A few weeks ago in Minneapolis, the city’s 19-member Workplace Partnership Group — business owners, workers, and representatives of labor and business organizations — made concrete recommendations for a paid-sick-leave mandate in Minneapolis. The proposal follows similar policies passed in recent years in San Francisco, the District of Columbia, New York City, Newark, Jersey City and Philadelphia, and statewide in Connecticut, California, Oregon and Vermont. St. Paul also has convened a work group to consider a such a mandate.
What is the recommended policy about? Paid sick leave is an insurance against wage losses when an employee falls sick or a sick family member requires care. We all fall sick once in a while, and our kids do, too. The U.S. is the only industrialized country in the world that does not guarantee universal access to paid sick leave.
Currently, Minneapolis employers choose whether to offer paid sick leave to employees. The Minneapolis Department of Health estimates that 41 percent of employed residents lack access to such leave. This is similar to the rate nationally, and it means that about 125,000 working Minneapolitans lack paid sick leave. Among low-wage workers and in service occupations, more than 80 percent lack sick-pay coverage.
Without paid sick leave, many employees go to work sick, because if they didn’t they would lose income and could (although this is illegal) lose their jobs. Coming to work sick is called “presenteeism,” and it is an important mechanism through which sickness spreads. A co-worker may sneeze around you. The sandwich you order for lunch will appear the same whether the cook who made it is healthy or sick.
Do mandates for paid sick leave help? The most careful studies find that infection rates decrease by about 5 percent in cities that pass mandates, suggesting that they keep sick employees at home in bed — where they belong. Based on national rates, we estimate that, every week, about 40,000 employees in the Twin Cities area go to work sick.
Will a government mandate dampen wage growth, increase labor costs and reduce job creation? It could. The Minneapolis-recommended proposal would allow employees to earn one hour of paid sick leave per 30 hours worked. This means a government-mandated fringe benefit of about 1/30 of the standard wage, or 3.3 percent. So, in theory, employees who would gain access to paid sick leave through the mandate may experience weaker wage growth of up to that level. This assumes that employees use all of their sick leave and do not compensate for any of the lost labor when they return from their sick leave. If work productivity does increase as a result of a healthier workforce or if employers pay for this benefit using their profits, then we may not see weaker wage growth as a result.
In fact, research that has investigated whether sick-leave mandates hurt wage growth or employment in areas that have enacted them has not found empirical evidence that they do. None. Employment and wage growth in areas with sick-pay mandates appear as dynamic as in comparable control areas.
In our opinion, the main risks of a sick-pay mandate are additional bureaucratic burdens and potential entrepreneurs’ perception of it as discouragement of their business activities. For this reason, the efforts of the Workplace Partnership Group are especially important. Small-business owners, large-business managers, workers and labor leaders came together to build toward shared understanding, compromise and policy recommendations. The group members put in hundreds of hours of study and deliberation to make the recommended policy work as well as possible for all stakeholders. They reached a high level of consensus, though not complete. Their recommendations merit very serious consideration.
Nicolas R. Ziebarth is an assistant professor in the Department of Policy Analysis and Management at Cornell University’s College of Human Ecology. Aaron Sojourner is an assistant professor in the Department of Work and Organizations at the University of Minnesota’s Carlson School of Management.