Elizabeth New: State celebrates program that harms low-income workers

By Elizabeth New

Would you celebrate a government program that helped more wealthy people than poor people? A program that transferred money from the working poor so people with higher incomes could benefit? Would you cheer along a program that doubled its tax rate in less than five years and say it deserved an Olympic gold medal?

Gov. Jay Inslee did this month.

The governor described the state’s Paid Family and Medical Leave program as the greatest of his 12 years as governor and one that made the most difference in people’s lives: More than 500,000 Washingtonians were paid $5 billion taxpayer dollars in the program’s first five years. Left unsaid was that far more individuals – about 3.6 million workers, including low-wage workers – lost hundreds of dollars in income that could have been spent on their own life needs. That’s hardly worthy of a victory lap.

The program was built on the backs of workers in 2017 with Senate Bill 5975 and it started taking workers’ wages in 2019. The state redistributes 74 cents of every $100 a worker makes – right now, that is. In a recent meeting, lawmakers discussed increasing the tax rate – again.

The tax rate for Paid Family and Medical Leave already doubled in its short lifetime, from 0.40% in 2017 to 0.80% in 2023. It then dipped slightly in 2024 to 0.74% because the state gave the fund a bailout from another pool of taxes. As Caitlyn Jekel, government affairs director for the Employment Security Department, explained, “When the Legislature plopped $200 million into the account, it artificially pushed the tax rate lower.”

The program is not paying its way. Lawmakers were recently told a deficit could happen as soon as October and could be more severe than was previously projected. State Sen. Steve Conway, D-Tacoma, said in response to that grim news that some states with similar programs have higher payroll taxes attached to them – closer to 1%. He said, “I wonder if we have structured it properly to make sure we don’t have these funding crises every other year.”

The Employment Security Department reports that the state’s average annual income in 2022 was $84,167. In 2024, a worker making that wage would pay $444.89 for benefits they might not need or use. That person’s employer would pay an extra $177.95 on that employee’s behalf – again, for benefits the employee might not need or use. That’s a total of $622.84 going into the Paid Family and Medical Leave program for an average-wage worker in just one year.

Beneficiaries can receive up to 90% of their weekly pay on a progressive scale and up to a maximum updated yearly. In 2024, that max was $1,456. While a large share of one’s wage is great for workers using other taxpayers’ money to bond with babies or take care of medical needs, it’s more “too bad” for other workers, including those with lower incomes, single parents and many family caregivers. Some workers need their full wages to make ends meet and are unable to take paid leave. They can’t afford to. They have to work to get by.

Paid Family and Medical Leave is no safety net. In October, I sought a wage breakdown of recipients and learned paid leave wasn’t primarily helping people considered financially needy. It most often benefits middle- and upper-income wage earners. That remains true for fiscal year 2024, with even fewer people in the lower wage brackets using PFML. Here’s that updated hourly wage and use information:

Up to $18/hour: 9%

Between $18 and $24/hour: 20%

Between $24 and $35/hour: 27%

Between $35 and $60/hour: 26%

More than $60/hour: 17%

Requiring people with lower wages to give money to workers with higher incomes or who are not in need of taxpayer help isn’t my idea of a social program worth celebrating.

This next legislative session, lawmakers should stop penalizing work and repeal Paid Family and Medical Leave.

Elizabeth New is director of the Center for Worker Rights at the Washington Policy Center. Members of the Cowles family, owners of The Spokesman-Review, have previously hosted fundraisers for the Washington Policy Center and sit on the organization’s board.