Mandatory paid sick leave: The wrong prescription for New Jersey
Author: Maxford Nelsen and Michael Saltsman
Publication Date: October 2014
Newspaper: The Record
Paid sick leave mandates have moderate negative consequences for affected employers and employees.
This thursday, the state Assembly Labor Committee will hear a bill that would force employers in New Jersey to provide paid sick leave. Several cities — including Jersey City, Newark, and Paterson — have already passed similar laws at the urging of activist groups like the labor-union-aligned New Jersey Working Families Alliance.
Proponents have portrayed the law as all gain and no pain. But a careful look at the experience of the other jurisdictions that have adopted such requirements — including San Francisco, Washington, D.C., Connecticut, and Seattle — shows that paid sick leave mandates come with notable side effects and few benefits.
The top argument in favor of mandated paid sick leave is that it’s necessary to decrease illness in the workplace. But the evidence suggests that it hasn’t succeeded at this goal. In a survey of San Francisco employers conducted a year after implementation of the city’s sick leave ordinance, for instance, just 3.3 percent reported a decrease in employees coming to work sick, while a similar percentage reported more sick workers. Most employers reported no change.
In fact, of the five studies examining whether requiring employers to offer paid sick leave reduces workplace sickness, four found it does not. The only study claiming to find a reduction did not give employers the option to report otherwise.
But what of the claim that mandated paid sick leave will save businesses money by reducing employee turnover? The claim rests on several misinterpreted studies. One is decades old and deals with health insurance, not paid sick leave. Other studies even dispute the notion that employee turnover is inherently bad. Not surprisingly, there is scant evidence linking mandatory paid sick leave laws to employee turnover reductions.
In the study of Seattle’s ordinance, for instance, two employers reported decreased turnover, four experienced increased turnover and 243 saw no change. One San Francisco business owner provided a likely explanation: If everyone is forced to provide paid leave, there’s no reason for employees to prefer one business over another.
The lack of measurable benefits from mandated paid sick leave is bad enough. But apart from being merely unproductive, paid sick leave mandates have moderate negative consequences for affected employers and employees.
Proponents typically argue that, since many employers support paid sick leave mandates, any costs and consequences for their staffs must be minimal. Again, the fine print matters: In every survey conducted, a majority of employers had the financial flexibility to voluntarily provide paid sick leave before the law was passed and had to make few or no changes to comply. In fact, the percentage of businesses opposing the mandates typically corresponds closely to the percentage that had to create or overhaul paid sick leave policies.
Unsurprisingly, newly affected employers with less flexibility were most likely to report having to deal with increased costs by raising prices and decreasing employee pay and benefits. In San Francisco, for instance, nearly 30 percent of the lowest-paid workers reported layoffs or reduced hours at work after passage of the city’s mandate.
If paid sick leave regulations do not reduce the number of people working while sick, and instead reduce opportunities for employees, then the promised benefits to public health and worker productivity in New Jersey will fail to materialize.