Sick day bill’s benefits aren’t as favorable as backers say

Original Article:

  • Author: Maxford Nelsen and Michael Saltsman

  • Publication Date: August 2014

  • Newspaper: The Sacramento Bee

In the final days of the Legislature, a controversial bill to require employers to provide paid sick leave is still under consideration. Proponents of Assembly Bill 1522 have offered a rosy picture of the bill’s benefits.

But a clear-eyed look at the experience of the other jurisdictions that have adopted such requirements shows that the evidence isn’t nearly as favorable as proponents suggest.

A new report from the Washington state-based Freedom Foundation examines the 10 most significant studies about the effect of mandatory paid sick leave laws in San Francisco, Washington, D.C., Connecticut and Seattle. Careful evaluation of the data from these jurisdictions yields surprising conclusions about the most-cited arguments in favor of these laws.

Everyone wants sick people to stay home, but the studies suggest sick leave mandates do not decrease illness in the workplace. For instance, in a survey of San Francisco employers conducted a year after implementation of the city’s sick leave ordinance, 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.

All told, of the five studies examining whether paid sick leave reduces workplace sickness, four say they do not. The only study claiming to find a reduction did not give employers the option to report otherwise.

But what of the claim that paid sick leave saves businesses money by reducing employee turnover? In California, a 2008 study from the Institute for Women’s Policy Research said it would save employers more than $2 billion a year “mainly from reduced costs of turnover.”

The core of that analysis, however, 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 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 employer pointed out the obvious: If everyone is forced to provide paid leave, there’s no reason for employees to stay with one business over another.

Sick leave mandates are not merely unproductive, but have moderate negative consequences for affected employers. Proponents typically argue, though, that since many employers support paid sick leave mandates, any costs must be minimal.

Every study that has examined the question has found a majority of employers support mandatory sick leave a year or so after its passage. But in every case, a majority already had the financial flexibility to voluntarily provide paid sick leave and had to make few or no changes to comply. In fact, the percentage of businesses opposing the mandate 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. Some employers report decreased profits.

And it wasn’t just employers who reported consequences: In San Francisco, nearly 30 percent of the lowest-paid workers reported layoffs or reduced hours at work following 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 California will fail to materialize.