Drew Cline

Dear Chairman Hunt and members of the House Commerce and Consumer Affairs Committee, Thank you for the opportunity to testify on HB 1761, expanding the NH paid family & medical leave program. This testimony is from the Josiah Bartlett Center for Public Policy. The state's current paid family and medical leave program, created just a few years ago, acknowledges that policy goals come with tradeoffs. Forcing employers to adopt such a program would impose significant costs on New Hampshire businesses. Those costs could discourage employment and business creation. They also would make it harder for employers operating on already small margins to remain financially viable. So the state wisely opted for a voluntary program that allows both employers and individuals access to paid leave without forcing the program on all business regardless of their ability to shoulder the costs. HB 1761 ignores the careful considerations that went into creating the current program and operates under the delusion that a state mandated program will have zero negative effects. It would create an expensive mandate on all employers regardless of all cost considerations. To finance this scheme, HB 1761 would create a new payroll tax to be paid by employers and employees. The bill defines employer as an entity with more than five employees, and states that "each employer shall remit contributions to the family and medical leave insurance fund in the form and manner determined by the department." It further states that "Employers may deduct from employees' wages the employee portion of the contribution up to the percentage allowed by rule." This mandatory payroll tax will reduce incomes of both employers and employees. Though some employees might want this benefit, others might not. They will have their take-home pay reduced to cover a benefit they did not voluntarily choose. The state does not need to decide for employees that they should convert some of their take-home pay into a paid leave benefit. The bill would create this mandatory program without any idea of the cost. Because contribution rates are not set in the bill, there's no way to determine the cost to employers or to estimate whether those costs are worth the benefits. In sum, HB 1761 would create a new payroll tax that will lower employee take-home pay, reduce hiring, and hurt New Hampshire small businesses. These negative effects are exactly why New Hampshire created a voluntary paid leave program to begin with. That voluntary program is a uniquely New Hampshire creation, and something the state should take pride in having created. Giving it time to grow would be a more cost-effective option than replace it with expensive taxes and mandates.