Introduction

On November 3, 2021, the House Rules Committee released text of a modified version of H.R. 5376, commonly referred to as the Build Back Better Act (BBBA). Title XIII, Subtitle A, of the act (titled "Universal Comprehensive Paid Leave") proposes a new federal cash benefit for eligible individuals engaged in certain types of family and medical caregiving.¹ The November 3 text modifies a similar paid leave benefit program proposed in an earlier version of H.R. 5376 that was introduced on September 27, 2021.²

This report describes the weekly benefit formula for qualified caregiving as included in the November 3, 2021, version of the BBBA. To gain insights into how weekly benefit amounts might vary across workers residing in different states, the report presents the state-level distribution of adult workers in 2019 across selected earnings groups and estimates the weekly benefit rate at state-level median earnings levels.

Weekly Benefit Amount

As provided in the November 3 version of the BBBA (i.e., House Rules Committee Print 117-18), the weekly benefit amount would be equal to the product of the weekly benefit rate multiplied by the ratio of the number of creditable caregiving hours in the week to the number of hours in the regular workweek:

The ratio of caregiving hours to regular hours worked measures the percentage of an individual's workweek that was allocated to caregiving (e.g., 20 hours of caregiving for a 40-hour workweek has a ratio of ½ or 50%, whereas as 20 hours of caregiving for a 20-hour workweek has a ratio of 1 or 100%). Creditable caregiving hours may not exceed the number of hours in an individual's regular workweek (i.e., the ratio [caregiving hours in a workweek / regular workweek hours] cannot exceed one).³

The proposed weekly benefit rate formula is based on total wages and self-employment earnings during the most recent eight-quarter calendar quarter period that ends four months prior to the beginning of the individual's benefit period. (In general, the benefit period is the 12-month period that starts with the month that contains the first week in which the individual meets the benefit eligibility conditions and has at least four caregiving hours).

To be eligible for a benefit during the 2024 calendar year, an individual must have earned at least $2,000 during the most recent eight-quarter period that ends at least four months prior to the individual's benefit period (i.e., the same eight-quarter period used to assess average earnings).

Initial Weekly Benefit Rate

The initial⁴ weekly benefit rate would be the sum of

• 90.138% x (the first $15,080 of annual earnings) ÷ 52 weeks
• 73.171% x (the portion of annual earnings between $15,081 and $34,248) ÷ 52 weeks
• 53.023% x (the portion of annual earnings between $34,249 and $62,000) ÷ 52 weeks

For qualified caregiving that occurs in weeks that end within the year 2024 (after which date a portion of the benefit formula will be adjusted), the maximum weekly benefit rate would be $814.10. A minimum benefit is not proposed explicitly. However, because the proposal would require claimants to have at least $2,000 in earnings in the eight-quarter period used to calculate earnings, the implicit minimum weekly benefit rate would be $34.67 in 2024.

Weekly Benefit Amount Examples

An eligible individual who regularly works 40 hours with average annual earnings of $15,080 in the eight-quarter period used to calculate the weekly benefit rate could claim a weekly benefit of $261.40 if he or she engaged in at least 40 caregiving hours. For such an individual, the weekly claim would be $130.70 (i.e., ½ x $261.40) if he or she provided 20 hours of caregiving.

An eligible individual who regularly works 40 hours with average annual earnings of $34,248 in the eight-quarter period used to calculate the weekly benefit rate could claim a weekly benefit of $531.12 if he or she engaged in at least 40 caregiving hours. For such an individual, the weekly claim would be $265.56 (i.e., ½ x $531.12) if he or she provided 20 hours of caregiving.

An individual who regularly works 40 hours and has annual average earnings of $62,000 or more could claim a weekly benefit of $814.10 if he or she engaged in at least 40 caregiving hours; the weekly claim would be $407.05 (i.e., ½ x $814.10) if he or she provided 20 hours of caregiving.

Weekly Benefit Amount Illustrated

Figure 1 illustrates weekly benefit amounts across a range of average annual earnings levels for an individual who provides weekly caregiving hours in an amount that is at least as great as his or her regular workweek hours (e.g., provides 40 hours of creditable caregiving hours and has a 40-hour regular workweek). That is, the following example supposes workers' weekly benefit rates are all multiplied by the maximum ratio value for caregiving hours to workweek hours (i.e., 1).

Figure 1. Proposed Initial Weekly Paid Leave Benefit Amount, by Average Annual Earnings Formula provided in H. Rules Committee Print 117-18

Source: CRS calculations based on H. Committee Print 117-18. Notes: Weekly benefit amounts and average annual earnings are based on total wages and self-employment earnings during the most recent eight-quarter calendar quarter period (a span of two years) that ends four months prior to the beginning of the individual's benefit period. The calculations assume an individual provides weekly caregiving hours in an amount that is at least as great as his or her regular workweek hours. Weekly benefit rates are rounded to the nearest dollar amount. The calculations show benefits amount possible—based on a worker's average earnings—in 2024. In years after 2024, bend points would be adjusted by the Social Security Administration's Average Wage Index.

After calendar year 2024, the "bend points" of the weekly benefit formula—the dollar amounts used to calculate the weekly benefit rate—would increase annually by the growth in the national average wage index (42 U.S.C. §409(k)(1)) or would remain at the previous year's level if the average wage index does not increase.

State-Level Worker Distributions Across Earnings Groups

This section presents the distribution of adult workers (18 and older) by state across the earnings groups identified in the paid leave benefit formula proposed in the November 3 BBBA (H. Rules Committee Report 117-18). Such distributions are provided for two worker groups. Table 1 shows the distribution of all adult workers who report they worked at least one week during the last 12 months. Table 2 shows the distribution of full-time, full-year adult workers; that is, workers who report that they usually work at least 35 hours per week (i.e., full-time) and worked at least 50 weeks during the last 12 months (i.e., full-year).

The tables reveal state-level variation in the earnings distributions of workers. For example, some states have relatively high concentrations of workers in lower-earnings groups, and in others workers are more evenly spread across the earnings groups. While these differences may affect the amount of typical benefit claims across states, earnings levels are not the sole determining factor for benefit claims. Not addressed in this report, for example, are state-level differences in workers' age, family structure, fertility rates, health status, and access to job-protected leave, all of which may influence workers' need for and ability to use family and medical leave, as well as potential claim behavior.⁵

State-level differences in workers' earnings—as shown in Table 1 and Table 2—can reflect true differences in workers' purchasing power, but they can also reflect regional price differences.⁶ As with other benefit programs that factor earnings levels into benefit calculations, such as unemployment insurance, the paid family leave benefit proposed in the November 3 BBBA does not adjust for such price differences. For this reason, it may be the case that the relative value of the maximum benefit amount ($814 per week) is higher in some states (e.g., with lower relative prices) and lower in others (i.e., those with higher relative prices).

All Adult Workers

Table 1 presents the distribution of all adult workers in 2019 (the most recent year for which relevant public use data are available) by state across the earnings groups identified in the paid leave benefit formula proposed in the November 3 BBBA (H. Rules Committee Report 117-18). The proposed federal paid leave benefit is not restricted to persons working a full-time hours schedule or those who worked a certain number of weeks prior to taking leave (or claiming the proposed benefit).⁷ For this reason, the sample in Table 1 is restricted only to those who report working at least one week in the 12-month period that precedes the survey interview (i.e., the sample includes both full-time and part-time workers, as well as those working part-year or intermittent schedules).⁸ Nationally, 1.9% of such workers reported annual earnings of less than $2,000; 16.2% of adult workers had annual earnings between $2,000 and $15,080 (lowest earnings category that would qualify for the paid leave benefit); and 28% had annual earnings in the highest earnings group (over $62,000).

Across all states, the share of working adults who earned less than $2,000 in 2019 ranged from to 1.1% (South Dakota) to 3% (Vermont). In some states, relatively few workers had earnings in the lowest earnings category that would qualify for the paid leave benefit (DC had the lowest share at 9.1%), whereas in others the share was relatively high (20.8% in New Mexico). Similarly, states differed in the degree to which workers were concentrated in the highest earnings groups; shares ranged from 17.8% (Mississippi) to 54.2% (DC). In addition to state-level differences in the many factors that influence workers' need for and use of family and medical leave (e.g., age, health status, fertility rates, access to job-protection during periods of leave), these differences in earnings across states may lead to different typical paid leave benefit amounts across states.

Full-Time, Full-Year Adult Workers

As noted earlier, the proposed federal paid leave benefit is not restricted to persons working a full-time or full-year schedule. However, there may be some value in examining the earnings distribution for this group of workers. While this group does not necessarily have greater caregiving needs (i.e., they may not be more likely to be expecting a new child or to have a serious health condition), they may to some extent better represent those who would need to take leave if such a need arises, because they have less non-work time available to them on a week-by-week basis.

Table 2 presents the distribution of adult, full-time, full-year workers in 2019 by state across the same earnings groups included in Table 1. Nationally, 0.1% of such workers reported annual earnings of less than $2,000; 5.1% of adult workers had annual earnings between $2,000 and $15,080 (lowest earnings category that would qualify for the paid leave benefit); and 35.5% had annual earnings in the highest earnings group (over $62,000).

In each state, less than 1% of full-time, full-year working adults earned less than $2,000 in 2019. In some states, relatively few workers had earnings in the lowest earnings category that would qualify for the paid leave benefit (DC had the lowest share at 1.9%), whereas in others the share was relatively high (9.4% in Mississippi). Similarly, states differed in the degree to which workers were concentrated in the highest earnings groups: shares ranged from 21.8% (Mississippi) to 64.5% (DC). As noted earlier, in addition to other state-level differences affecting workers' need for and use of family and medical leave, state-level differences in the distribution of earnings may lead to differences in the typical paid leave benefit amounts across states under the federal proposal.

State-Level Examples: Proposed Weekly Benefit Rates Calculated at Median Earnings

Table 3 presents the median annual earnings by state for two groups of adult workers and calculates the proposed weekly benefit rate at the state-level median earnings level. The first two data columns describe adult workers who worked at least one week in the last 12 months, and the last two data columns describe full-time, full-year adult workers.

As discussed earlier, the weekly benefit amount would be determined by multiplying the weekly benefit rate by the ratio of the number of creditable caregiving hours in a week to the number of hours in the regular workweek (see section "Weekly Benefit Amount" of this report). The estimated replacement rates shown in Table 3 are calculated for a worker who provides weekly caregiving hours in an amount that is at least as great as his or her regular workweek hours (e.g., provides 40 hours of creditable caregiving hours and has a 40-hour regular workweek). In each case, replacement rates would be lower for workers with weekly caregiving hours than are less than their regular workweek hours.⁹

Among all adult workers (i.e., including those employed in part-time and full-time positions) who worked at least one week during the last 12 months, median earnings in 2019 ranged from $32,000 (Mississippi) to $70,000 (DC), with corresponding proposed weekly benefit rates evaluated at those median earnings levels ranging from $499 (81% of average weekly earnings) to $814 (60% of average weekly earnings). Among full-time, full-year adult workers, median earnings in 2019 ranged from $39,000 (Mississippi) to $80,000 (DC). Corresponding proposed weekly benefit rates estimated at those median earnings levels range from $580 (77% of average weekly earnings) to $814 (53% of average weekly earnings).

State-Level Earnings Data Source

CRS estimated median earnings using data from the Census Bureau's American Community Survey (ACS), a large-scale, nationally representative household survey.¹⁰ Specifically, CRS used the public use microdata sample (PUMS) data, which includes a subsample (approximately two-thirds of responses collected in a given calendar year) of the full ACS microdata.¹¹

ACS data are collected throughout the calendar year. The ACS asks individuals to report how much they earned in the 12 months that precede the interview. Responses to this question are used to estimate median annual earnings across states. Earnings (referred to as wage or salary income in ACS documentation) include wages, salary, Armed Forces pay, commissions, tips, piece-rate payments, and cash bonuses earned before deductions (e.g., for taxes, pensions, union dues).¹²

Median earnings were selected as the focus of analysis (i.e., in lieu of average earnings) because the median is less sensitive to outliers (i.e., extremely high or extremely low earners) than the average.¹³