Perhaps no one in the District embodies the debate over allowing city workers 16 weeks of paid family leave better than Andy Shallal.
As the owner of Busboys and Poets and the Eatonville Restaurant, Mr. Shallal is an employer focused on keeping his eateries’ costs down and their productivity up.
As director of the D.C. Workforce Investment Council, he is an advocate for employees seeking to improve their career opportunities while meeting their family commitments.
In addressing the paid family leave issue, he calls for balance between the needs of local businesses and those of city workers.
“There is no question of the need for paid family leave,” Mr. Shallal said. “But how do you create equity in the workplace without bankrupting the business?”
Last month the D.C. Council took up legislation that would require city businesses to pay up to a 1 percent tax on their employees’ salaries in order to create a citywide fund that would pay for 16 weeks of paid family and medical leave for working residents. If enacted, the District would have the most generous family leave policy in the country.
Currently, District workers receive 16 weeks of unpaid family and medical leave. Other jurisdictions offer no more than six weeks of paid leave.
Mr. Shallal said he supports paid family leave, in general, but he recognizes the challenges that the 16-week proposal poses to businesses.
“Sometimes there are things that come up that don’t always make sense on the business perspective,” he said. “Sixteen weeks of paid leave might sound really good, but it has the potential to be problematic.”
For Margaret Singleton, interim president of the D.C. Chamber of Commerce, the proposal is more than “problematic.” It joins other initiatives proffered by city officials that increase costs on businesses, thereby cutting their profits, restraining their growth and blunting their ability to compete, she said.
In particular, she noted the minimum wage increase initiative that D.C. residents will vote on in November. If approved, the minimum wage in the District would rise to $15 an hour — making it the highest of any East Coast city, and bringing it in line with wages of West Coast cities like Los Angeles and San Francisco.
The District’s current minimum wage is scheduled to increase to $11.50 per hour in July.
Taken together, the city’s paid family leave and minimum wage could drive away businesses considering setting up shop in the District and hurt businesses already established in Washington, Ms. Singleton said.
“It’s not just one piece of legislation,” she said. “When we begin to look at the cumulative effect on business, that’s where we have our biggest concern. Collectively, there is a large burden on the business community, and there needs to be balance across the board.
Ms. Singleton pointed to Wal-Mart’s recent decision to pull out of building two retail stores in Ward 7 as a sign that businesses might not want to come to the District if its minimum wage continues to rise or its workers are granted 16 weeks of paid leave. Businesses are looking at how the legislation could affect them in the future, but the effects are already being felt, she said.
“Wal-Mart’s decision said, ‘Yeah, but the time is here now,’” Ms. Singleton said.
D.C. Council member David Grosso, at-large independent, doesn’t agree that Wal-Mart’s decision is a reason to back off bringing paid family leave to the District.
“Wal-Mart did what Wal-Mart was going to do all along, and those that suggest the decision was made because of higher wages or paid leave [are] making a superficial argument,” Mr. Grosso said. “In my mind, Wal-Mart does not reflect our businesses in D.C. because the businesses that talk to me and engage on wages and leave programs want to be doing business here, and they take pride in employing our residents.”
Under the paid family leave plan, the District would create a fund to pay 100 percent of the salaries of workers making up to $52,000 a year. Anyone who earns more than that would be eligible for $1,000 a week and 50 percent of the rest of his or her income, up to $3,000 per week.
The legislation would more than double the length of any paid-leave program in the country. In the past 10 years, just three states have passed similar laws. California and New Jersey offer six weeks of partial paid leave.
Business burden or benefit?
The major stumbling block with the 16-week paid family leave legislation is that no one seems to know how much it’s going to cost the city. A report from the Greater Washington Board of Trade showed the program’s costs could be more than $700 million a year. That would mean the 1 percent tax, which would garner about $500 million, would cause a $200 million deficit.
But a separate, federally funded report from the Institute for Women’s Policy Research said the program could be fully funded with the 1 percent tax and would not cause a shortfall that would affect other city services.
D.C. Mayor Muriel Bowser doesn’t oppose a paid family plan, in general, but has voiced through her staff that 16 weeks could be too much for the District to handle financially.
City Administrator Rashad Young has held to the Board of Trade estimate, saying in a Jan. 14 hearing that a 16-week paid leave plan would cut into public safety, education and affordable housing programs.
And D.C. Chief Financial Officer Jeffrey S. DeWitt said the administration has looked at different scenarios and assumptions, and has concluded that many employees would use the paid leave and rely on its payments for an extended period of time. That means the tax might not be enough to cover the program’s costs, he said.
Regardless of cost, Mr. Grosso argued that paid leave actually would save employers money and create a better workforce in the District.
“Paid leave is cost savings for employers who already offer short-term disability and/or paid family leave benefits, because they could share the financial burden more widely and see some savings through a public model,” the lawmaker said. “Research shows that paid leave programs increase business productivity by decreasing costs associated with turnover, overhead and training.”
Joanna Blotner, the D.C. Paid Family and Medical Leave campaign manager for Jews for Justice, agreed that businesses wouldn’t be driven out by the measure.
“D.C. is a hugely attractive place to operate a business for many reasons, and the data from here and other states doesn’t show businesses leaving due to being asked to ensure their employees are treated decently,” Ms. Blotner said.
And small businesses should be embracing the program because of the potential benefits, including lowering employer costs, she said.
“Dozens of small and local business owners and managers are really eager to see the policy implemented and soon, in no small part because they know paid leave programs help reduce costs associated with employee retention, turnover and hiring — in addition to boosting employee productivity and morale,” Ms. Blotner said.
Paid leave also will attract the best workers to the District, Mr. Grosso said, and allow local businesses that don’t privately offer a paid leave benefit to build a better workforce.
“This program will be particularly beneficial to small businesses, which will be able to compete for the best employees alongside larger companies that are already providing this benefit out of pocket,” he said.
But when it comes to a minimum wage increase, Mr. Grosso said the District needs to step back and look closely at what would be right for the city workers and businesses.
“The proposed $15 minimum wage is a national movement that attempts to undermine months of D.C. Council hearings, meetings and negotiations with the labor force and businesses to raise the minimum wage on an annually scaled basis,” he said.
That said, Mr. Shallal is interested in disparate opinions. He wants lawmakers, business leaders and activists to hammer out a deal that benefits everyone.
“People get polarized and one side loses,” said Mr. Shallal. “It shouldn’t have to be that way.”