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Guest Column: Paid Sick Leave is a Cure Worse Than the Disease

Guest Column: Paid Sick Leave is a Cure Worse Than the Disease

December 22, 2014

// Originally posted on Michigan Live - Full article available here //

It’s flu season, and Michigan’s labor activists are hoping to capitalize on the runny noses and sore throats of the state’s residents to press lawmakers to require private employers to provide certain amounts of paid sick leave. 

Before pursuing such a drastic policy change, Michigan should take a careful look at the experience of other jurisdictions that have enacted similar regulations. The evidence shows that paid sick leave mandates come with notable side effects and comparatively few benefits.

Labor activists recently announced their intention to press lawmakers in Lansing to require private employers in the state to provide certain amounts of paid sick leave.

A recent report from the Washington state-based Freedom Foundation examines the 10 most significant studies about the effect of mandatory paid sick leave laws in other locales including San Francisco, Washington, D.C., Connecticut and Seattle. (Two of these studies were conducted by the Employment Policies Institute.) 

If, as activists argue, people have a right to get paid to stay home while sick and public health is threatened when people come to work ill, then an effective policy is one which will keep sick people at home. But held to this standard, paid sick leave mandates appear to be ineffective at best. 

In a survey of San Francisco employers about the city’s mandatory paid sick leave ordinance, just 3.3 percent of employers reported that the law reduced workplace illness. A similar percentage (3.4 percent) reported that the law worsened illness. The vast majority reported no change. 

Other jurisdictions have reported similar results. Of the five studies examining whether requiring employers to offer paid sick leave reduces workplace sickness, four found no detectable decrease. The fifth was plagued by methodological shortcomings. 

If paid sick leave mandates are ineffective at decreasing workplace illness, they are downright harmful for affected businesses. 

For instance, contrary to the predictions of activists desperate to sell businesses on the alleged benefits of added regulation, paid sick leave mandates fail to reduce employee turnover. 

In a study of Seattle's paid sick leave ordinance, only two employers reported decreased turnover, four experienced increased turnover and 243 saw no change. 

As one San Francisco business owner had previously pointed out, if everyone is forced to provide paid leave, there's no reason for employees to prefer one business over another.

Advocates of government sick leave mandates often trumpet the results of employer surveys finding that, in jurisdictions that have passed such laws, most employers support the law after its implementation. 

Activists fail to mention, however, that 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 their paid sick leave policies in response to the new law. 

The fact that unaffected businesses approved of regulations being imposed on their typically smaller competitors does not make a paid sick leave law a success.

Unsurprisingly, these newly affected employers with less flexibility were the most likely to report having to deal with the increased costs of providing paid sick leave benefits by raising prices on customers 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 paid sick leave mandate. Even after taking mitigating action, some employers report decreased profitability.

Supporters of paid sick leave laws may mean well, but the evidence indicates that these ineffective measures do little more than soothe the consciences of labor activists. In the case of mandatory paid sick leave, the cure may be worse than the disease.

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