as a voter, how much are you willing to pay into this program. And, as an employer, could you afford to do that,” said Strohm.
There are also questions about how many people the program can afford to support. Some analysts expect higher levels of utilization due to the benefits the program provides, while others think it’s more likely it will stay within a reasonable range.
“We’re talking about between $1 and $4 per week for the average worker,” said Dr. Jennifer Greenfield of the University of Denver. “Utilization is, I think, very likely to stay within that 5%.”
Analysts at the Common Policy Institute think that the utilization will be higher because Colorado’s program is the most generous in the country. The Institute found that if 6.5% of workers use the benefit in the first year, taking an average leave of nine and a half weeks, the program would be insolvent.
In the second year, the Institute says that it couldn’t go above 7.5% utilization and 10 weeks leave. If it does, the Institute says that either costs would have to go up or the state would have to bail the program out.
If the proposition passes, the first year of the program would begin in 2023.