Saturday, May 16, 2009

Legislation to feel good about

House Democrats have introduced legislation to require businesses who have 15 or more employees to provide a minimum amount of paid sick leave each year.

The bill, the Healthy Families Act, would be binding on employers that had 15 or more workers. It would guarantee employees one paid hour off for each 30 hours worked, enabling them to earn up to seven paid sick days a year. They would be entitled to claim their days when they or a child, a parent, a spouse or someone else close to them became ill.
As we see each flu season, too many sick people come to work infecting others. People should have the opportunity (and be encouraged) to stay home when they are sick. The availability of paid sick leave would also help to even the employment playing field between women and men and possibly provide incentives for men to shoulder a more equal share of home responsibilities.

According to the Bureau of Labor Statistics, 41 percent of civilian employees currently have paid personal days as an employee benefit. Nearly three-fifths of businesses with 500 or more employees offer the benefit. (Information has been updated). The lack of a universal mandate puts sensible businesses at a disadvantage.

Setting the benefit in terms of hours worked instead of a flat yearly rate also means that the costs of the benefit to businesses will be marginal rather than lump sum. This should help to minimize the employment impacts. It is also a reasonable way to extend the benefit to part-time workers.

To be sure, some small businesses would be put at a disadvantage. Besides the cost of paid leave days, businesses also face possible replacement costs for workers who are absent. Small businesses typically have the least flexibility to cover temporary replacements.

Workers will also bear some, if not most, of the costs. To the extent that the costs to businesses of employing people increase, businesses are likely to offer lower wages or fewer other compensated days off than they otherwise would have. That is, the incidence of the cost of the benefit will be split between businesses and workers. If job markets are competitive, economists expect that nearly all of the cost would be passed on to workers.

As expected, the Party of No vows to block this bill.
Michael Steel, a spokesman for the House Republican leader, Representative John A. Boehner of Ohio, said, "Republicans want to ensure that working families have the flexibility to get the health care they need, but we don’t think the answer is a 'one size fits all' government mandate."
The Republicans offer a newspeak definition of flexibility, as working families without paid leave would lack the time and money to attend to their health needs.

The BLS figures indicate that most high wage workers already enjoy this benefit. However, less than a quarter of workers in the bottom quartile of the wage distribution have paid personal days. (Again, see updated figures). So, the workers with the least flexibility in terms of money also appear to have the least flexibility in terms of paid time off.

8 comments:

Pino said...

As expected, the Party of No vows to block this bill.Did you read this part?

economists expect that nearly all of the cost would be passed on to workers.This is exactly the same thing that happens when minimum wage goes up; the least able to do without a job are, well, without a job.

The best way to ensure paid sick leave is to identify a skill and then become proficient enough at it to warrant paid sick leave.

TANSTAAFL

Dave Ribar said...

Pino:

Hmm, so fast food workers, retail clerks, and other employees who work with the public should come to work sick.

Also, the 40 percent or so of highly skilled workers who do not get personal days should, um, learn an additional skill?

Pino said...

so fast food workers, retail clerks, and other employees who work with the public should come to work sick.That, or stay home.

Do you agree that as employers are required to pay more for labor they will purchase less of it?

highly skilled workers who do not get personal days shouldWhat highly skilled worker does not get sick days?

Dave Ribar said...

Pino:

The fast food or retail worker is going to ignore the externality of infecting the public.

The BLS reports that only about 60 percent of high wage workers get personal paid days.

Pino said...

The fast food or retail worker is going to ignore the externality of infecting the public.They can stay home. Further, you are making a point that the bill isn't making. This isn't public good legislation.

The BLS reports that only about 60 percent of high wage workers get personal paid days.That would be interesting if we were discussing personal days. But we're not.

Again, do you agree that as the cost of labor goes up, employers will purchase less of it?

Dave Ribar said...

Pino:

Section 2 (findings) of H.R. 2460 parts 5 & 6 state:

(5) When parents cannot afford to miss work and must send children with contagious illnesses to child care centers or schools, infection can spread rapidly through child care centers and schools.

(6) Providing paid sick time improves public health by reducing infectious disease. Policies that make it easier for sick adults and children to be isolated at home reduce the spread of infectious disease.
So the bill is making exactly that point, among others.

Personal leave was the only non-vacation leave listing in the BLS news release. I'll check on whether special tables break out the sick leave numbers.

Pino said...

As the cost of labor rises, will employers buy less of it?

Dave Ribar said...

Pino:

If labor markets are completely competitive, the incidence of the benefit would be borne entirely by workers. So, there would be no cost to employers.

If markets are restricted (e.g., low-skill, minimum wage markets), the effects would be similar to a minimum wage. The available evidence for these markets indicates that the employment effects would be extremely modest.

If markets are not completely competitive and firms have some market (monopsony) power, the benefit can actually increase employment or at least increase workers' bargaining power.

With respect to the employment impacts, the legislation calls for the BLS to collect data on utilization and for the GAO to study impacts.

On another note, I've gone back to the BLS web site and found actual sick leave data. Thanks for pointing out the problem with the personal leave data.