Proposals Giving New Parents Unemployment Benefits Falter
By Clare Nolan, Senior Writer
Only a handful of states are trying to take advantage of new federal rules that allow unemployment benefits for parents who temporarily leave work to care for a new baby. Six state legislatures are currently weighing so-called Baby U.I. bills, but few, if any, are likely to pass this year.
When President Clinton first proposed broadening the unemployment system to include millions of additional working parents, business groups predicted that states would feel enormous pressure to change their programs, at the expense of the employers who fund unemployment insurance.
So far, the idea has been received most warmly in Vermont, Maryland and Massachusetts, some of the states that prompted the federal government to consider paid family leave.
"This is a recognition that times have changed, that mothers now work," said Vermont Senate President Peter Shumlin, chief sponsor of a bill moving through the statehouse in Montpelier. "It's one of my priorities. I think there isn't an issue that's more important to working parents."
If all 50 states adopted Baby U.I., 1.8 million new mothers would qualify for paid leave each year, the U.S. Department of Labor says. Unemployment benefits vary from state to state, but the national weekly average is $200.
Only about one in three unemployed U.S. workers currently receive unemployment insurance. Proponents of Baby U.I. would also like to see the system expanded to include part-time workers.
In 1997, Vermont became the first state to propose extending benefits to parents, but the plan was rejected by the U.S. Department of Labor. Unemployment insurance has traditionally been reserved for workers who've lost their jobs through no fault of their own and are either actively seeking work or waiting for their employer to recall them.
Baby U.I., unveiled by the Clinton administration in November, would allow states to extend unemployment to parents who leave their jobs voluntarily to care for newborn or newly adopted babies.
The program has met with considerable resistance from congressional Republicans, business groups and even some state unemployment insurance commissioners.
This opposition, combined with the reluctance of some officials to move forward until the Labor Department issues final rules, is likely to delay the passage of Baby U.I. legislation until at least next year, according to the National Conference of State Legislatures.
At the state level, support for the issue mirrors partisan lines, with Democrats for Baby U.I. and Republicans against. Labor unions in California, New Jersey, Vermont and Washington have thrown their weight behind Democrats.
"This is politics at its worst, and if the administration proceeds down this course we will see them in court," U.S. Chamber of Commerce vice president Randel Johnson declared when the new policy was announced.
Business groups say Baby U.I. is illegal because Congress considered and rejected making paid leave a component of the Family and Medical Leave Act in 1993. "I consider this an attempt to do an end-run around that decision," said Michael Bartlett also with the U.S. Chamber of Commerce.
Under the Family and Medical Leave Act, employees of companies with more than 50 workers are entitled to as much as 12 weeks off to recover from an illness or to care for a new baby or a very ill relative. Employees taking advantage of the law do not collect a paycheck, but are entitled to return to the same, or equivalent, job.
According to the Clinton administration, more than 20 million workers have taken advantage of the law since it was adopted, but millions more forego the opportunity because they cannot afford a cut in pay.
Baby U.I. would not cover workers taking time off for personal medical reasons or to tend to ill parents or children.
The unemployment insurance system, established in 1935, is funded primarily through federal and state taxes on employers, although at least two states, Alaska and New Jersey, also collect from employees. State contributions are deposited into a trust fund overseen by the Department of Labor that currently holds $50 billion.
With the nation's economic expansion entering its tenth consecutive year, many states have accrued healthy balances for unemployment insurance. According to Labor Department ratings, 31 states currently have sufficient funds to weather recession-spawned unemployment for one year.
Five states -- Delaware, Georgia, New Hampshire, New Mexico and Vermont -- are said to be in such good shape that their reserves could withstand a two-year recession.
The Labor Department estimates that the four states that have expressed the strongest interest in Baby U.I. -- Vermont, Maryland, Massachusetts and Washington -- would incur annual expenditures of about $68 million apiece for the program. Collectively, the four states have more than $4.7 billion in their unemployment insurance accounts.
Opponents predict much higher costs. The U.S. Chamber of Commerce estimates Baby U.I. could cost as much as $18 billion a year nationwide, nearly double what the unemployment system currently pays out.
"It's undermining the stability of the safety net for those that are unemployed," said the Chamber of Commerce's Bartlett. "I question whether or not (states will) have a sufficient surplus in the event of a downturn."
Bartlett points out that during the recession that hit in the early 1990s, many states exhausted their accounts and had to borrow from the national trust fund to meet their obligations.
"This is not going to be a solution for states that don't have healthy U.I. systems," said Sandhya Subramanian of the National Partnership for Women and Families, a prominent supporter of paid family and medical leave.
Subramanian said the Chamber of Commerce's $18 billion estimate is predicated on an "unrealistic" scenario, namely that all 50 states adopt Baby U.I. in conjunction with all eligible parents taking leave and receiving benefits for 12 weeks.
Under proposed Labor Department rules, the states would determine how long parents would receive benefits. Lawmakers in the state of Washington, for example, have proposed paying for just five weeks of leave.
The businesses fighting Baby U.I. in Vermont and other states, Subramanian notes, are also pushing for a cut in the unemployment tax.
According to the National Employment Law Project, a liberal group that focuses on low-wage workers, 15 states have cut the amount employers pay for unemployment insurance within the last three years.
"It is absolutely disingenous for the business community to argue, as they have so vocally, that most states cannot afford" family leave, said Maurice Emsellem of NELP.
The U.S. House of Representatives plans to hold a hearing on Baby U.I. next week. House Ways and Means Committee Chairman Bill Archer, a Republican from Texas, has already expressed his opposition to the Clinton administration's plan.
Among states examining Baby U.I., the following legislation has surfaced:
A Vermont bill proposes using up to $2 million of the state's unemployment compensation fund to pay for 12 weeks of leave. The bill would also cut the unemployment tax for employers by .1 percent for three years. The legislation awaits approval by the Senate General Affairs Committee. Vermont's Senate President Peter Shumlin says the bill has one Republican sponsor. Democrats control both houses of the Vermont legislature. Shumlin plans to bring the bill to the Senate floor within the next two weeks.
Connecticut Representative Christopher Donovan has introduced a bill that would allow new parents to receive unemployment benefits for up to 12 weeks. His legislation also establishes a state fund to pay for medical leave. Donovan chairs the General Assembly's Labor and Public Employees Committee, which held a hearing on the measure Feb. 24. Democrats control both houses of the Connecticut General Assembly.
Maryland's House of Delegates Economic Matters committee will hold a hearing on its Baby U.I. bill Mar. 9. Written by Delegate Michael Dobson of Baltimore, the legislation has 10 Democratic sponsors in the House. A Senate sponsor has introduced a companion bill. Democrats control both houses of the Maryland General Assembly. The authors haven't decided on a benefits time limit. Proponents say passage this year is unlikely. "Many members don't know much about the legislation," said Denise Davis of the Women's Law Center of Maryland. "The real challenge this term is to get the word out."
Massachusetts lawmakers are considering two bills. The first gives 12 weeks of family leave, the second creates a separate Temporary Disability Insurance program to cover up to 26 weeks of medical leave. (Five states have separate TDI programs.) Both bills are on hold until a task force returns to the Legislature in May.
A measure in Washington would grant just five weeks of paid leave to new parents. This year, the Senate Labor Committee passed the bill and forwarded it to the Ways and Means committee. The measure missed the deadline for new legislation and is dead for the year.
Indiana's Democratic House approved a Baby U.I. bill in January, but supporters never obtained a sponsor in the Republican-controlled Senate. The measure is dead for the year. The legislation would have provided 12 weeks of benefits for workers who take time off during a child's first year or within a year after adopting a child.
Representative Mary Stuart Gile of New Hampshire has introduced a bill to establish a committee to look into using the state's unemployment insurance surplus to provide benefits to new parents on leave.
Lawmakers in California, New Jersey and New York have proposed extending their states' temporary disability systems to cover parental leave. California has ordered a study to examine the cost of an expansion. New Jersey's bill has yet to receive a hearing in the Assembly's Labor Committee. Republicans control both the New Jersey Senate and Assembly. New York Democrats, who control the state Assembly, support using disability insurance to cover family leave. Last year, the Assembly Labor Committee approved an expansion, but the bill never made it out of the Ways and Means Committee. There are no companion bills in the New York Senate, which Republicans dominate.