Statement on Governor Newsom’s May Budget Revise
While the Governor’s May Revise includes important investments in childcare, education, health, housing and climate, the budget fails to address a critical need for California’s working families: making paid leave accessible to families by increasing wage replacement rates for Paid Family Leave (PFL) and State Disability Insurance (SDI) programs. The State’s budget must protect California’s families by increasing wage replacement under Paid Family Leave and State Disability Insurance to 90% for workers making up to 70% of the State Average Weekly Wage, about $57,000 a year, as is supported by the Senate Democratic, Latino, and Women’s Caucuses.
Paid Family Leave and State Disability Insurance are designed to make it affordable for workers to take leave from work when they are sick, caring for sick loved ones, or bonding with new children. Access to paid leave is an important determinant of health because it reduces premature birth and infant mortality, promotes breastfeeding, and reduces nursing home admissions.
However, paid leave remains out of reach to lower-wage Californians, due to inadequate wage replacement rates for these programs. Very low-wage Californians, those making about $27,000 annually or less, receive 70% of their regular wages, far too little to afford to take leave. All other Californians, including full-time workers earning minimum wage ($15 an hour in 2022) receive benefits equal to only 60% of their weekly wages, up to a maximum of $1,540. For full-time workers earning minimum wage who need to access these programs, this low wage replacement rate means they must attempt to live on about $365 a week while taking leave, to care for themselves, a family member, or bond with a new child. Rising costs in California make this budget even more unrealistic. As a result, many California workers do not apply for paid leave at all, or are forced to return to work much too early after giving birth or recovering from a serious illness simply to make ends meet. The state budget must increase the wage replacement rate to 90% for low wage workers, defined as those making up to $57,000 per year (up to 70% of the State Average Weekly Wage), to ensure that SDI and PFL are accessible to the low-wage workers.
Because current wage replacement rates are not enough to provide livable support to low-wage workers, who are more likely to be women, born outside of the United States, or to identify as Black or Latinx, low-wage workers end up subsidizing higher wage workers’ leaves through their contributions to the Disability Insurance (DI) Fund. Almost all employees in California pay into the DI fund with each paycheck, but middle and high income earners - who also have greater access to savings and employer-paid sick and vacation time - are far more likely to take leave and apply for PFL or SDI benefits. This inequity is magnified by the fact that low-wage workers in California, disproportionately those who identify as Black or Latinx, women and immigrants, already face health disparities due to systemic racism, sexism and xenophobia. These are the same populations of workers who have already been most impacted by COVID-19 and have had to risk exposure for themselves or their family members they were caring for.
We urge the Governor and Legislative leadership to adopt the changes proposed by SB 951 (Durazo) and the Budget Request authored by Senator Durazo and supported by the Senate Democratic, Women’s and Latino caucuses, which would increase wage replacement rates for PFL and SDI to 90% for all California workers earning less than $57,000 a year (less than 70% of the State Average Weekly Wage). California families at all income levels deserve to be able to heal from illness, bond with a new baby, or care for a seriously ill family member.
The California Work & Family Coalition is a statewide alliance of community organizations, unions, non-profits, and individuals dedicated to helping parents, caregivers, and families thrive. We are united in the belief that all people should have the time and resources to care for themselves and each other.
¹ Christopher J. Ruhm. 2011. “Policies to Assist Parents with Young Children.” Work and Family 21(2); Maya Rossin. 2011. “The Effects of Maternity Leave on Children’s Birth and Infant Health Outcomes in the United States.” Journal of Health Economics 30(2); Sakiko Tanaka. 2005. “Parental Leave and Child Health Across OECD Countries.” The Economic Journal 115(501): F7-F28; C.R. Winegarden and Paula Bracy. 1995. “Demographic Consequences of Maternal-Leave Programs in Industrial Countries: Evidence from Fixed-Effects Models.” Southern Economic Journal 61(4): 1020-35; Pamela Winston. 2014. Work-Family Supports for Low Income Families: Key Research Findings and Policy Trends. Washington, D.C.: U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation.
² Paid Family Leave: A Crucial Support for Breastfeeding. CLASP and BreastfeedLA. Retrieved December 11, 2018, from https://www.clasp.org/sites/default/files/public/resources-and-publications/files/Breastfeeding-Paid-Leave.pdf
³ Arora, K., & Wolf, D. A. (2017, November 3). Does Paid Family Leave Reduce Nursing Home Use? The California Experience. Journal of Policy Analysis and Management, 37(1), 38-62. DOI: 10.1002/pam.22038.
⁴ https://laborcenter.berkeley.edu/low-wage-work-in-california-data-explorer/
⁵ https://laborcenter.berkeley.edu/low-wage-work-in-california-data-explorer/
