Economic and Policy Impact Statement: Universal Paid Leave

The Office of the Budget Director issued its first economic and policy impact statement on the “Universal Paid Leave Amendment Act of 2016” on December 1, 2016. It offers the Council of the District of Columbia an evidence-based resource for weighing a piece of legislation’s policy implications and economic costs and benefits. It is divided into four sections:

  1. A review of paid leave programs’ impacts on labor markets, the business climate, and health, based on empirical evidence from more than 170 peer-reviewed studies.
  2. A detailed benchmarking analysis of paid leave programs in other states.
  3. An assessment of District-based employees’ current access to paid and unpaid leave.
  4. An economic analysis of the legislation’s projected impact on the DC economy using REMI, a widely used economic forecasting model.

The study concludes that implementing the proposed legislation would have a minimal impact on the District’s labor market and economy over a ten-year period (2016-2027). Some businesses and industries might experience the impacts of the proposed legislation more sharply than others. However, it is unlikely to alter the current upward trajectory of the District’s economy.

  • The paid leave program would pay out $242M in benefits per year, beginning in 2020.

– Firms that currently offer paid family leave benefits could offset $33.2 million of the new payroll tax, in the aggregate, by shifting existing benefits onto the new public program.

  • Women’s labor force participation would increase.
  • Infant mortality rate would decline.
  • Over the next 10 years, the District’s GDP would grow at an average annual rate of 1.921% to 1.913%, rather than 1.920%.

– GDP is projected to grow by $28.2 billion between now and 2027 – from $123.9 billion to $152.1 billion.

– If the legislation is implemented, in 2027 the GDP would likely be between $15 million higher and $122 million lower than otherwise projected.

  • Over the next 10 years, private sector employment in the District would increase at an average annual rate of 1.358% to 1.340%, rather than 1.359%.

– Private sector employment is projected to grow by 87,000 jobs between now and 2027 – from 534,000 to 621,000 jobs.

–  If the legislation is implemented, in 2027 the District would likely support 90 to 1,300 fewer private sector jobs than otherwise projected.

Presentation – Economic and Policy Impact Statement

Executive Summary – Economic and Policy Impact Statement

Economic and Policy Impact Statement

Addendum

In preparation for the public hearing on five different pieces of legislation about paid family and medical leave benefits, the Office of the Budget Director (Budget Office) analyzed the economic impact of the proposed approaches to paid leave by grouping the bills into three general categories: a public insurance program, a government mandate on employers, and a hybrid public/private model.

In an Addendum to the Economic and Policy Impact Statement on the “Universal Paid Leave Act of 2016”, the Budget Office finds that each of these three approaches to providing equivalent paid leave benefits would have virtually the same impact on the District’s economy and job market over the medium to long term.

This addendum memo can be accessed here.