Sick-leave law unhealthy
Author: Michael Saltsman
Publication Date: May 2012
Newspaper: Boston Herald
Topics: Health Care
You can tell the legislative season is drawing to a close when unpopular bills with little interest among legislators are resurrected in force.
Witness the renewed push for an employer sick-leave mandate in Massachusetts, bolstered by a study from the Institute for Women’s Policy Research (IWPR) claiming a net financial benefit for the state of $74 million each year. To read the study, you would think that the only thing standing between the Bay State and a strong economy is another employer requirement.
But a close look at this new report shows why it’s more spin than substance — the product of advocacy groups desperately trying to convince the state of the merits of this bad idea.
The study starts by acknowledging that sick days do carry a cost for employers: The authors put the price tag at about $198 million annually. But then they describe over $215 million in savings that employers will enjoy due to reduced turnover in the workplace. Another $23 million in “community savings” comes from fewer trips to the emergency room.
These estimates are backed up with copious footnotes, giving the appearance of credibility. But not so fast. The hundreds of millions in estimated savings from reduced employee turnover hinge on a single study from 1993 — released about 15 years before any city or state had a paid sick- leave law on the books.
A survey of employers actually affected by a sick-leave mandate, in San Francisco, found that they weren’t experiencing the promised reductions in employee turnover. One employer pointed out the obvious — if everyone’s required to provide the benefit, then there’s no particular incentive for employees to stay with one employer over another.
In other words, the $215 million in projected employer savings is a statistical sleight-of-hand — you can make the math work on paper, but it doesn’t reflect reality.
That’s not the only exaggeration. The Massachusetts study also relies on an earlier IWPR analysis claiming that access to sick days is associated with fewer trips to the emergency room for the uninsured. The problem with that conclusion is that it wasn’t one at all — the IWPR numbers didn’t meet a key test of statistical significance. Their analysts buried this inconvenient truth in the appendix.
By IWPR’s own analysis, knocking out the $215 million in savings from reduced turnover alone transforms the policy from an employer benefit to an employer burden.
Unfortunately, this result is exactly what we’ve seen in cities like San Francisco. Nearly 30 percent of the city’s lowest paid employees reported layoffs or reduced hours at their place of work following the sick-leave law.
It’s a natural consequence of basic business realities. While nearly 80 percent of private sector employees have some sort of paid time off, that still leaves a contingent of others (such as part-time employees) whose employers can’t afford the paid benefit. So instead, they’re offered schedule flexibility, which gives them the leeway to make up a missed shift later in the week.
Businesses keeping just a few cents in profit for each sales dollar are hardly “crying wolf” when they warn of the consequences of mandating a paid policy. If they can’t raise prices on discerning customers to offset the cost, it means slashing employee work hours or other benefits to maintain a profit.
Advocates frame the sick-day issue as a matter of public health, but there’s nothing healthy about a law that means less opportunity for Massachusetts employees.