Other Opinion: Minnesota's paid family leave proposal simply unaffordable

Of course Minnesotans should be able to take a paid day off when they're sick or when a loved one is sick and needs to be cared for. That's not only reasonable, it's humane and right.

But a state law that would guarantee "paid family and medical leave," being worked on in St. Paul this legislative session, is shaping up to be so extreme and so expensive that "our businesses, our small proprietors, simply won't be able to afford it," as Duluth Area Chamber of Commerce President Matt Baumgartner said in a recent interview with the News Tribune Editorial Board.

"But you know who can afford it? The national operators who are in both expensive and less-expensive markets. And so they come in, and all of a sudden something that drives tourism to Duluth — which is local restaurants, local merchants, and local shops — we don't have those anymore, and we end up with (all) McDonald's and Dunkin' Donuts," Baumgartner continued. "The fear is that we lose our ... local flavor over something that might sound good on the top line but when it gets executed out becomes very expensive.

"It isn't that anybody doesn't want to help people and take care of them when they need that care and they need their medical time, but if we end up with the most extreme version of this paid family medical leave in the country, that becomes probably intolerable to our small business community and once again puts Minnesota at a competitive disadvantage economically."

How extreme?

"The current proposal would give a single worker who has worked just three months up to 24 weeks off. ... That's nearly six months off a year," as political analyst and former NFL sideline reporter Michele Tafoya of Edina, Minnesota, pointed out in a commentary exclusively in the News Tribune this month. "And whether you are a mom-and-pop shop in Ely with three full-time employees or 3M in Maple Grove, businesses would be required to hold these jobs open for the entire duration of an employee's leave. Companies would also be required to pay for any benefits that employees enjoy as part of their job — all while trying to find temporary workers to fill the gap. Businesses would not receive a grant or incentive to pay for these replacement workers who, if they then spend months on the job, would also qualify for the state's paid-family-leave program."

To pay for the program, Gov. Tim Walz has proposed a 0.7% payroll tax on all Minnesota employers and employees. That'd be a brand new $1 billion tax, used to create an entirely new department within state government that would be staffed by 300 to 400 new state employees. And if the $1 billion proves not enough to run the department, the state can raise the tax. There's no payroll-tax cap in the governor's proposal, according to the group United for Jobs.

Additionally, while other states with such programs exempt the smallest of small businesses and seasonal workers, both of which are plentiful here in the Northland and all of which operate on a shoestring, Minnesota's proposal would not.

All of this at a time when businesses — especially those smaller, independent businesses that define communities and help make them special and unique — are still struggling to rebound from the pandemic, find employees, cope with supply-chain disruptions, and survive record-high inflation.

Instead of pushing through a well-intentioned program that nonetheless clearly would be unaffordable and unsustainable, lawmakers can heed the plea of Minnesota Chamber of Commerce President Doug Loon to "step back" and to "look at what other states have done."

"There's got to be a better way to do this (other than) a very large, one-size-fits-all government mandate with a significant tax attached to it that we don't know will be solvent," Loon said in the same interview with the Editorial Board. "At a time when you're trying to bring in and produce more productivity and economic growth, this (proposal) could hit the brakes pretty hard on that and impact businesses. ...

"Do we have a firm understanding of: how will this affect workers? How will this affect businesses, particularly small businesses? Is this thing fiscally sound? ... Will it have an ever-increasing impact on (Minnesotans') taxes? It's easier to fix it now than later."

In St. Paul, the legislation is "moving so quickly that we sometimes don't think about what the unintended consequences are going to be," Baumgartner added.

Minnesotans absolutely deserve to take time off when they need it. But any law guaranteeing that has to be reasonable and actually affordable, can't be damaging to either employers or employees, and can't be allowed to negatively impact local or state bottom lines.

Considering especially the potential enormity of this proposal — and those unintended consequences — lawmakers owe it to Minnesotans to take the time necessary to get it right.