Should Cities Mandate Sick Leave?
Seattle is the third U.S. city to require private employers to offer paid sick leave. Is this a good idea?
Should private employers offer sick leave to their workers? Or more pointedly, should the government require that they do? Seattle recently became the third major U.S. city to say yes.
The city's new policy mandates that businesses with five to 249 employees award one hour of paid sick leave for every 40 hours worked. Companies with 250 or more employees must offer one hour for every 30 hours. Under the law, which takes effect September 2012, employers are also permitted to pool vacation time and sick leave together.
Councilman Nick Licata, who spearheaded the effort, tells Governing he was approached by a coalition of "the usual suspects," such as labor unions and progressive political groups, to pursue the mandate. He sees paid sick leave as a means of bolstering productivity through improved work conditions.
"We want to ensure workers…are not sick when they go to work," Licata says. "You end up with a more productive work force, which is better for businesses. We don't really talk about quality of work conditions in local government, but it can be a significant benefit for the overall economy."
Washington, D.C., and San Francisco have passed similar legislation in the last five years. The state of Connecticut issued a paid sick leave mandate in July, and U.S. Rep. Rosa DeLauro (who is also from Connecticut) introduced a bill to Congress that would extend the policy nationwide.
Denver's voters will consider a sick leave requirement in November. There, the city's chamber of commerce and Gov. John Hickenlooper have come out against such a measure. Their opposition echoes arguments that have followed the policy wherever it surfaces: While ostensibly creating a better work environment, it will lead to layoffs and reduced profits while the economy struggles to recover.
"If anything, it's going to cost jobs," Hickenlooper told the Economic Club of Colorado.
That's a sentiment that was echoed in Seattle, where The Seattle Times' editorial page blasted the proposed bill, siding with council president Richard Conlin, the only council member to oppose the mandate. "It's also not great timing in the middle of a recession, with thousands of businesses struggling, to impose a new bureaucratic rule on them," Conlin said.
Michael Saltsman, a fellow at the Employment Policies Institute, took to the Wall Street Journal's opinion page to lament the trend of sick leave requirements:
"The plain truth is that if an employer could save about $2 for every $1 spent providing his employees with a benefit…he would have done so already. Increasing labor costs by mandating sick leave means affected businesses have to either raise prices on their customers or cut total hours worked by their employees to maintain their narrow profit margins."
Saltsman notes that, according to the Bureau of Labor Statistics and the Census Bureau, about 80 percent of private companies nationwide already offer some kind of paid sick leave. According to a survey released after San Francisco adopted the mandate, "industries that didn't offer paid leave before the mandate were more likely to report a negative impact on profitability," Saltsman wrote in the Journal. That coincided with 30 percent of the lowest wage earners reporting reduced hours or layoffs at their workplace.
Seattle's city council directed that an independent and objective analysis of the policy's economic impact be conducted 18 months after it is enacted, and Licata says he has research on his side as well. The Economic Opportunity Institute, based in Seattle, supported the policy and cited several studies that back up his claim of improved productivity.
One such study, published in the Journal of Managerial Issues in 2001, offered this conclusion: Paid sick leave "has a significant positive effect on profits, while the actual exercising of the sick leave option does not affect profits."
The EOI also noted the job market in San Francisco, which instituted the requirement in 2007, has largely outperformed the rest of California during the recession.
It was that research that gave Licata confidence in pursuing the mandate, he says, despite opposition from Seattle business groups, which he acknowledges, "deep down…didn't want it at all."
"One thing I remind people is we had the largest surge of pro-labor policies during the Great Depression," he says. "In other words, everyone knows times are bad for employers. But it's also difficult for employees."