Is paid sick leave good for business?

Connecticut passed in 2011 a paid sick leave law. It was the first state in the country to do so; although paid sick leave is common in other countries, our state took the first step in the US. The law applies to 400,000 workers in business with 50 or more employers, allowing them to earn five paid sick leave days a year.

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The law was greeted with a great deal of skepticism from a business community (to put it mildly) that feared an increase in labor costs. Two years after it took effect too economists, Eileen Appelbaun (CEPR) and Ruth Milkman (CUNY), surveyed 251 Connecticut employers and interviewed 15 business managers. Their preliminary findings are striking:

The authors found that the law had minimal effects on businesses.  A large majority of employers reported that the law did not affect business operations and that they had no or only small increases in costs. Businesses most frequently covered absent workers by assigning the work to other employees, a solution which has little effect on costs. Just 10 percent of employers reported that the law caused their costs to increase by 3 percent or more. Since the implementation of the paid sick days law, Connecticut employers saw decreases in the spread of illnesses and increases in morale, among many more effects [PPT].

About 89 percent of employers already offered paid sick days to some or all of their employees prior to the law. An important effect of the law is that paid sick days coverage was extended to part-time employees who previously lacked such paid time off. The sectors with the largest changes in coverage to employees were hospitality, retail, and health, education, and social services.

Eighteen months after the law took effect, over three-fourths of employers reported that they were very supportive or somewhat supportive of the paid sick days law.  Find out more in the authors’ presentation [PPT].

As Bryce Covert points out, business in other cities with paid sick leave legislation have experienced similar results: no effect in business relocation, largely positive results.  Currently four states are considering similar legislation (Massachusetts, Oregon, New Jersey and Oregon), and they should be encouraged by the Connecticut results. Currently 40% of private sector workers do not have access to paid sick leave; the US stands alone among developed nations in this regard.

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