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What's In the Plan?

  • Coverage for Everyone: The previous Covid package excluded businesses with under 50 employees as well as companies with more than 500 workers. Gig workers and self-employed will get tax credits.
  • How Much: Workers’ wages up to $1,400 a week, or $280 a day. That covers about making up to $73,000, about three-fourths of workers.  Last years' plan was up to $511 per day but limited to two weeks. 
  • How Long: Up to 14 weeks or more of paid leave. 
  • Who Pays: Employers with fewer than 500 workers will receive a payroll tax credit. Large corporations will foot the bill. As of now, just one quarter of companies with more than 500 employees provide some sort of family leave, according to the Bureau of Labor Statistics
  • What's Changed: Also, under a 1993 law, workers are eligible for 12 weeks of unpaid family and medical leave, but roughly half of workers don’t qualify (for example, if they have worked at their employer for less than a year, or if the company has fewer than 50 people). Residents of 15 states and about eight in 10 employees over all have paid sick leave. But the period of leave is often several days, not weeks, and low-income, Black and Latino workers are less likely to have it.

Details condensed from How Biden’s Proposed Paid Leave Would Work.

What's Wrong?

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  1. Cash Flow Issues: Small businesses, especially tiny businesses have to pay workers who don't show up, potentially for as long as 14 weeks. They would have to find replacement workers and the same thing can happen repeatedly. This creates a huge potential cash flow problem.
  2. Massive Opportunity for Fraud: The setup is rife for fraud two ways. Employees can take advantage of free vacations. And employers of family-run businesses can pay daughter Susie and son Sam at government (taxpayer) expense when perhaps neither of them is sick.
  3. Uncertainty: How long will someone be gone? Will it be a week or 14? It matters.
  4. Training: If someone is gone for 14 weeks you have to train a new employee. That's an expense.
  5. Returning Issues: After 14 week the employee want to return. To what? A small business already replaced that worker and doesn't need another employee. If you fire them they may file a lawsuit and/or there are unemployment payments to deal with.

Mish