Virginia Paid Family and Medical Leave Study
This report for The Virginia Employment Commission examines the effects of a Virginia Paid Family Medical Leave (PFML) program, with the focus being HB2016/SB1330 legislation introduced during the 2021 General Assembly Session. It examines the features of the Virginia legislation in comparison to other states that have adopted PFML and the potential effects of various program design elements. It also reports on a professional actuarial analysis done by Milliman, Inc. that projected costs needed for benefit payments and the direct and indirect costs of the operation and administration, as well as costs to maintain a sufficient cash balance to ensure the program’s solvency over the 2022 to 2033 period. The potential short-run and long-run economic, social, and demographic effects on Virginia residents are examined using recent scholarly research on similar U.S. state programs.
The study assumed that the PFML program was established on July 1, 2022, initial staffing, procurement, and education/outreach began on January 1, 2023, implementation of the payroll tax on workers and businesses started on January 1, 2023, and benefit payments were initiated on January 1, 2024. In addition to the increased taxes, costs, and spending that would result from its implementation, the Virginia PFML would have other positive and negative secondary economic, social, and demographic effects. It would likely increase the number of workers taking leave and could improve infant and toddler health and parental well-being on average. For businesses, the effects of paid leave are fairly small, but PFML would likely hit small businesses harder.
The last part of the study forecasts the impact on Virginia’s economy economic and tax revenue, using REMI PI+ (Regional Economic Models Inc. Policy Insight Plus) software. Results from the two tax burden scenarios suggest that shifting the payroll tax from employers to employees would reduce the negative impact on employment and real GDP, while shifting the tax to employers would increase the negative economic impacts.
For the full study, download the file below.