Making TDI and TCI accessible to more Rhode Islanders

The Economic Policy Institute supports Senator Miller’s SB-534, which aims to make Temporary Disability Insurance (TDI) and Temporary Caregiver Insurance (TCI) accessible to more Rhode Islanders. TDI and TCI are critical protections for RI workers and families, and these programs are fully employee-funded and budget neutral - expanding them should be a no-brainer.

Rhode Island was one of the nation’s leaders in passing a paid family leave program in 2013. Now a decade later, the program lags behind those in other states (including our neighbors in Massachusetts and Connecticut) and leaves many Rhode Islanders unable to make use of these important benefits. In 2022, 8,084 workers used TCI, to either bond with a new child (77% of claimants) or provide care for a seriously ill family member (23% of claimants). TCI is a critical program that allows Rhode Islanders to take care of their families while providing job security and some wage replacement. However, RI workers with the lowest earnings (making less than $30,000 per year) make up the largest share of those contributing to the TCI/TDI fund, at 47%, but often cannot afford to utilize the program because they cannot survive on 60% of their already low salary.

Rhode Island offers the lowest wage replacement in the U.S.

Since its passage in 2013, TCI wage replacement has been approximately 60% of a worker's wages - currently the lowest in the nation for low-income earners. The program is fully employee funded. For 2023, the maximum weekly benefit is $1,007/week, and the minimum weekly benefit is $121/week - which is insufficient to meet anyone's basic needs.

We support this bill, which would create a tiered wage replacement, increase the taxable wage base, and create an opt-in option for self-employed workers. Although it is important to pass all of the provisions in the original bill as soon as possible, EPI will also support an amended version of this bill, which raises the wage replacement from 60% to 70% and creates an opt-in option for self-employed workers.

Senator Miller’s bill works to ensure that Rhode Islanders of all incomes can provide necessary care for their loved ones by addressing three current deficiencies.

This legislation would create a tiered wage replacement: 90% wage replacement for workers earning the minimum wage ($13/hr, approximately $27,000 annually), 75% wage replacement for workers earning up to double the minimum wage (up to $26/hr, approximately $54,000 annually), and 60% wage replacement for workers earning more than double the minimum wage (more than $54,000 annually). Regionally, Massachusetts and Connecticut also have a tiered wage replacement for their paid leave programs. MA and CT have 80% and 95% wage replacement for their low-wage earners, respectively.

The proposed amendment falls short of the original bill but would increase the wage replacement from 60 to 70%, which would make taking paid leave more realistic for low-wage workers. This would be the first rate increase for TCI in a decade. For our lowest-wage earners, Rhode Island offers the lowest wage replacement, making the program unfeasible for many of our minimum wage workers, as shown in the data.

Workers with lowest wages pay more into the TCI program than other groups, but access it less

The 2022 TCI claims data show that workers with the lowest earnings, making less than $30,000 (approximately $14/hour), make up the largest share of those contributing to the TCI/TDI fund at 47%¹. Rhode Island has prided itself in having gender parity in paid leave utilization; Of those who took TCI in 2022, 53% were men and 47% women.

However, disaggregating by wages and gender, the data tell a different story; the lowest income men are taking TCI at disproportionately lower rates than their male counterparts in higher income brackets. Of all the workers utilizing TCI in 2022, only 27% were low-wage workers. Of the lowest wage workers using TCI, 63% were women.

When men earn $30,000 or more annually, they begin to use TCI more than women – suggesting that wage replacement may play a significant factor in whether or not people chose to take paid leave.

RI has the lowest income contribution cap in the country

RI also has a much lower income contribution cap than other states, whose contribution limits are double that of RI. Of the six states with a paid leave program (CA, NJ, NY, WA, MA, CT), their income contribution caps range from $153,000 to $3.5 Million. And of the five states that have passed paid leave and have yet to fully launch their programs (OR, CO, MD, DE, MN), the federal Social Security taxable wage base is utilized as the income contribution cap².

Neighboring states, MA and CT, utilize the federal Social Security contribution base which for FY23 is $160,200. Senator Miller's bill would effectively double the taxable wage base from $84,000 to $160,200.

Self-employed workers are excluded from TCI

Currently, there is no way for independent contractors, so-called “gig” workers, and self- employed workers to contribute to and benefit from TCI. Rhode Island is one of only two states (out of 11) in which self-employed workers cannot opt-in for their state’s paid leave program. Massachusetts and Connecticut both allow self-employed workers to opt-in to paid leave. This bill will allow individuals to opt-in to the program. This opt-in option will allow gig workers and self-employed workers to contribute to the fund for 12 months and then be able to take TCI.