GOVERNMENT OF THE DISTRICT OF COLUMBIA

OFFICE OF THE CITY ADMINISTRATOR

Public Hearing on Bill 21-415,

The Universal Paid Leave Act of 2015

Testimony of

Rashad M. Young
City Administrator

Before the
Committee of the Whole
Council of the District of Columbia
The Honorable Phil Mendelson, Chairperson

Council Chamber
John A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004
January 14, 2016
10:00 a.m.

Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

Good morning, Chairman Mendelson and members of the Council. For the
record, my name is Rashad Young, and I serve as the City Administrator of the
District of Columbia. Joining me today are Ventris Gibson, the Director of the
Department of Human Resources, and Deborah Carroll, the Director of the
Department of Employment Services.
Each of us will be presenting testimony today on Bill 20-415, the Universal
Paid Leave Act of 2015.

Director Carroll will first provide testimony

discussing several specific elements of Bill 20-415 and the potential impacts
of the proposed legislation on employers and employees. Director Gibson will
then provide testimony on the Districts current leave programs, the history of
the federal Family and Medical Leave Act, the history of the Districts Family
and Medical Leave Act, and the District governments own experience with the
recently enacted paid leave act for District government employees. After
Director Gibsons testimony, I will present additional information on the
Administrations position on Bill 20-415.
With that introduction, I would like now to turn to Director Carroll for the
presentation of her testimony.
[Presentation of testimony by Director Carroll and Director Gibson]
Good morning, Chairman Mendelson and members of the Council. Again, for
the record, my name is Rashad Young, and I serve as the City Administrator of

Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

the District of Columbia. I am pleased to testify before you today on Bill 20415, the Universal Paid Leave Act of 2015.
As has been discussed in the prior testimony, under the proposed legislation
each employer in the District of Columbia would be required to provide 16
weeks of paid family and medical leave to all of its employees. The proposed
legislation would apply to all employers, no matter the size of the business,
and would cover all employees, no matter how short a period of time they
have worked for the employer.
The Administration supports the principle of a paid leave program for private
employers in the District. However, given the concerns with the current bill,
which I will describe in my testimony, we believe more work is needed before
moving forward with paid leave legislation.
We believe the best route to achieving this goal is to establish a multi-sector
working group, consisting of stakeholders to include both employees, and
employers. The working group would perform a joint, in-depth analysis of the
impacts of a paid leave program and develop legislative recommendations
that benefits employees, does not unduly burden employers, imposes a
limited financial impact on the District government, and creates a sustainable
benefit. It also is important to note that Congress is also considering paid
leave legislation and the discussion of paid leave is part of the current
presidential campaign, which indicates that it will continue to be part of the
ongoing legislative discussion at the federal level.

Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

One of the key goals of the Bowser Administration is to create pathways to the
middle class for all District residents. And during our first year in office, the
Administration has taken a number of steps to create and protect quality jobs
for District residents. For example, we have:
o Expanded the LEAP Academy to train underserved District residents for
good-paying jobs with the District government;
o Expanded the summer youth employment program and launched the
Career Connections program to connect vulnerable younger residents
with on-the-job training;
o Launched a series of targeted hiring events, which have connected more
than 300 people to jobs;
o Provided job services to more than 3,500 people who secured
employment in 2015; and
o Created approximately 12,000 temporary jobs and more than 2,500
permanent jobs for District residents through new development
projects.
Notably, the Districts unemployment rate has declined from 7.7% to 6.6%
since the beginning of the Bowser Administration.
Of course, the Administration not only wants to ensure that District residents
have jobs, but we also want those jobs to pay well and provide good benefits.
Paid leave could be just such a benefit. However, we believe several issues
need to be addressed before moving forward with paid leave legislation.
Ultimately, we need to ensure that a paid leave program is sustainable and
does not discourage companies from creating jobs in the District.

Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

Directors Carroll and Gibson have already discussed several of the

Administrations specific concerns with the proposed legislation. At this time,
I would like to highlight and expand on some of those concerns.
Scope of Bill 20-415
We have identified fewer than five states that currently have active paid
family and medical leave programs, and those programs have been in effect
for a relatively short period of time. Paid leave is clearly at its infancy in the
United States. Because of this, it is particularly important that we learn from
the programs in those other jurisdictions. However, the current proposal may
create a family and medical leave program with a scope and burden that is not
sustainable.
For example, this bill would provide 16 weeks of paid family and medical
leavewhich is four times the amount available under the Rhode Island law
and two-and-a-half times the amount available under either the California or
New Jersey law. And the bill before the Council would pay 100% of an
employees salary for most employees, while Californias program pays 55%
of an employees salary, New Jersey pays 67% of an employees salary, and the
Rhode Island program pays about 60% of an employees salary. Moreover,
these existing paid leave programs are based on existing temporary disability
insurance (TDI) programs in each state, with which employers in those states
already have experience and established procedures. Under Bill 20-415, a
completely new organizational and administrative structure would need to be
created to implement the paid leave program.

Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

Of course, the broad scope of the legislation means that employees in the
District will also have expansive access to paid family and medical leave, and
that benefit should not be discounted. However, as a whole, the benefits of the
bill need to be more closely balanced against the potential negative impacts.
Financial Impact
The Administration is also concerned that the proposed paid leave program is
not balanced financially. According to the Chief Financial Officers analysis,
which will be presented in more detail later in the hearing, less than
$500 million would be collected annually from the paid leave tax. At the same
time, the benefits that would be paid out under the paid leave program are
likely to be well over that amountsome estimates suggesting costs between
two to four times that amount creating an ongoing annual deficit.
Similarly, the fiscal analysis prepared at the request of the Board of Trade by
the IHS consulting group also found that Bill 20-415 would result in a
significant funding gap, although IHS estimated that the gap would be smaller,
at about $400 million annually. Under either analysis, however, the proposed
paid leave program would not be financially sustainable without significant
changes to its structure or significant subsidy by the District government. The
tradeoffs that would be required to cover the potential funding deficits would
be significant. The impacts on other critical safety net programs that we have
made priorities and significant investments in, such as affordable housing and
homeless reduction strategies, as well as public safety and education could be
detrimental.

Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

The other financial impacts that the paid leave program would impose on the
District government must also be considered. Those costs will largely be
incurred in two waysfirst, there will be substantial startup costs,
particularly in information technology, and second, there will be ongoing
annual administrative costs.
The costs incurred by the District government to administer the
unemployment insurance program, which the CFO has reviewed, can help
provide a basis for estimating the costs that would be incurred by the District
government in administering the paid leave program. The unemployment
insurance program covers only about two-thirds of the number of employees
who would be covered by the paid leave program and only about one-third of
the benefit taxes; even so, the annual operating costs to administer the
unemployment insurance program are approximately $18 million per year.
Taking into account the larger size of the proposed paid leave program and its
significant benefit level, it seems reasonable to estimate the cost of
administering the paid leave program at about $25 million to $50 million
annually.
Startup costs, consisting largely of information technology (IT) costs,
represent the other significant administrative cost that would be imposed on
the District government. Because the Districts paid leave program would not
be built on an existing program, the IT system would need to be built from the
ground up and would need to accommodate high volumes of access to more
than 30,000 employers while also providing access for all beneficiaries. For
the purposes of estimating the likely startup costs, the Districts health
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Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

benefits exchange provides one comparison point.

The health benefits

exchange startup costs are already about $150 million, and are likely to rise
substantially. Therefore, even if the paid leave program cost only half that
amount, the District could need to invest nearly $100 million in startup for the
paid leave program.

Again, to absorb these costs within our existing

resources, the District would need to trade off those costs at the expense of
other vital programs and services.
In the end, administrative costs will be part of any paid leave program that is
implemented in the District. However, it is likely that the more complex and
expansive the paid leave program is, the greater those costs will be. These
costs must be weighed carefully with the benefits and other impacts of a paid
leave program.
Impact of the Bill on Job Creation in the District
Another significant concern that the Administration has with the proposed
legislation is its potential impact on job creation and growth in the District. As
mentioned earlier in my testimony, one of the key goals of the Bowser
Administration is to create pathways to the middle class for all District
residents. To achieve this goal, which I believe the Council shares, we need to
increase the number of jobs available in the District to District residents.
However, based on the testimony provided by the employer community at the
prior hearing on this bill, an unintended consequence of this bill could be
slower or negative job growth in the District. To some extent, it make senses
to take this testimony with a grain of saltthe business community is often
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Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

inclined to oppose legislation that increases their costs and perceived

administrative burdens. However, our own review of the potential impacts of
the legislation lends support to the concerns raised by the business
community.
Although at this point in time we cannot state with certainty what the impact
of Bill 20-415 will be on job growth and retention in the District, these
impacts should be carefully analyzed before any paid leave legislation moves
forward. To be clear, the Administration supports jobs with comprehensive
benefits, but we also must make sure that we are supporting an economic
environment where private employers are creating jobs in the District to
begin with and that our competitive position in the region for employer
location and investment is not diminished
Administrative and Operational Issues
Bill 20-415 also raises a number of administrative and operational concerns.
Director Carroll has described several of those issues, and other issues were
described by witnesses at the prior hearing on the bill. In addition, Director
Gibson has discussed several issues that exist with the implementation of the
District governments paid leave programwhich is a program that impacts
only a single employer. The number of issues that could arise with the much
more expansive private employer paid leave programwhich will impact
thousands of employers of varying sizes with varying benefit systems and a
variety of administrative proceduresis vast.

Given these factors and

because of the number of issues that a bill of this scope can raisemany of
them unintentionallywe need more analysis and collaborative, in-depth
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Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

discussion than what can reasonably be achieved through individual

testimony.
Recommendation
The Administration recognizes that a private employer paid leave program
would provide benefits to District residents.

Those benefits are real and

significant. We understand that at those crucial times, allowing employees to

take paid leave for family and medical purposes will reduce their economic
stress and other real-world burdens. In addition, some District employers
have expressed support for the program, because the program will allow them
to provide a valuable benefit to employees and may reduce turnover.
However, given the issues that have been discussed in our testimonies, the
Administration believes that more work is needed before we move forward
with a paid leave program for private employees. To reach that goal, a more
detailed examination of how such a program would be structured and operate
is needed, and a more in-depth review of its financial impact on District
employers, the District government, and the District economy is needed.
Moreover, the practical impacts of implementing such a program in the
private employment marketplace needs to be discussed in detail with both the
employer community and the employee community.
We therefore recommend the establishment of a working group that would
include employees, employers, and other stakeholders. This working group
would holistically review existing proposals related to wages and benefits. It
would address the paid family and medical leave issues and would also
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Testimony of City Administrator Rashad Young

Public Hearing on Bill 20-415, the Universal Paid Leave Act of 2015
January 14, 2016

examine recently approved and pending wage and benefit legislation to

determine how those bills interact with each other and with existing law. The
working group would also provide options for a path forwardoptions that
contribute to our economic vitality and also create more pathways to the
middle class for District residents.
In conclusion, the Administration supports the principles of a paid leave
benefit for private employees in the District, but it is important that the
structure of such a program be sustainable and that we carefully balance the
immediate benefits to employees with the overall costs of the program and
mitigate the potential long-term negative impact on job growth and retention
in the District.

That concludes my testimony. I am happy to answer any questions you may

have.

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