Businesses and workers win with earned paid sick leave

by Douglas Hall PhD – RIFuture

Rhode Island’s business lobbyists have been pulling out all the stops in opposition to the overwhelmingly popular earned paid sick days bills in the House (H5413) and Senate (S290). In the version passed out of the Senate Labor Committee this week, the Healthy and Safe Families and Workplaces Act allows Rhode Island employees to accumulate earned paid sick days, totaling up to 32 hours in 2018, and up to 40 hours thereafter.

It’s surprising that this commonsense measure, which allows Rhode Island workers to take time from work to care for themselves or family members during periods of illness, continues to attract such fierce opposition, since the experience in other jurisdictions that have adopted paid sick leave has been that businesses face little or no additional costs, and overwhelmingly support the provisions once fully implemented.

Opponents have been taking out of context the findings of a report prepared by the Center for Economic and Policy Research (CEPR) and The Murphy Institute at CUNY to gauge the impact on businesses of Connecticut’s paid sick days bill. The CEPR report, Good for Business? Connecticut’s Paid Sick Leave Law actually concludes that the impact on Connecticut businesses was minimal and that a sizable majority of Connecticut businesses surveyed support the earned sick leave law:

“In short, this path-breaking legislation has brought paid sick leave to tens of thousands of Connecticut workers, with modest effects or none at all on the state’s businesses….Most employers reported a modest impact or no impact of the law on their costs or business operations, and they typically found that the administrative burden was minimal. Finally, a year and a half after its implementation, more than three-quarters of surveyed employers expressed support for the earned paid sick leave law.” (Appelbaum and Milkman, 2014)

Notably, the Connecticut research showed that 59 percent of firms surveyed reported either no change in costs (47 percent) or changes too small to be worth tracking (12 percent), while among those reporting increased costs, the majority (30 percent of all respondents) reported cost increases of 2 percent or less. For all seeing increased costs, those costs were one-time costs associated with initial implementation of the law.

In a second study completed in September 2016, CEPR examined the impact of the paid sick leave legislation passed in New York City. The report, No Big Deal: The Impact of New York City’s Paid Sick Days Law on Employers, shows that the standard arguments against the paid sick days law were unfounded, finding that the vast majority of employers (just under 85 percent) reported that the new law had no effect on their overall business costs, with a few (a little less than two percent) reporting a decline in overall costs. In terms of the impact on employment, the New York study shows that 91 percent of businesses reported no reduction in hiring as a result of the new law, 97 percent did not reduce hours, and 94 percent did not raise prices.

These conclusions are consistent with the experience in other jurisdictions that have adopted earned sick leave. San Francisco was the first jurisdiction in the nation to adopt earned sick leave legislation. The Senior Vice President of the San Francisco Chamber of Commerce, Jim Lazarus, noted that the impact of their law on employers was “[m]inimal…by and large, this has not been an employer issue. San Francisco’s economy is booming”. San Francisco experienced greater employment growth than neighboring counties, including in sectors most affected by the law, such as food service and accommodation. As a result, more than two-thirds of San Francisco employers have expressed support for their earned sick leave legislation.

One oft-repeated refrain of the business community is that they like to compete “on a level playing field”. By passing this legislation, which requires employers to provide earned paid sick leave, we level the playing field for those firms that have been doing the right thing and offering earned sick leave to their employees.

The Institute for Women’s Policy Research conducted a cost-benefit analysis of the proposed Rhode Island legislation, and concluded that the net benefit to Rhode Island (both businesses and the community) associated with passage of the legislation would be positive, approximately $9 million a year. Employers’ net savings of $3 million a year result from lower turnover rate, and reduced flu contagion in the workplace.

As noted in the Providence Journal’s Friday editorial, in an effort to alleviate the concerns of some, compromises have been made in the latest version of the bill. One such change has been to exempt firms with 10 employees or fewer from the requirement to provide paid sick leave. Some have been pushing to even further erode the provisions of the bill. Our analysis of Rhode Island Department of Labor and Training data shows that if we were to increase the exemption from firms 10 and under to firms 15 and under, the bill would apply to up to 19,000 fewer Rhode Island workers.

Requiring the provision of earned paid sick days has worked well in several other jurisdictions. It’s a classic win-win-win. Good for workers, businesses, and the Rhode Island economy.