Michigan has a bad track record of government-run programs. That’s worth remembering now that Governor Whitmer and the Michigan Legislature are trying to pass a mandatory paid leave law that will apply to all job creators. The West Michigan Policy Forum has previously shown how this policy would hurt small businesses, yet it’s also likely to suffer serious problems, in line with other state programs.
The mandatory paid leave proposal suffers from many serious issues. To start, it enacts a new tax on both workers and businesses, cutting families’ take-home pay. Moreover, there’s no cap on annual payroll taxes, meaning the tax burden will be much larger. Other states have enacted caps precisely to limit the damage to job creators and families.
If enacted, this policy will be one of the most expansive and expensive in the country. Paid leave also could be used to care for anyone who isn’t a family member, including friends or people treated like family. Both full- and part-time employees are covered, with no exemptions for small businesses. And leave would be available for more than just illness, including school events and other issues. The lack of guardrails all but guarantees that job creators will face significant financial and staffing difficulties.
Before enacting a new mandate, lawmakers should ask why previous Michigan mandates are falling short:
- The state’s worker-compensation plan is horribly administered, with a history of financial losses
- The state’s unemployment insurance system faces many challenges. During the pandemic, for instance, it routinely failed to provide workers with the right payments.
A new mandate will only create more problems – without solving the ones that already exist.