Grand Bargain. June 20, 2018

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Transcription:

Grand Bargain June 20, 2018

Agenda Summary of the Grand Bargain Process and stakeholders Sales tax Minimum wage Paid family and medical leave

Summary of the Grand Bargain Sales tax Permanent sales tax holiday weekend in August No sales tax cut Minimum wage Minimum wage increases to $15 over 5 years Tipped minimum increases to $6.75 over 5 years (45% of regular min wage) No indexing No teen/training/subminimum wage Sunday/holiday premium pay phased out over 5 years New paid family and medical leave benefit program for most workers in Massachusetts

Agenda Summary of the Grand Bargain Process and stakeholders Sales tax Minimum wage Paid family and medical leave

Process To Reach Agreement Goal was to negotiate agreement that removes sales tax cut, minimum wage, and PFML questions from the 2018 ballot PFML working group was launched last November Discussion facilitated by Chairs of LWD Committee Representatives of Raise Up Massachusetts (RUM) Representatives of business community (AIM, Greater Boston Chamber of Commerce, Mass Business Roundtable, Greater Springfield Chamber of Commerce) Starting May 1, the Senate President and Speaker expanded the negotiations to include all 3 ballot questions, and both sides added additional negotiators to represent more stakeholder groups Deadline is July 3 last day to withdraw ballot petitions

Agenda Summary of the Grand Bargain Process and stakeholders Sales tax Minimum wage Paid family and medical leave

Sales Tax Provisions Annual two-day sales tax holiday weekend in August Which weekend will be determined each year by July 1 by joint legislative resolution If legislature does not act then DOR Commissioner will set the date No reduction in sales tax rate

Agenda Summary of the Grand Bargain Process and stakeholders Sales tax Minimum wage Paid family and medical leave

Current Minimum Wage $11 an hour Not indexed Tipped wage is $3.75 an hour (34% of regular min wage) No teen/training/subminimum wage Sunday/holiday premium pay of 150% required for certain retail workers Last updated by legislature in 2014

1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Historical Minimum Wage $12.00 Massachusetts Minimum Wage In Nominal and Real Dollars, 1968-present $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 Minimum Wage Inflation Adjusted CPI Indexed (2010=100). Source for data: St. Louis Fed

States/Cities with Higher Min Wage State Minimum Wage Year of Final Implementation Massachusetts $11.00 2017 Arizona, Colorado, Maine $12.00 2020 New York $12.50 2020 Oregon, Washington $13.50 2020 Portland $14.75 2020 Washington DC, New York City $15.00 2020 California $15.00 2022

Tipped Wage Compared to Other States 45 states have a tipped wage lower than the regular minimum wage (5 states have no tipped minimum wage)

Subminimum Wage in Other States 39 states have a teen or training subminimum wage Many based on the federal model (90 days at $4.25/hr for u18) Others based solely on age (i.e. all under age 18 earn $x) Some based on hours worked in a new industry Evidence is unclear if, or to what extent, teen subminimum wages result in greater teen employment or have any significant impact on business hiring

Sunday/Holiday Premium Pay Massachusetts blue laws derive from 1782 statute that governed activities on the Lord s Day Prohibitions and fines were placed on commercial activities on Sunday Over time, sports games, certain retail sales, and other activities were allowed on Sunday Red Sox played their first Sunday game in 1929 Retail shops first opened (legally) on Sundays and some holidays in 1983, but not until noon In the mid-1990s, retail shops were allowed to open in the mornings, and workers were offered increased pay by statute to work on Sundays (premium pay) Since the blue laws have been amended, Sunday work has been voluntary retail employers may not force an employee to work on Sundays Today, only Massachusetts and Rhode Island require the payment of Sunday/holiday premium pay Some employers do pay extra for Sundays, for example, the federal government provides 125% pay for certain employees Retailers argue that premium pay is cost prohibitive

Impact of a Minimum Wage Increase Raises wages for approximately 950,000 workers (29% of Mass workforce) 91% are age 20 or older 56% are women 57% work full-time

Proposed Minimum Wage Increase 5 year phase-in to $15.00 1/1/2019 increases $1.00 to $12.00 1/1/2020 increases $0.75 to $12.75 1/1/2021 increases $0.75 to $13.50 1/1/2022 increases $0.75 to $14.25 1/1/2023 increases $0.75 to $15.00

Proposed Tipped Wage Increase 5 year phase-in to $6.75 1/1/2019 increases $0.60 to $4.35 1/1/2020 increases $0.60 to $4.95 1/1/2021 increases $0.60 to $5.55 1/1/2022 increases $0.60 to $6.15 1/1/2023 increases $0.60 to $6.75 Once fully phased in will be 45% of regular minimum wage Workers must make at least minimum wage for each shift worked (rather than pay period as required under current law)

Proposed Premium Pay Phase-Out 5 year phase-out 1/1/2019 decreases to 140% of base pay 1/1/2020 decreases to 130% of base pay 1/1/2021 decreases to 120% of base pay 1/1/2022 decreases to 110% of base pay 1/1/2023 decreases to 100% of base pay

Other Minimum Wage Provisions No indexing No teen/training/subminimum wage

Agenda Summary of the Grand Bargain Process and stakeholders Sales tax Minimum wage Paid family and medical leave

Paid Family and Medical Leave Paid Family Leave (PFL) is paid leave for a worker to: Bond with a child after a birth, adoption, or foster placement Care for a family member with a serious medical condition Paid Medical Leave (PML) is paid leave for a worker s own serious medical condition

Family and Medical Leave Act (FMLA) Up to 12 weeks Unpaid Job protected Doesn t apply to employers with <50 employees Worker is eligible after one year of work and must have worked at least 1,250 hours during the past 12 months Only about 60% of the workforce is eligible for FMLA

What MA Law Currently Requires MA Parental Leave Act Requires employers with 6 or more employees to provide 8 weeks of unpaid, job-protected leave for birth or placement of a child for adoption to mothers and fathers MA Earned Sick Time Law Most workers can earn and use up to 40 hours of job-protected sick time per year to care for themselves or a family member; leave is unpaid if employer has fewer than 11 employees.

Current Access to Paid Leave 13% of New England employers provide PFL 39% of New England workers have short-term disability policies (PML) High earners are 4 times more likely to have access to paid leave than low-wage workers

Current Snapshot of Leaves in MA

Benefits of PFML For Employees: Expands access to leave Reduces inequality for workers of color, low-wage earners, and women Helps prevent bankruptcies For Employers: Shared cost of providing leave, particularly for small businesses Reduced employee turnover For Society: Promotes infant and maternal health Keeps women in the workforce Reduces reliance on public assistance

Business Concerns about PFML Cost of premiums Hiring replacement workers Punishing employers who already provide it Employee abuse and fraud Compliance/interaction with new state agency Additional burden/mandate on business

States with PFML Programs Rhode Island New Jersey New York California Washington Hawaii (PML only)

Key Policy Considerations Eligibility Length of leave Wage replacement rate Flat rate vs. tiered structure Weekly benefit cap Job protection Premium cost split Treatment of small employers Family members covered by PFL Treatment of self-employed individuals Employer opt-out Program administration, oversight and enforcement Implementation schedule Total cost

Employee Eligibility An employee who meets the financial eligibility requirements for unemployment insurance (UI) or former employee who met the financial eligibility requirements of UI and has been separated from employment for 26 weeks or less Must have earned at least $4,700 during the last 4 completed calendar quarters and 30 times the weekly benefit amount the employee would be eligible to collect

Length of Leave Family Leave: 12 weeks Medical Leave: 20 weeks Military Exigency Leave: 26 weeks Annual Cap: 26 weeks

Wage Replacement Rate 80% of an individual s average weekly wage up to 50% of the state average weekly wage (SAWW) Then 50% of an individual s average weekly wage up to the weekly cap of 64% of SAWW (currently $850)

Job Protection An employee who has taken PFML shall be restored to the employee s previous position, or to an equivalent position, with the same status, pay, and employment benefits An employer may not retaliate against an employee for using PFML

Premium Cost Split Employers with fewer than 25 employees Employer not required to pay any premiums Employee pays 40% of medical leave and 100% of family leave Employers with 25 or more employees Employer pays 60% of medical leave Employee pays 40% of medical leave and 100% of family leave Overall split is roughly 50/50

Family Members Covered by PFL Family member is defined as: A spouse, domestic partner, child, sibling, parent, parent of spouse or domestic partner, person who was like a parent to the employee when the employee was a minor, grandparent, or grandchild Child is defined as: A biological, adopted, or foster child, stepchild or legal ward, a child to whom the covered individual stands in loco parentis, or a person to whom the covered individual stood in loco parentis when the person was a minor child

Self-Employed Individuals (SEIs) An SEI may opt-in to the state program for an initial period of not less than 3 years and shall not be eligible for benefits until contributions for 2 of the last 4 calendar quarters have been made An employer with more than 50% SEIs and a workforce size greater than 25 (employees plus SEIs) must pay the employer share of premiums for contracted SEIs who opt-in

Employer Opt-out Employers may meet their PFML obligations through a private plan if the plan provides equal or greater benefits at no greater cost to the employee An employer may provide one type of leave privately and another type through the state plan

Program Administration New Department of Paid Family and Medical Leave created within the Executive Office of Labor and Workforce Development (EOLWD) EOLWD responsible for enforcement of the new law Premium contributions paid into a newly established Family and Employment Security Trust Fund (established in the Office of the Treasurer)

Implementation Schedule Contributions begin 7/1/2019 for both PML and PFL PML and PFL to bond with a new child Benefit payments begin 1/1/2021 PFL to care for an ill family member Benefit payments begin 7/1/2021

Total Cost Final cost projection is being calculated but estimated at $750-800 million Payroll rate Set at 0.63% in the bill but will very likely be adjusted lower by the Commissioner Average weekly cost per worker estimated at $4.00-4.50 (which would be split 50/50)

Summary Schedule Minimum Wage Tipped Minimum Wage Premium Pay Paid Family and Medical Leave 2018 $11 $3.75 150% 2019 $12.00 $4.35 140% 7/1: premium contributions begin 2020 $12.75 $4.95 130% 2021 $13.50 $5.55 120% 1/1: PML and PFL bonding leave payments begin 7/1: PFL to care for ill family member payments begin 2022 $14.25 $6.15 110% 2023 $15.00 $6.75 100%