Colorado is Embracing Socialism, and You’re Going to Pay for It

What do you think of when someone mentions the word “socialism?”

If you consider yourself a Democrat, you likely view socialism as equality for everyone, along with government provisions of benefits and social services.

If you’re a Republican, you likely view socialism as akin to Marxism and communism, which is collective ownership of property and redistribution of resources.

However, the true definition of socialism is “a political and economic theory of social organization, which advocates that the means of production, distribution and exchange should be owned or regulated by the community as a whole.”

With this definition in mind, let’s examine Proposition 118: Paid Family and Medical Leave Insurance Program (PFML) and see if Colorado is going socialist.

Prop 118

In November 2020, Colorado voters approved Proposition 118, which means that starting Jan. 1, 2023, Colorado employers and employees must begin contributing to a state-run insurance program.

Specifically, starting in 2023, employees and employers will pay 0.9 percent of the employee’s wage into the insurance program (it’s a 50/50 split). That means, for example, if an employee makes $104,000 a year, the employer and employee will each pay $468 toward the insurance program for a combined total payment of $936 annually.

Then, starting in 2024, if a Colorado employee is sick or has a baby, he or she can take up to 12 weeks of paid family and medical leave and receive up to $1,100 per week in wages, depending on their salary. Anyone employed for 180 days, and earning at least $2,500 at an organization in Colorado, qualifies so long as the organization employs at least 10 people.

When taken at face value, the above doesn’t sound too onerous, right? Well, there are drawbacks to consider.

The Drawbacks

As stated above, in 2023, the initial insurance premium rate is 0.9 percent. However, if solvency is threatened, that statutory cap can increase to 1.2 percent in 2025. In other words, if more people use the fund and the fund depletes, the state can increase the funding requirements.

Further, the benefit levels established under Prop 118 are “more generous than any other state with a history of established utilization data,”according to Common Sense Institute. This means that funding level requirements will almost certainly increase.

And, while 1.2 percent of an employee’s wage might now sound significant on its head, the reality is these numbers add up. For example, the current flat income tax rate in Colorado is 4.63 percent. If an individual makes $50,000, their contribution to the insurance program is $281 at 1.2 percent. That’s an income tax rate increase of approximately 14 percent.

Moreover, for employers, the cost is even higher. While individuals feel the pinch for just themselves, an employer must cover all their employees. Common Sense Institute estimates that the new insurance program will cost a large employer up to $94 million per year in 2023. And, by 2025, “the total premiums to be paid by employers could total over $1.34 billion. This would be an effective increase of the corporate income tax of 204%.”

Socialism 101

Proposition 118 sounds great at first — who doesn’t want paid family and medical leave? But Prop 118 is a socialist policy. Before the passage of Prop 118, employers provided up to 12 weeks of job-protected leave thanks to The Family and Medical Leave Act (FMLA), which was signed into law by President Bill Clinton in 1993.

Now, however, employers not only have to allow employees to take up to 12 weeks of leave, but they also must pay for it. That means instead of individuals making sure they have enough money set aside for certain emergencies, the government is mandating that everyone contribute to a large pool, and then it’ll distribute the funds.

More pointedly, employers in Colorado will pay a significant amount for this benefit, which will undoubtedly lead to unintended consequences. 

For example, the Equal Pay for Equal Work Act, which became law in 2019, requires employers to, among other things, post the pay range for all openings and maintain records of wage rate history for each employee or pay a fine. The goal is wage equality. However, an unintended consequence of this new law is now employers open to remote work are finding Colorado employees less desirable.

Fleeing Employees

Prop 118 doesn’t go into effect until 2023, so we won’t know the full fallout until after that time. However, it’s reasonable to assume that as Colorado is one of only nine states requiring PFML — the other states are California, Connecticut, New York, Oregon, Rhode Island, New Jersey, Washington, and Massachusetts — employers who can, will look for locations outside of Colorado to do business. Consequently, The Maverick Observer is following this and will update as Prop 118 unfolds.

Even more concerning is that Prop 118 isn’t the only step toward socialism Colorado has taken recently. When you add up all the recently passed taxes and fees and add in new progressive housing policies, it’s easy to see that Colorado is embracing a new progressive era.

The Maverick Observer, or “The Moe” as we affectionately call it, is an online free-thinking publication interested in the happenings in our town. We launched in February 2020 to hold our politicians and businesses accountable. We hope to educate, inform, entertain, and infuse you with a sense of community.