NEW: Oregon Eligible Paid Leave Workers Below $42,916 Income Could Get 100% of Wages Replaced for Up to 12 Weeks. Total Tax Collected Varies by Business Size and Type.

Oregon’s Average weekly wage  (SAWW) used to determine Oregon Paid Leave, unemployment benefits, and worker compensation benefits was published today. SAWW increased from $1,224.82 to -$1,269.69,an increase of 3.8%/$45.

This post will focus on the impact for lower income Paid Leave eligible workers and also focus on the different TOTAL tax collected by three different employer categories. 

Workers Up to $42,916 In Wages: 100% Wage Replacement, Employee Cost to Benefit Ratio of 38:1.

Note: To my knowledge Oregon is the ONLY state that provides for 100% replacement wages in a paid leave program. 

Those earning up to $825 weekly or $42,916 annually (65% of SAWW annualized) can receive 100% of their wages for up to 12 weeks. [At full time hours, an annual wage of $42,916 is $20.63 per hour, $825 per week, and $3,576 per month]

At an average weekly wage of $825 the employee ANNUAL costs (at .6%) would be $257 and their full 12 weeks of paid leave benefits would total $9,904. 

That's a potential 38 :1 ratio of employee paid costs to employee benefits.   

When average wages exceed $825 per week the replacement ratio for wages declines below 100% as does the cost to benefit ratio. However, even at the average weekly wage of $1,269.69 employees could replace 83% of their wages and their cost to benefit ratio would still be 31 to 1.  

The table below has my calculations at different wage levels. As always, look at the Employment Department materials for the OFFICIAL calculations. 

Paid Leave Employee Benefits and Costs are the Same, but Small Business and Self Employed Businesses Pay 40% Less than Larger Businesses. 

(This is not a function of the annual change in average wages but a feature of the Oregon Paid Leave system)

Employers with fewer than 25 employees do not pay .4% payroll taxes, but employees continue to pay their .6% share.

Self employed workers have the option of joining the Paid Leave program and if they do, they pay the same .6% as other employees but they do not pay the .4% that larger employers pay.

Benefit levels are the same for all employees. 

For a worker at the new average weekly wage of $1,269.69

• At a larger employer the total annual 1% paid leave tax will be $660. 
• For employees working at businesses with fewer than 25 employees, or for self-employed individuals who choose to opt into the system, the total annual per .6% employee tax paid would be only $396. 
• That's a per employee cost avoidance of $ 264 annually. 

For Every 100,000 Employees, Small Business and the Self Employed Avoid $26.4 Million in Costs.

The table below show the total tax collected for the 3 employer types for every 100,000 employees. (There are 1.9M+ employed Oregonians but the number of employees that will likely be covered by Paid Leave is smaller). 

Larger employers, including employee contributions, would pay $66 Million, while small employers and the self employed would pay $39.6 Million, a $26.4 Million cost avoidance.  

This is a cost avoidance of 40%, the amount that large employers pay that the smaller employers and voluntary self employee participants do not pay.   

The Oregon Paid Leave landing page is HERE. 

Originally created and posted on the Oregon Housing Blog.