Trump Budget Calls for Paid Leave Time; Chamber Opposed to Using Employer UI Taxes as Funding Source

May 26, 2017

President Trump’s federal budget proposal calls for up to six weeks of paid leave for employees after the birth or adoption of a child. The Michigan Chamber is opposed to this proposal because it would be funded entirely by states’ 100 percent employer-financed unemployment insurance (UI) programs and lead to large UI tax increases on job providers.

The program is expected to cost about $25 billion over 10 years. It would require states that do not currently provide an equal amount of paid leave to new parents to do so through their state-based UI program.  Currently, only California, Rhode Island, New Jersey, New York and Washington DC have mandated parental paid-leave programs. 

The Chamber will be expressing its opposition to Michigan’s congressional delegation in the coming days and specifically voicing concern about asking state UI Trust Funds to shoulder the costs of this program.  States like Michigan are still recovering from the last recession and rebuilding sufficient Trust Fund reserves to pay UI benefits when the next recession hits. The Trump proposal would severely threaten the ability of Michigan to adequately fund UI benefits without UI tax increases on employers. 

Although we recognize the Trump administration attempted to offset the costs of the proposal with a package of reforms to the UI system (e.g., reforms to reduce improper payments, help unemployed workers find jobs more quickly and encourage states to maintain reserves in their Unemployment Trust Fund accounts), these reforms cannot offset the cost increases to employers or get around the fact that the proposal is inconsistent with many basic tenets of the UI system.

Please contact Wendy Block, Senior Director, Health Policy, Human Resources & Business Advocacy at (517) 371-7678 or with any questions.