Progressive politicians in St. Paul want to stick small businesses, family farms, workers, and others with a new $1 billion payroll tax to fund a government-run paid-leave insurance system. They say it’ll cost $30 million to build and be ready in under two years. All it needs is the new tax, a new bureaucracy, and 300 to 400 new government workers to run the system.
If that sounds suspiciously familiar, it should. We heard something similar in 2008 when the state wanted a new vehicle license and registration system. It was supposed to take four years and cost $48 million. After 10 years and more than $100 million, the system finally launched. Then it promptly failed, was scrapped, and was replaced by an entirely new system.
We heard it again a few years later. The MNsure system was supposed to be ready by October 2013 and cost about $200 million to start. MNsure flopped out of the gate, and the cost ballooned to $500 million within a few years. Instead of promised savings, health insurance premiums doubled and tripled after a few years. Instead of being able to keep their plan, people’s insurance coverage disappeared.
Now it’s 2023, and we’re hearing it again from people who want the state to build a new paid-leave insurance system. The details should concern everyone.
Regulators can raise the payroll tax every year if $1 billion isn’t enough to fund the program. Washington state’s paid-leave tax doubled in just three years.
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It doesn’t matter if you like your job and existing benefit package or want to negotiate for something different. If the policy doesn’t match the 24 weeks of paid family and medical leave required by the state-run program, you’ll be forced into the one-size-fits-all system, according to the current proposal.
There’s no explanation for where small businesses are supposed to find temporary workers for the up-to-nearly half a year an employee could be on leave. Many cannot find workers for open jobs now.
Other states' paid-leave insurance mandates exempt small and seasonal employers — key parts of northern Minnesota’s economy — from the added costs. Not in what’s being planned for Minnesota.
It’s no exaggeration to say this could be the most expensive paid-leave insurance program for small business in the country. And at a time when small businesses are already losing ground and getting stretched thin from the worker shortage, supply disruptions, and inflation. Many have still not even fully recovered from the pandemic.
Advocates say government-run paid-leave insurance brings people back to the workforce. But states like California and New York already have paid-leave mandates, and they suffered some of the worst pandemic-era workforce declines in the country.
This is no time to get fooled again. The warning signs are there, and this state-run paid leave insurance scheme won’t work for small businesses.
It’s time for northern Minnesota lawmakers to step up and defend Main Street.
John Reynolds is the Minnesota state director for the National Federation of Independent Business (nfib.com) in St. Paul, which represents 10,000 small businesses in Minnesota.
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