Livengood: Michigan doesn’t have enough babies. Would paid leave help?

“We all believe supporting working families is important, and our members provide paid leave benefits for their employees. But a government-mandated bureaucracy is not the solution,” said Jeff Donofrio, CEO of Business Leaders for Michigan, a roundtable of corporate executives.

Business leaders see an economic disaster looming if a universal paid family and medical leave policy becomes law, a key priority of Gov. Gretchen Whitmer and her Democratic allies. They argue the requirement would make Michigan less competitive with its manufacturing economy competitors in Ohio and Indiana, especially one modeled after an unemployment insurance system that can be arguably described as a bureaucratic trainwreck.

“It’s a terrible idea to do paid family medical leave,” said John Kennedy, WMPF Chair and CEO of Autocam Medical, a Kentwood-based manufacturer of metal surgical implants.

Kennedy is seeing the impact of another state’s universal family and medical leave law play out on the factory floor of his company’s plant in Plymouth, Mass.

In 2022, Kennedy’s Autocam had seven employees claim 76 weeks of paid leave under the Bay State’s new family and medical leave law (not including company-paid maternity and paternity leaves), with roughly the same number of employees, he said.

These employee absences disrupted his company’s ability to deliver titanium plates and screws to medical customers on time, Kennedy said, because the employees taking family and medical leave cannot be easily replaced by temporary workers.

“There’s no way to backfill them,” Kennedy said. “I can’t bring in somebody off the street to match their ability.”

Kennedy and other business owners worry that a universal paid family and medical leave system would be vulnerable to the same type of fraud abuse that besieged Michigan’s unemployment system during the pandemic.

Details on exactly what kind of paid leave system Whitmer wants are murky. Her Aug. 30 policy speech in Lansing lacked specifics, and the Democratic governor didn’t take questions from reporters. Last week, as the Democratic-controlled Legislature got back to work following its usual two-month-long summer recess, Whitmer was off to Japan for a trade mission.

The governor’s office would not make any top officials available for an interview to explain Whitmer’s proposal.

But Whitmer’s office has suggested the basic outline of the plan could look like the family and medical leave law that just went on the books in Minnesota but won’t take effect until 2026.

Minnesota’s new law will give workers up to 12 weeks of paid time off for personal medical needs, up to 12 weeks for maternity or paternity leave or a total of 20 weeks off for both.

To pay for it, Minnesota’s Legislature levied a new 0.7% payroll tax — half of which employers can deduct from their employees’ paychecks — to generate $1.5 billion annually to pay family and medical leave claims. If Michigan took this route, it would wipe away much of the nearly $1 billion tax cut Whitmer secured earlier this year for seniors and low-income families and likely make working families shoulder a higher tax burden.

Whitmer, who is closely aligned with some big businesses in Michigan like Blue Cross Blue Shield, Ford Motor Co. and General Motors Co., made a claim in her speech that turned the heads of advocates of small businesses and those who own them.

“Enacting paid leave levels the playing field, helping small businesses attract and retain workers,” Whitmer said.

That statement doesn’t reflect the reality facing a small business with fewer than 10 employees in managing work schedules when one or two employees take an unexpected leave of absence — paid or unpaid.

“Asking small businesses to do something they can’t do doesn’t make them more competitive — it puts them out of business,” said John Reynolds, the Minnesota state director for the National Federation of Independent Business.

This story originally appeared in its entirety in the Detroit News on September 12, 2023.