This July, We’re Celebrating Paid Family Leave and Increased Minimum Wage

The Numbers

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It’s summer and there’s lots to enjoy: longer days, cookouts, fireworks, days at the pool and more. We also should celebrate progress here in DC on two issues that matter to us when we get back to work: the start to implementation of DC’s new paid family and medical leave program, and a minimum wage increase that went into effect July 1. These two policy improvements are important for DC workers and for the District as a whole, because they mean that workers will be better able to take care of themselves and their families, and the District can move toward being a place where everyone has a chance to succeed.

 

Paid Family Leave Means Not Choosing Between a Paycheck and Caring for a Loved One

As of July 1, the District is collecting taxes from employers so that by July 1, 2020, DC workers can begin to claim paid leave benefits when they have a new child or sick relative. The Universal Paid Leave Act, passed by the DC Council in 2016, grants eight weeks of paid leave for new parents to be with their children, six weeks for workers to care for an ill relative and two weeks to address personal health needs.

With paid family leave, tragic stories like this won’t happen again in DC. Maya Warren delivered a baby via C-section but had to return to work only eight days later because she had no paid leave benefits from her employer and couldn’t afford to take time off unpaid.

Paid family leave helps workers and employers alike and is crucial for improving public health. Parents have more time to bond with their newborns. That makes it easier for moms to breast-feed and otherwise care for their babies, leading to reduced infant mortality. For employers, offering paid leave will boost morale and help attract and retain good employees. Paid leave also increases women’s participation in the labor market and can help close the gender wage gap.

Paid leave is funded through an employer payroll tax, which means employers are taxed based on employee wages. While this is certainly something for businesses to adjust to, the burden is not enormous, especially given the benefits. For an employee making $40,000 a year, the cost of the tax is under $250, less than $5 per week. For someone making $25 an hour, the cost would be 15 cents an hour. This is a small price to pay considering how valuable paid leave benefits are. A DC Council analysis found that implementing paid leave would not harm businesses or employment.

Importantly, DC’s paid leave structure ensures that the lowest-wage workers benefit the most. The program replaces 90% of wages for low-wage workers, with a smaller replacement rate for those with higher pay. In programs in other states, replacement is 60%, and low-wage workers often don’t take time off because the benefits are too low. DC’s structure ensures that the workers who face the greatest barriers to economic prosperity can actually use their benefits and won’t face additional challenges paying their bills when taking time off.

It’s no wonder so many people are excited for the policy to be implemented in July 2020. Who will be the lucky family that has a baby on July 1 next year?

 

A Higher Minimum Wage Will Help Workers Stay in DC

On July 1, DC’s minimum wage increased to $14 per hour, under legislation that will bring it to $15 a year from now. DC’s tipped minimum wage also increased, to $4.45 per hour now and $5.00 an hour on July 1, 2020. Initiative 77, which voters approved last year, would have eliminated the tipped minimum wage, but the DC Council overturned it.

Given the high cost of living, it’s important to help workers with lower wages stay in the District. As wealthier residents move to DC and the city courts developers, rising costs make it harder for low-wage workers, many of whom are long-time black residents, to stay in the District. Studies have shown that gentrification and displacement in DC are among the worst in the nation.

Furthermore, decades of systemic barriers – school segregation, job discrimination, restrictive deed covenants and more – have prevented residents of color from fully benefitting from the District’s current prosperity. Nearly half of all workers who will benefit from a $15 minimum wage are black, and another 24 percent are Latinx. While incomes have increased for white residents in recent year, the median household income for black residents has not changed in the last 10 years.

Higher wages help workers make ends meet, support their families and stay in DC as the costs of living rise. With a larger paycheck, it will be easier to pay rent, fill the refrigerator with nutritious food, afford transportation to and from work and more.

DC’s upcoming improvements for workers are cause for celebration. They’re also a reminder that we have more to do to support workers at all income levels and ensure that everyone has the opportunity and resources they need to stay, and succeed, in the District.

 

Simone Holzer is the communications manager at the DC Fiscal Policy Institute (www.dcfpi.org). DCFPI promotes budget and policy solutions to address DC’s economic and racial inequities and increase opportunities for residents to build a better future.