Proposed Family Leave Program Is Basically Corporate Welfare

Before I make my argument, I should acknowledge that the business community in North Dakota has come out in opposition to HB1509.

That proposal, introduced by state Rep. Karla Rose Hanson (D-Fargo), would create a mandatory family leave program for employers with 50 or more employees. It would be administered by Workforce Safety and Insurance (the state’s workers compensation agency) and paid for by a tax on wages which works out to about $100 per year for someone with an annual salary of $50,000.

“A government mandate has not been needed nor is needed in the future to help companies or force companies compete for workforce on the private market,” Arik Spencer, president and CEO for the Greater North Dakota Chamber, told a legislative committee about the bill this week.

The business community doesn’t want a mandate. That’s understandable. But from a certain perspective, they’re advocating against their own interests. This bill could get them out of the family leave business altogether.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]Hanson’s bill would, at least in the area of family leave, throw all of that out of the window. Businesses would have no incentive to innovate in this area of compensation because the state would be doing it for them.[/mks_pullquote]

If the government is going to mandate this sort of benefit, why should North Dakota’s businesses go through the time and expense to design and implement their own policy?

Spencer alludes to workforce competition. That’s a very real thing. Businesses need skilled, reliable pools of labor to be successful. They compete with other businesses in implementing compensation packages – including things like family leave – to attract that labor.

Those packages are often tailored to the sort of labor force the employers are trying to attract. Benefits which may be important to the sort of worker interested in an oil field job in western North Dakota will likely be different than those valued by an administrative office worker in Fargo. The point is that businesses have to offer competitive compensation packages to attract employees (especially in North Dakota’s labor market where there is almost always a chronic labor shortage) and right now they have the flexibility to design those packages while balancing generosity with cost impacts on the bottom line.

Hanson’s bill would, at least in the area of family leave, throw all of that out of the window. Businesses would have no incentive to innovate in this area of compensation because the state would be doing it for them.

Remember, it’s not the businesses which would be paying for this. Not really. The funding from this bill comes from a tax on compensation. The businesses will collect the tax, and remit it to the state, but ultimately the cost of it will be passed on to the workers.

We don’t need new government programs to provide benefits to people who have jobs. The benefits of a given job should be the product of both employers and employees balancing their respective interests in employment.

Any effort by the government to interfere in that relationship is likely to produce more negative outcomes than positives.