Wednesday, September 30, 2009

The case for mandatory paid sick leave

In the US, many workers, especially part-time and/or low-wage workers, are not eligible for paid sick leave days. Businesses would argue that it's too expensive to provide these days, although they are required to provide a certain number of unpaid days under the Family Medical Leave Act. Unpaid sick days are imperfect. Hourly workers obviously lose income if they take time off work for their own illness, or a family member's illness. This dissuades people from taking time off.

As a CNN Money article argues, the swine flu does provide a certain impetus for policymakers to consider mandating paid time off. If someone is infected but comes to work because they don't want to lose hours, that places everyone at risk for a pandemic. Even without the swine flu, paid days off are good public policy, and many European countries have considerably stronger sick leave laws than the US. Nonetheless, there is pushback from businesses:

Mandated leave
In May, Brewer introduced a sick-leave law modeled on San Francisco's: nine days a year of paid time off for workers at businesses with 10 or more employees, five days for those at smaller businesses. The legislation, which already has 38 of the city's 51 council members as sponsors, would also allow workers to use sick time to care not only for ill children, but also for kids whose schools are closed because of swine flu fears.

"A child can't stay home without a parent staying with them," Warren says. "So if the parent doesn't have paid sick time, the child mostly likely goes to school, and the parent goes to work."

In response, the chambers of commerce from each of New York's five boroughs have banded together to form the 5 Boro Chamber Alliance to fight the paid-leave bill.

Their main concern is what they see as an excessive number of days required, and the inflexibility it would impose on small business owners.

"Government is trying to do something that's well-intentioned, but they have no idea what the effect is on a small business owner," says Jack Friedman, executive vice-president of the Queens Chamber of Commerce. "So our business owners are coming back to us and saying, 'We already offer our employees some sick days -- five sick days, six sick days. And the difference between what we're offering and what the government is requiring us to offer could cost our business tens of thousands of dollars.'"

For many workers, though, even five sick days is an unheard-of benefit. As part of its soon-to-be-released annual Unheard Third survey of 1,212 New Yorkers, the Manhattan-based Community Service Society is estimating that 39% of all workers -- amounting to 1.3 million people citywide -- have no paid leave of any kind. In the leisure and hospitality industries, which include restaurants and food service, only 23% are allotted paid sick leave.

Nationwide, the same trend holds: The proportions of workers without paid leave are higher in lower-wage industries, including food service, nursing care, and retail workers.

"Oftentimes, the folks who are most in contact with the public are the ones who are least likely to have paid sick days and be able to stay home when they're sick," says the National Partnership's Ness.

I think the case hasn't been adequately made that mandated sick days will, in the long run, be a boon to businesses. The main reason is the cost of turnover. It costs a lot to recruit and train a worker. If you have people leaving or being fired because they didn't show up to work because of illness, a business then has to find and train a worker, who will be less productive to start. The cycle repeats.

Consider this cost-benefit analysis by the Institute for Women's Policy Research. For just the state of Illinois, they find that mandated sick days would cause about $589 million in new costs to businesses. However, this amounts to only about $7 per worker newly covered by the policy (i.e. who doesn't already have sick leave benefits) per week.

Additionally, the benefits from reduced turnover would total an estimated $795 million. Additional benefits from lost productivity by sick people on the job and the reduced amount of illness would total $66 million. In other words, a mandated sick leave policy could produce $272 million in savings for all businesses. Similar results would occur in other states.

The key provisions of the law that IWPR proposes are:

1. All workers earn one hour of paid sick time for every 30 hours they work, up to a maximum of 7 paid sick days.
2. Paid sick time may be used for diagnosis or treatment. It may be used by the worker, or they may use it to accompany a family member.
3. Employers may require a doctor's note for any absence over 3 days.
4. Employers who already provide paid sick time at or above the level of the new law would not be required to provide any additional time.

While IWPR's work is necessarily an estimate based on census-level data, it seems that businesses are likely to be missing the big picture. At the worst, they might break even by complying with a well-designed sick leave mandate.

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