Hey, American businesses: Stop being so shamefully miserly with paid sick and family leave
We've run this experiment at the state level, and the benefits to businesses render the costs moot
The moral argument for these policies is almost too obvious to state. But the economic case is straightforward, too: If a person is faced with caring for a newborn or a sick elder or other family member, and paid leave isn't available, they have to weigh the importance of giving their family member their full attention against leaving their job, the loss of income and all the financial distress that entails, and the difficulties and uncertainties in eventually finding new employment. Meanwhile, employers must go through the time and expense of finding a new hire and training them for the role. Conversely, people who decide to stay at their jobs will likely be less productive, because they're trying to juggle their work with their suddenly more demanding obligations at home.
The economic argument for paid sick leave is similar: If employees are able to take time to recover from an illness, they'll be more productive when they are in the office and thus make the business more money. They'll also be far less likely to infect other employees. Whatever costs employers avoid by not having paid sick days, and whatever productivity is gained by employees coming into work when they're ill, is lost to the workers' inability to perform and to the risk of passing on the bug to other employees.
Nonetheless, many Republican lawmakers and business interests, along with other conservative critics, disagree, arguing that robust leave policies would hamper firms' flexibility, reduce wages, and kill jobs. "Americans have great freedom when it comes to work," said Sen. Lamar Alexander (R-Tenn.), the chariman of the Senate's Health, Education, Labor and Pensions Committee. "They can choose the career they like and negotiate with their employer for the things they need... One more government mandate, however well-intentioned, will only reduce those freedoms."
But the flippant notion that employees can fend for themselves papers over some remarkable class disparities. Plenty of businesses provide paid sick leave on their own, but while at least 80 percent of earners in the top fourth of the income ladder get it, only a third of earners in the bottom fourth do. And only 12 percent of U.S. workers at any income level get paid parental leave. It also begs the question of why federal legislation cannot itself be an arena for negotiations between employers and employees; indeed, the U.S. is pretty much the only advanced country that doesn't nationally mandate paid sick and parental leave, and its law requiring 12 weeks of unpaid leave only covers about two-thirds of workers.
Like a lot of policy disputes in Washington, you can find clarity on these issues by digging into actual real-world examples of how these policies play out. California has had a paid family leave law in place for about a decade, and Connecticut has had paid sick days for several years. And by all accounts, both policies are working out just fine for everyone involved.
Let's look at California. In 2004, the state amended its disability program to provide up to six weeks of paid leave to care for a newborn, an adopted child, or a sick family member, with the pay during leave replacing 55 percent of the previous wage. The program is bankrolled by a payroll tax that falls solely on employees. (The bill in Congress that would provide a similar system at the national level is a bit different — it would be paid for by fees leveled jointly on employers and employees, and would replace wages up to 66 percent of their normal level.)
Critics in California initially seized on the same gripes we're hearing nationally now. But a survey of the state in 2009 and 2010 — several years after the paid leave policy had been implemented — found that 93 percent of employers reported either no noticeable effect or a positive effect on employee turnover, 88.5 percent reported the same for productivity, and 91 percent reported the same on profitability and performance. The benefits of the program for workers — in terms of income replacement, satisfaction with the leave, and other factors — were particularly striking for Californians in lower-quality jobs.
In Connecticut, meanwhile, a law enacted in 2012 mandates that businesses with 50 or more workers allow their employees to earn up to five days of paid sick leave per year. (The national proposal for paid sick days would work the same way, allowing employees at any firm with 15 or more workers to earn seven paid sick days a year, paid for by the employer.) A 2013 survey found that 47 percent of employers reported no increase in business costs, while another 30 percent reported modest increases of 2 percent or less. A third of businesses reported boosts to company morale. And a year after the program's implementation, well over two-thirds of Connecticut employers said they were "somewhat" or "very" supportive of the program.
So why is it that conservatives and business interests howl about paid and family leave policies before they're enacted, and then mostly accept them — and even grow to like them — once they're put in place?
"People don't really consider what the additional economic benefits are going to be," said Alexandra Mitukiewicz, a research associate at the Washington Center for Equitable Growth. "The fact that it's going to reduce turnover, increase worker productivity, allow workers to maintain more labor force attachment, and increase labor force participation. I think those kinds of hidden benefits and long-term benefits are not really brought into the argument. Even though a handful of research studies have found these benefits."
The complexity of the economy — and all the ways policy interventions can have unforeseen consequences — is usually held up as a reason to avoid interventions like this. But that complexity is also why the "just so" stories about how efforts to make our economy more humane will just kill jobs are so often wrong. Robust sick and family leave is not only the right thing to do for Americans — it has clear economic benefits to employees and employers alike.