Fixing the Wrong Disease
New York Post
November 20, 2009
by Diana Furchtgott-Roth
As the City Council debates a bill to force employers to offer paid sick leave, Democrats in Congress aim to pass a similar federal law.
Sen. Chris Dodd and Rep. Rosa DeLauro (both D-Conn.) on Tuesday released the Pandemic Protection for Workers, Families, and Businesses Act, which would require all employers with more than 15 workers to give full-time workers seven days of paid sick leave (and part-time employees a pro-rated benefit).
"This isn't just a workers' rights issue -- it's a public-health emergency," Dodd claimed. "Families shouldn't have to choose between staying healthy and making ends meet."
The New York City bill would force firms with 10 or more employees to offer nine days of paid sick leave a year. Smaller businesses would only have to grant five days.
But with city unemployment rate at almost 9 percent and rising, the added cost of paid sick leave would discourage hiring, lower some workers' wages and cost others with low skills to lose their jobs.
Both bills require paid "sick" time not just when an employee is sick, but also to stay home with sick children (or even take them to the doctor for routine visit), or even to babysit if schools are closed due to the sickness of other kids. The Dodd bill restricts use of sick time to contagious diseases -- but it's a fair bet that, once Congress hears from breast-cancer patients, HIV/AIDS sufferers and car-accident victims, it would extend the law to cover all sickness.
The Dodd bill is just the latest version of legislation introduced by other Democrats over the years. These bills have never passed Congress for a simple reason: They don't make sense.
More than three-fourths of workers already have sick leave; those who don't often hold entry-level jobs that they might lose if the law mandates leave.
There's also the problem of abuse. The Dodd bill states, "Paid sick time shall be provided upon the oral or written request of a covered employee" without medical certification needed, and would let employers take potential abuse of sick leave into account when considering promotions or raises. Sick workers mean others have to pick up the slack.
Economists such as Harvard's Alberto Alesina and MIT's Olivier Blanchard, now International Monetary Fund chief economist, have reached the same conclusion: European labor market regulations, including those that award sick pay, have resulted in higher unemployment because employers substituted labor-saving machines as the cost of low-skill workers went up.
With the US unemployment rate at a 26-year high, this is no time to price American workers out of jobs.
The Labor Department estimates that 77 percent of full-time private-sector workers and 89 percent of state and local government employees have some paid sick leave; still others have access to nonspecific, personal time off -- days they can use for vacation, illness or other purposes. And many employers without formal policies grant leave on a case-by-case basis, to prevent contagion.
Yes, it can be tough for workers without paid leave to stay home when they are ill and for single parents, often mothers in low-wage jobs, to look after sick kids. But it'd be even harder for them to lose their jobs altogether. (In October, 36 percent of the unemployed had been out of work for over six months.)
The International Franchise Association estimates that Dodd's bill would cost an average franchise business -- typically a fast-food restaurant or motel -- $800 to $1,000 a year for each employee, plus added costs for "temporary staff, additional record-keeping, burdening co-workers with increased workloads or the loss of business due to decreased productivity caused by absent staff."
Local restaurants, clothing stores and computer-repair shops are just the sort of businesses that might not give sick leave today, and would offer fewer jobs tomorrow if sick leave were mandated. Teen unemployment stands at 27 percent; if Congress passes a sick-leave bill, teenagers and others looking for entry-level jobs will have even more difficulty finding a job.
The real crisis gripping most New Yorkers isn't swine flu, it's the economy -- and the fear that jobs will vanish. Lawmakers should drop the idea of mandating sick leave, and instead focus on how to put their constituents back to work.
Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, was a Senior Fellow at Hudson Institute from 2005 to 2011.
Tags - Click a tag for related materialDodd Bill
, Paid Sick Leave
, Public Health
, Workers Rights