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Paid family leave benefits both workers and employers by allowing employees to address the caregiving needs of their family without losing their jobs or ability to pay their bills and by reducing employer costs associated with high turnover, low worker retention, and decreased productivity.

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This analysis provides a fiscal estimate of a proposal to provide paid leave to St. Louis City employees. The proposed policy would provide:

• 12 weeks paid parental leave for the birth, adoption, or foster care placement of a child.
  
• 4 weeks of paid caregiver leave for a spouse, parent, or child (which are existing FMLA categories) as well as additional eligibility to care for an in-law or parent of a domestic partner, grandparent, or a sibling with a serious health condition.
  
• 2 weeks of paid military deployment leave for a “qualifying exigency” related to military deployment of a spouse, child, or parent such as making alternative child care arrangements, attending certain military ceremonies, and making financial or legal arrangements.

The table below provides an overview of the estimated costs to St. Louis City to provide paid family leave. We find that expanding paid family leave to St. Louis City workers would cost approximately $1.05 million in wages annually, but would also be offset by significant cost savings in the form of reduced turnover, improved worker retention, & increased productivity.

Cost of Paid Family Leave

Type of Family Leave	Estimated Annual Leave Requests	Average Weekly Wage	Proposed Weeks of Paid Leave	Annual Cost Per Employee	Annual Cost of Paid Family Leave
Birth, Adoption, Foster Care	44	$1,004.80	12	$12,057.60	$530,534.40
Caregiving for Family Member	128	$1,004.80	4	$4,019.20	$514,457.60
Military Family Leave	2	$1,004.80	2	$2,009.60	$4,019.20
Total	174				$1,049,011.20

Savings from Paid Family Leave

Paid family leave is an investment in a modern workforce, but also an investment that helps an employer’s bottom line by allowing workers to continue to make productive contributions in the workplace while simultaneously fulfilling family care obligations.

Paid family leave has been shown to lead to significant savings for employers primarily by reducing employee turnover and boosting worker retention.  In fact, research has shown that access to paid family leave reduces the likelihood of new mothers leaving the labor force by 20%[i]. Rehiring and training a replacement represents a significant cost to employers and is estimated to cost approximately 21% of a lost employee’s annual salary[ii].

Paid family leave increases productivity and has little impact on daily operations. Research has shown that work-family benefits attract a higher quality workforce and reduce absenteeism and tardiness among workers, thereby increasing overall productivity[iii]. Further, 87% of employers in California reported a positive effect or no noticeable effect on business operations due to paid family leave and 91% report a positive effect or no noticeable effect on business profitability and performance upon instituting family leave.[iv]

American Rescue Plan

The American Rescue Plan (ARP) allocated nearly $440 million to St. Louis City that may be used to support efforts to bring the pandemic under control and to support economic stabilization for workers, households, businesses, and the public sector[v]. Paid family leave would meet these objectives by allowing workers the opportunity to provide care for family members without having to lose income as a result of that care. Local fiscal relief provided through ARP provides a unique opportunity to fund paid family leave for St. Louis City workers allowing St. Louis City to build a vibrant and competitive workforce.

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Methodology used for paid family leave estimates: Annual Leave Request estimates based on average annual new FMLA leave requests in 2019 & 2020 obtained from STL City Personnel Department adjusted for a 10.3% increase[vi] in uptake in caregiver leave to account for new categories of eligible care recipients; Average cost of one week of leave: average bi-weekly rate for salaried civil service employees obtained from STL City Personnel Department; Military deployment leave: Usage data for military leave are unavailable but uptake is expected to be quite low. Estimate assumes two employees taking leave annually.

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[i] Jones, K., & Wilcher, B. (2019). Reducing maternal labor market detachment: A role for paid family leave. American University Working Paper Series

[ii] Boushey, H., & Glynn, S. J. (2012). There are significant business costs to replacing employees. Center for American Progress, 16, 1-9.

[iii] Meyer, Christine Siegwarth, Swati Mukerjee, and Ann Sestero. “Work-family benefits: which ones maximize profits?.” Journal of managerial Issues (2001): 28-44.

[iv] Appelbaum, E., and R. Milkman. “Employer and worker experiences with paid family leave in California.” Leaves That Pay (2011): 1-32.

[v] U.S. Department of the Treasury. Coronavirus State and Local Fiscal Recovery Fund. Funding Objectives & Allocation for Metropolitan Cities. 

[vi] Missouri Budget Project analysis of average annual paid family care claims for recipients other than a spouse, parent, or child in FY2012-2021. State of California Employment Development Department: Paid Family Leave Program Statistics.

Thank you for your interest in this issue. This action is now complete, as the bill moved out of the House Budget Committee on Tuesday, April 19th.

We’re disappointed that lawmakers chose to leave one-third of Missourians out of proposed economic relief, despite expressing an intent to help families meet the rising cost of inflation. Moreover, the taxpayers who won’t get this rebate are the very ones who pay the highest portion of their income in state and local taxes.

While we oppose the legislation in its current form because it leaves out so many taxpayers, we’re hopeful that if it or other tax rebate proposals move forward in the remaining weeks, policymakers will prioritize – or at least include – the Missourians most struggling to afford gas and put food on the table.

Learn More: Economic Recovery Rebates Should Include All Missourians.

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A Missouri House proposal to provide economic recovery payments to Missourians intended to help families meet the rising cost of inflation would leave out one-third of Missouri taxpayers, including families earning low wages and seniors who rely on Social Security income.

By modifying the structure of this one-time economic recovery payment, lawmakers can greatly simplify administration of the credit and put money back in the hands of all Missourians, including those most impacted by the health and economic consequences of COVID.

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House Bill 3021 structures the economic recovery payment as a tax credit applied to income tax and would give single adults a credit of up to $500 and joint filers a credit of up to $1,000. However, the credit is limited depending on the income tax liability of the taxpayer. So, if a family’s income tax liability is $6, they would get $6; if a family’s income tax liability is $0, they would get $0.

This structure leaves behind many of the Missouri taxpayers most struggling afford to gas and to put food on the table, including families earning low wages and seniors with fixed incomes – while giving the largest rebates to Missourians with average incomes of $332,000 or higher.

While these folks are not likely to have a state income tax liability, they pay significant portions of their income in sales, property and other state and local taxes. In fact, according to the most recent analysis, Missouri families in the bottom quintile of income pay 9.9% of their income in state and local taxes, compared to just 6.2% for the wealthiest 1% of families.

The Missourians left out of the current version of the economic recovery payment are the very ones that are still struggling to recover from the COVID crisis while facing higher costs for food, gas, and other necessities. Further, as the costs for the food and gas and other necessities increase, the sales and excise taxes paid on those items have also increased, making it even harder for low-income Missourians to get by. 

By making the economic recovery payment refundable, lawmakers can include all Missourians, greatly simplify administration of the credit, and put money into the hands of the Missourians who need it the most.

For Immediate Release: April 13, 2022
Contact: Traci Gleason

Groups Encourage Lawmakers to Strengthen Economic Relief Proposal
Current Proposal Leaves Out Missourians Struggling to Make Ends Meet

A coalition of groups led by the Missouri Budget Project appreciate House leadership’s efforts to provide direct assistance to families as in House Bill 3021. However, the proposed one-time economy recovery payment that the House Budget Committee will hear today currently leaves out the very Missourians who most need it. Legislators have an opportunity to help an additional 400,000 Missouri households by making the credit refundable, providing a lifeline to Missourians struggling to make ends meet.

House Bill 3021 would provide a one-time economic recovery tax credit of up to $500 for individuals and up to $1,000 for married couples. However, at least 400,000 Missouri households whose pay is so low that they don’t owe income tax wouldn’t see any benefit – even though the total state and local taxes they pay make up a higher portion of their incomes than most taxpayers. What’s more, many of these Missourians are the very ones who were hit hardest by the pandemic and are still struggling to recover.  

“Missourians whose pay is so low that they don’t owe income tax are still paying taxes,” said Amy Blouin, President & CEO of the Missouri Budget Project. “In fact, the lower your earnings, the more you pay in state and local taxes as a share of what you make.”

According to the most recent analysis, Missouri families in the bottom quintile of income pay 9.9% of their income in state and local taxes, compared to just 6.2% for the wealthiest 1% of families.

“Many older adults have low enough incomes that they don’t owe income taxes,” said Jay Hardenbrook, Advocacy Director for AARP Missouri. “But they still pay sales taxes, they still pay property taxes, and they still pay gas taxes, all of which take a big bite of your budget when you have limited income.”

All Missourians are seeing increased costs for food, gas, and other products they need. As the costs of those goods increase, so do the associated sales taxes, which are applied as a percentage of the total.

What’s more, the economic fallout from COVID hit workers with low wages and families with fixed incomes the hardest, and many families are still trying to get back on their feet, with more than 30% of Missourians still reporting difficulty meeting their normal household expenses.

“The very households struggling the most with both rising costs and the consequences of the pandemic are left out of this relief,” Blouin continued. “We encourage Missouri lawmakers to modify this credit so that the Missourians most struggling to afford gas and put food on the table aren’t left behind.”

The pandemic particularly upended the lives and budgets of families with children, who are more likely to report challenges like not having enough to eat.

“Providing families with a one-time benefit would combat against rising household costs and ensure they are able to make ends meet,” said Craig Stevenson, Director of Policy & Advocacy for Kids Win Missouri. “We look forward to working with House Budget leaders in working towards refundability of the credit or adding an enhancement for those families with children, structured similar to the federal stimulus payments.” 

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Missouri Budget Project is a nonprofit public policy analysis organization that analyzes state budget, tax, and economic issues.

Join Our Team: The Missouri Budget Project (MBP) is now accepting applications for two State Policy Interns to contribute to our research on a range of substantive policy issues impacting low- and moderate-income Missourians. MBP seeks to expand the diversity of voices in state policy debates by identifying highly motivated candidates who have experience with communities that are traditionally underrepresented. Applications are due April 15 with anticipated start date of Summer 2022.

State Policy Interns are responsible for assisting in the production of objective, timely, and accessible research and analysis on state budget, tax, health and economic issues under the direction of the MBP Director of Research. The Interns will also engage with advocates, community groups, state department and/or legislative staff to help advance MBPs policy priorities.

State Policy Intern (Budget & Tax Focus): This internship focuses primarily on analysis and advocacy related to state budget and tax issues in Missouri. Interns will learn how to track Missouri’s budget process and will leave with a deeper understanding of Missouri’s tax structure as well as the programs funded through our tax & budget system. Interns applying for this position should have a background in demographic analysis, including analysis of secondary data from the Census Bureau and/or related sources.

State Policy Intern (Economic Justice Focus): This internship focuses primarily on economic justice and worker-centered priorities with a particular focus on applying a racial and ethnic equity lens to this work. Interns will contribute to the development of a shared policy agenda with input from grassroots and Black-led organizations across the state of Missouri. Interns applying for this position should have a background in economic analysis including analysis of secondary data from the Census Bureau, the BEA/DOL and/or related sources.

Position Overview: State Policy Internships will ideally begin in Summer 2022 and continue through Spring 2023 (~June 1-May 31) and are expected to contribute approximately 20 hours/week. MBP may consider consolidating positions into a one-year full-time fellowship for qualified candidates.

Candidates residing in all areas of Missouri are encouraged to apply.

Compensation: The positions will be compensated at a rate of $20 per hour. Reimbursement for travel and other related work expenses will be provided.

See the announcement below for more details, including position descriptions and application requirements.

More than 230,000 uninsured Missourians will gain health insurance through Medicaid expansion.

Thanks to our partners at Georgetown University Center for Children and Families, we know that 49 percent of those working without insurance are employed in the hospitality, retail, and health care and social assistance industries. These are cashiers, cooks, laborers and movers, maids and housekeeping staff who earn too much to qualify for current Medicaid coverage and too little to buy private insurance.

Many of them are essential workers that we have relied upon in some way during the pandemic. Now it’s our turn to help them get reliable, affordable health insurance so they can continue to do their jobs and care for their families. It’s time for Missouri to fully fund Medicaid expansion and extend health coverage to our state’s uninsured workers.

Where Do Missouri’s Uninsured Workers Live?

While uninsured working adults live in communities across the state, the 21 counties with the highest proportion of uninsured working adults are in rural parts of Missouri except for McDonald County. Hover over the map to check out the uninsured rate for working adults in your county.

Read the full profile of Missouri’s Low-Wage Uninsured Workers

This afternoon, Governor Parson laid out his budget priorities for the state budget year that begins July 1, 2021. MBP will analyze the specifics of the proposal in the coming days, but we are pleased that in his address, Governor Parson:

• Emphasized the need to level the playing field for bricks and mortar businesses by implementing the “Wayfair Fix” and “responsibly invest those revenues and provide new opportunities for our state.”

• Committed to implementing Medicaid expansion.

• Recommended full funding of K-12 schools through the $3.56 billion foundation formula.

• Requested funds for six new crisis stabilization centers to improve mental health access.

Through these and other investments in Missourians, we can make our state a better place to live, work, and play, and strengthen opportunity for future generations. We look forward to working with the legislature to help support these and other proposals – like a state earned income tax credit – that help achieve our mutual goals of improving the lives of all Missourians.

At first glance, it seems like Missouri’s state general revenue has fared well through the pandemic. However, much of state revenue growth can be attributed to Missouri’s delayed tax deadline and earlier federal COVID relief that is now expiring. Assessed in the context of these dynamics, general revenue is not as healthy as it may initially appear.

Missouri Office of Administration recently reported that state general revenue has grown by an astounding 25 percent for the current budget year compared to the previous budget year. That’s an increase of $750 million in the first 4 months of the 2021 Fiscal Year (July 2020 – October 2020).[1] However, much of that increase results from Missouri’s decision to move the tax filing deadline at the start of the pandemic. Delaying the tax deadline from April to July effectively shifted the tax filing from state Fiscal Year 2020 to Fiscal Year 2021. As a result, as much as $700 million of the current year’s growth is really revenue from last year. Once removed from the total, revenue in the current year has only grown by $50 million compared to the same timeframe last year – a rate of 1.6 percent.

In addition, actions that the Congress took in response to COVID have temporarily boosted personal income in Missouri, which is also helping to stabilize revenue. These actions included stimulus payments, pandemic unemployment assistance and the PPP loans. As documented by the Federal Reserve Bank of St. Louis, total personal income in Missouri grew by over $20 billion in the second quarter of 2020.[2] This growth was well above the average growth rate, which hovers closer to $2 billion, and is likely largely attributable to the infusion of Congressional funds for Missourians. With the increased personal income being spent in Missouri’s economy, state tax revenue was stabilized. In other words, the actions Congress took are working as intended – they have provided significant help for individuals and stabilized the economy.

But nearly all of those actions are expiring at the end of this year.

• Without Congressional action on an additional and robust COVID relief package, personal income will flatline and Missouri’s economy will tumble.

• That would result in a steep decline in state general revenue – and certainly end in significant cuts to critical public services.

• For each cut to the state budget, more jobs will be lost – teachers, social workers, public health workers and others will join the ranks of the unemployed, making our recovery even more difficult.

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[1] See “State Releases October 2020 General Revenue Report”, November 9, 2020; retrieved on 12/2/20 from https://oa.mo.gov/commissioners-office/news/state-releases-october-2020-general-revenue-report

[2] Federal Reserve Bank of St. Louis and U.S. Bureau of Economic Analysis, Total Personal Income in Missouri [MOOTOT], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MOOTOT, December 2, 2020.

Last week, Missouri legislators convened a Special Legislative Session to discuss allocation of the remainder of the Coronavirus Relief Fund in Missouri. While the Governor’s Supplemental Budget request and House Bill 14, the corresponding supplemental appropriations bill, both recommend funds for a wide variety of needed services, they also would allow federal COVID relief funds to be used to replenish the state’s unemployment trust fund – at the same time that the Missouri Department of Labor decreased the unemployment tax assessment for businesses.

While some funds included in the Governor’s recommendation and HB 14 would be allocated to COVID mitigation, school nutrition, and other items (further detail below), the largest appropriation by far is $752 million that would be allocated to the Department of Public Safety – State Emergency Management Agency. From there, the funding would be distributed to COVID-related costs at the discretion of the Governor.

Many of the costs outlined are to be expected – for example, the direct costs of purchasing PPE, contact tracing, etc., as well as more indirect costs, such as the reimbursement of “state employee salaries for staff working on COVID-19.” However, the “budget book” describes that remaining funding could be used to “shore up the Unemployment Insurance Trust Fund” (FY 2021 Supplemental Appropriations Recommendations House Bill 14, page 35). 

Although the Unemployment Trust Fund has been significantly depleted over the last seven months, in the normal course of operations, businesses would be assessed a slightly higher unemployment tax rate to rebuild the fund. However, the Missouri Department of Labor just announced that the unemployment tax assessment will be decreasing.

While COVID funding can be used to partially replenish unemployment trust funds, Congress never intended for COVID relief funds to be used for the purpose of lowering business assessments.

Missouri’s unemployment assessment is already quite low. The average rate of 1.24% is only applied to the first $11,500 of income per employee – which results in a business contribution of just $142.60 per year per employee to the trust fund. Beginning in 2021, the amount of income subject to the tax would be reduced, allowing businesses to decrease their contribution to the trust fund. The decrease will be very tiny for most businesses – with the new contribution of just $136.40 per employee per year – a savings of $6.

At the same time, Missourians who have been most impacted by COVID are continuing to suffer extreme hardship, including lasting unemployment. As of August, the state had 137,600 less jobs than it did a year ago (Bureau of Labor Statistics). Those who have been able to return to work are likely earning less than they did previously.  And, as of September 30^th, 82,516 Missourians had exhausted their regular Unemployment Benefits (Missouri Department of Labor). Although these individuals are likely eligible for extended and special pandemic benefits in the near term, it is very likely that with the recent resurgence of COVID rates that Missouri unemployment levels could surge as well. As the crisis continues, Missourians who have already exhausted regular unemployment and others will exhaust all benefits.

Instead of using the COVID relief funds to replenish the unemployment trust fund, the funding would be better used if directed toward a stimulus payment to help Missourians who have been most directly impacted by unemployment due to COVID. That assistance would assure that funding would flow to families who are most in need and help stimulate local economies across the state.    

Missouri initially received $2.083 billion in federal relief funds through the CARES Act. $520.9 million was allocated to counties (this does not include additional funding that Jackson County and St. Louis County received directly from the U.S. Treasury. Some of the funding was allocated during the legislative session. However, the Missouri Office of Administration, Division of Budget and Planning has estimated that between $750 million – $1.5 billion remain (depending upon expenditures at the county level, some counties may need to return unspent funds to the State, which accounts for the range).

House Bill 14 is the vehicle for the supplemental budget and includes approximately $1.055 billion in spending authority for the remaining Coronavirus Relief Funding for Missouri. The most significant spending items include:

• $140.9 million for testing, contact tracing and mitigation of COVID. These funds would be allocated to the Department of Public Health, for distribution to local public health agencies.
• $75.6 million for school nutrition, in a special grant from the USDA.
• $34 million for expansion of the Shared Work program through the Department of Labor.
• $18.7 million additional authority from the federal Homeless Assistance CARES Act Grant.