Mandates Hurt the Economy

By: Murray Sabrin

“No Worker should have to choose between caring for their loved ones and paying their bills.” That’s the mantra of the paid family leave (PFL) proponents who have scheduled a rally in Trenton on December 10 to push the Legislature in passing a paid-family leave bill by the end of the year.

The goal of mandated paid-family leave legislation is laudable. Taking time off to care for a sick relative without facing a huge financial burden is a worthy social goal. However, there are dozens of worthwhile initiatives that could make New Jersey a better place to live and work. Must they be mandated by the State?

That is the crux of the issue. Can we have an attractive business environment that will provide high paying jobs and a growing standard of living for New Jersey’s labor force with more and more state government mandates? Or, should employee benefits be negotiated at the bargaining table between workers or their union representatives and management?

The answers to these questions reveal if you embrace coercion or freedom. Moreover, there will be long-term negative consequences for New Jersey’s economy if a paid-family leave mandate is passed by the Legislature and signed by Governor Corzine. Although the initial tax, let’s not forget another tax on employees will fund PFL, is “minor,” averaging one dollar per week per employee, the rate will inevitably rise in the future.

That is the history of all federal and state entitlement programs. Start with a low tax and in a few years and decades later most workers pay more in these taxes than do in income taxes. Just look at the history of Social Security and Medicare taxes. They have skyrocketed since they were enacted in 1935 and 1965, respectively. And these programs are financially unsustainable unless they get a huge infusion of higher taxes on working people in the years and decades ahead.

In the final analysis, the law is not supposed to create a social welfare state, despite the rhetoric of the governor and other members of the Legislature who see virtually every human need as an excuse to tax, spend and borrow.

New Jersey’s economy has a strong foundation. However, the political elite in Trenton unwittingly are undermining New Jersey’s future prosperity for short-term political gain. With Governor Corzine and his fellow Democrats firmly in charge of the Statehouse, paid family leave should be a shoo-in after Monday’s demonstration. When the governor signs a paid-family leave bill, he also will be signing away New Jersey’s long term economic competitiveness.

Murray Sabrin, Ph.D., is professor of finance in the Anisfield School of Business and executive director of the Center for Business and Public Policy. He also blogs for the Star-Ledger, www.nj.com/njvoices. Sabrin writes a weekly column every Monday for www.usadaily.com.