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The Business Case for Paid Leave and Paid Sick Days

Sick family

SOURCE: Flickr/thelotuscarroll

Paid sick days are important for employees to take care of themselves and their families without risking their jobs and salaries.

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Most opponents of paid sick days and paid family leave legislation claim that businesses cannot afford to cover their employees. But cities and states with paid family leave and paid sick days are proof that these policies are working. Growing support from many businesses—both big and small—as well as private-sector leaders, indicates that these policies are not only good for individuals and businesses but also for our economy as a whole.

A 2014 study by Eileen Appelbaum and others on Connecticut’s paid sick days law—the first state-wide policy in the nation—found that after the law was implemented in 2012, approximately one-third of businesses reported improved worker morale, while 15 percent saw increased productivity and a reduction in the spread of illness. Moreover, only 1 in 10 businesses reported an increased payroll cost of 3 percent or more. One year and a half after the law took effect, nearly 40 percent of employers interviewed were “very supportive” of the law, and 37 percent were “somewhat supportive.” The report also found that:

There is no evidence that the paid sick days law has been a “job killer”; on the contrary, in the period since it took effect, employment levels rose in key sectors covered by the law, such as hospitality and health services, while employment fell in manufacturing, which is exempt from the law.

Furthermore, many of the Connecticut businesses that argued the bill would force them to close their doors or lay off employees have yet to see any negative fallout and have expanded or hired more employees instead.

Since its implementation in 2007, San Francisco’s paid sick leave policies have had positive results for businesses. Studies found that the city’s Paid Sick Leave Ordinance boosted small- and large-business growth, and a 2011 report from the Institute for Women’s Policy Research found that “six out of every seven San Francisco employers did not report negative profitability effects from the Paid Sick Leave Ordinance.”

The business sector has also recognized that paid sick leave policies are not bad for employers. Recently, Jim Lazarus, senior vice president for policy at the San Francisco Chamber of Commerce, said that San Francisco’s paid sick leave policy has had “minimal” effects on employers. “By and large, this has not been an employer issue,” he said, pointing out that today, “San Francisco’s economy is booming.”

In cities such as Washington, D.C., and Seattle, paid sick days policies have actually expanded employment opportunities and helped businesses. In Washington, D.C., a 2013 audit report on the Accrued Sick and Safe Leave Act of 2008 showed that paid sick leave policies did not negatively affect business. The audit showed that 87.5 percent of business owners would not move their business outside of the District of Columbia if they were required to provide paid sick days to their employees. The audit also concluded that paid sick leave polices did not prevent or discourage people from opening new businesses. In Seattle, a report on the Paid Sick and Safe Leave Law found that job opportunities—especially those in the retail and food services industries—increased after the law’s implementation in 2012.

In addition, studies of paid family leave policies in California and New Jersey have found business fears to be largely overblown. California’s Chamber of Commerce, which opposed the state’s paid family leave law, said that employers have not reported that the law is the burden they expected. The Society for Human Resource Management published a report in 2010 titled “California Paid Family Leave is Less Onerous Than Predicted.” In New Jersey, the majority of businesses have experienced no effect—and some have even reported positive effects—from employees taking family leave. Rhode Island is the most recent state to approve paid family leave, and New York State may soon follow in its footsteps.

As the positive effects of paid sick leave polices are revealed across the country, more businesses are stepping up and voicing support for such legislation. In Maryland, for example, Margot Dorfman, CEO of the U.S Women’s Chamber of Commerce, and Ed Hatcher, president of The Hatcher Group, recently testified before the Maryland House Economic Matters Committee in support of the Maryland Earned Sick and Safe Leave Act. Hatcher believes that businesses with paid sick days benefit the most because their employees stay healthier; sick employees who come to work rather than staying home may infect their coworkers and reduce productivity, damaging businesses’ bottom lines. Paid sick days also improve the employee-employer relationship. Hatcher mentions that, “Happy, healthy employees are also more likely to be loyal employees.”

According to Dorfman, paid leave policies empower women, allowing them to get ahead in the workplace and still take care of their families and themselves. Another positive result of paid leave policies includes reducing the gender wage gap, which has stalled in recent years, although on average, women continue to earn 77 cents for every dollar earned by men. As major law firms, banks, and other financial services groups try to recruit women who may have left work to start families—a talent pool that is often untapped and underutilized—it is also important to remember that workers with paid leave are more likely to return to work for pre-leave employers, saving these businesses money and time.

Small business owners from Vermont have also joined the chorus of support for these policies. They requested that the Vermont House approve H. 208, which allows employees to accrue paid sick time based on hours worked. Some of the most vocal supporters were Vermont business owners who argued that paid sick days are good for their businesses. According to these employers, paid sick days boost employees’ productivity, reduce employee turnover, and decrease last-minute absences.

Vermont’s legislation has also received support from Ben Cohen and Jerry Greenfield, the founders of Ben & Jerry’s. The ice cream company’s founders recently sponsored a gathering in the Vermont Statehouse to support the legislation. Cohen believes not having access to paid sick days is “criminal” and thinks that “the Vermont Legislature has the power to overturn that injustice” by passing legislation.

Other prominent business leaders from across the country have shown their support for paid sick days as well. Tom Nides, vice chairman of Morgan Stanley and former U.S. deputy secretary of state, strongly supports paid sick days and the Family and Medical Insurance Leave Act, or FAMILY Act, the most recently proposed legislation for federal paid family and medical leave. He is not only a businessman and politician but also a father, and he recognizes that paid sick days are important for employees to take care of themselves and their families without risking their jobs and salaries. He is just one supporter on a growing list of business leaders and companies. Nides also highlighted that:

With benefits to both businesses and families, it is clear that even in an ongoing economic recovery, providing paid family and medical leave insurance is the right thing to do. In order for U.S. companies to remain competitive, we must embrace smart policies like this one, which is a winner for the economy, business, and workers.

Growing business support for paid leave and paid sick days demonstrates that these policies are a win-win for both employees and employers and a boon to our economy as a whole.

Claudia Calderon Machicado is an intern on the Economic Policy team at the Center for American Progress. 

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