[US] Washington workers’ pay packets decrease as payroll tax hike takes effect

In the US, expert analysis has revealed that Washington state workers are experiencing another quiet but meaningful pay cut, which undercuts the promised gains from the state’s rising minimum wage, Seattle Red reports.

The analysis - from Elizabeth New, director and policy analyst at the Washington Policy Center - focuses on Washington Democrats’ Paid Family and Medical Leave (PFML) program, which is funded through a payroll tax deducted directly from workers’ wages. On January 1, 2026, that tax rate automatically rose to 1.13 per cent of gross wages, nearing the statutory cap set in state law.

Ms New reportedly stated that this increase is not the result of an emergency decision but the predictable outcome of a program designed without sustainable cost controls.

The PFML program is projected to run a $350 million deficit by 2029, despite lawmakers continuing to expand eligibility and benefits. While the program is often marketed as a universal worker benefit, Ms New’s analysis shows higher-income workers drawing from the system at far greater rates than low-wage earners. 

Lower-income workers still pay into the system but are less able to afford the partial wage replacement required to take leave.

“PFML is a paycheck penalty masquerading as compassion, and it harms low-income workers the most,” Ms New wrote.

Using statewide average wages, she calculated that a typical worker will see hundreds of dollars deducted annually for PFML in 2026, with employers contributing additional costs that can affect hiring and hours. Those deductions come on top of other state payroll programs, creating what the policy analyst describes as an incremental approach to income taxation through mandated wage withholdings.

Democratic lawmakers have reportedly floated legislation to raise the payroll tax cap further in future years. Ms New warned that unless they rein in costs or move funding to the general budget, workers can expect an ongoing erosion of their take-home pay, regardless of headline wage increases.

Source: Seattle Red

(Link and quote via original reporting)

In the US, expert analysis has revealed that Washington state workers are experiencing another quiet but meaningful pay cut, which undercuts the promised gains from the state’s rising minimum wage, Seattle Red reports.

The analysis - from Elizabeth New, director and policy analyst at the Washington Policy Center - focuses on Washington Democrats’ Paid Family and Medical Leave (PFML) program, which is funded through a payroll tax deducted directly from workers’ wages. On January 1, 2026, that tax rate automatically rose to 1.13 per cent of gross wages, nearing the statutory cap set in state law.

Ms New reportedly stated that this increase is not the result of an emergency decision but the predictable outcome of a program designed without sustainable cost controls.

The PFML program is projected to run a $350 million deficit by 2029, despite lawmakers continuing to expand eligibility and benefits. While the program is often marketed as a universal worker benefit, Ms New’s analysis shows higher-income workers drawing from the system at far greater rates than low-wage earners. 

Lower-income workers still pay into the system but are less able to afford the partial wage replacement required to take leave.

“PFML is a paycheck penalty masquerading as compassion, and it harms low-income workers the most,” Ms New wrote.

Using statewide average wages, she calculated that a typical worker will see hundreds of dollars deducted annually for PFML in 2026, with employers contributing additional costs that can affect hiring and hours. Those deductions come on top of other state payroll programs, creating what the policy analyst describes as an incremental approach to income taxation through mandated wage withholdings.

Democratic lawmakers have reportedly floated legislation to raise the payroll tax cap further in future years. Ms New warned that unless they rein in costs or move funding to the general budget, workers can expect an ongoing erosion of their take-home pay, regardless of headline wage increases.

Source: Seattle Red

(Link and quote via original reporting)