Rebuilding Our Middle Class, One Smart Step at a Time
Paid Sick Days Would Help Both Employees and Employers
Americans are increasingly anxious about the economy these days, with good reason. Despite robust economic growth, job growth and wage gains have slowed, benefits have disappeared over the past few years, and families have had to borrow more and more money to make ends meet.
Clearly something is amiss if a growing economy and booming stock market do not translate into benefits for America’s middle class. Equally clear is the need for new policy ideas to relieve the pressure on our middle class. That’s why the Center for American Progress’s sister organization, the Center for American Progress Action Fund (CAPAF), included in its list of proposals several new ideas that Congress should tackle before the August 2007 recess aimed at supporting economically struggling families.
Specific CAPAF recommendations include expanding the Earned Income Tax Credit and bolstering the right to join unions. These proposals supplement ideas already put forward by the new Democratic majority in Congress, which would, for example, raise the federal minimum wage from its current level of $5.15 per hour to $7.25 per hour in 2009.
Another idea that deserves serious consideration is the Healthy Families Act, new legislation sponsored by Sen. Kennedy (D-MA) that would require all employers with 15 or more employees to offer seven paid sick days to their full-time workers. These benefits would be prorated for part-time employees working between 20 hours and 30 hours per week and would accrue at least quarterly. Paid sick days offer multiple benefits to employees and, yes, even employers.
Paid sick days would be one way to allow workers to share more equitably in recent economic gains. During the past few years, wage growth has fallen behind economic growth and, in 2006, the share of the total economy represented by wages and salaries slipped to its lowest level since 1947. Such downward pressures on employee compensation should have made it easier for employers to offer benefits directly linked to wages, such as time off or pensions, but instead rates of workers enjoying access to these benefits also declined.
The percentage of workers with a pension fell to 45 percent in 2004 from 50 percent in 2000, according to the latest analysis by the Congressional Research Service. Similarly, workers with paid sick days declined to 57 percent in 2006 from 59 percent in 2004, according to the Bureau of Labor Statistics. The paid sick days guaranteed by the proposed Healthy Families Act could be a key first step in reversing these trends and extending to workers the benefits of America’s recent economic growth.
Indeed, paid sick days would have the greatest impact on families under the most pressure. Those who often use paid sick days are parents caring for children and people with chronic illnesses. Moreover, part-time workers, many of whom are single mothers, would especially benefit from paid sick days. According to data from the Bureau of Labor Statistics, only 22 percent of part-time workers had paid sick days in 2006 compared with 68 percent of their full time counterparts.
There is potential upside for employers as well. According to an analysis from the Institute for Women’s Policy Research, or IWPR, employers would raise retention rates and decrease worker turnover by offering paid sick days to employees. Additionally, employers would recover productivity lost when employees are too ill to work effectively.
Overall, the IWPR estimates the savings to employers from the Healthy Families Act’s seven sick days could even outweigh its costs by nearly $7.8 billion (in 2003 dollars).
Providing a reasonable number of paid sick days could be a benefit that pays for itself.
Even if providing paid sick days does incur a small cost to employers, only a tiny fraction of workers use as many as seven sick days. Among workers who had access to seven sick days, 53.7 percent did not take any time off for illness or injury and another 37.7 percent used fewer than seven days for these purposes, according to IWPR. Since less than one-tenth of workers who have this benefit fully utilize it, the impact of enacting the Healthy Families Act would likely be smaller than the levels implied by its mandated seven sick days.
Providing paid sick days offers public health benefits as well. Because the flu is extremely contagious, the Center for Disease Control and Prevention recommends that workers with the virus stay home. Indeed, IWPR estimates that sick employees infect 1.8 out of 10 co-workers. Workers with paid sick days would no longer have to balance paying the rent against spreading disease to co-workers and others around them. On the employer side, businesses offering paid sick days could worry less about contagious illnesses affecting productivity.
Because paid sick days are a low-cost benefit that helps those most in need of it, proposals to help middle class families, particularly those to level the playing field between employers who offer paid sick days and those who do not have gained traction at the state and local level. This past November, voters in San Francisco passed an initiative requiring employers to offer nine paid sick days for full time workers. Similar initiatives are planned in Maine, Massachusetts, and Montana.
Advancing similar paid sick days legislation on the national level is a sensible way to share America’s recent economic gains with those who need more help while at the same time saving employers money, boosting productivity, and protecting the public from some nasty headaches—literally.
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