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Reports cast doubt on effectiveness of Seattle’s sick leave law

Max Nelsen is the labor policy analyst at the Freedom Foundation in Olympia.

This September will bring the first anniversary of the enactment of Seattle’s mandatory paid sick leave policy.

In 2011, the Seattle City Council voted to require employers with more than five employees to provide paid sick leave, making Seattle the third city in the nation to do so. At the time, advocates of Seattle’s ordinance contended that the law would be good for everyone involved — from workers who would no longer have to go to work sick, to businesses benefiting from decreased employee turnover.

Just last week, the Employment Policies Institute (EPI) released a survey of service industry businesses in Seattle regarding their responses to the new sick leave requirements.

Among the survey’s findings:

  • 83 percent of businesses said sickness in the workplace was “not serious at all” before the law took effect. Only one in 10 viewed it as a serious problem.
  • More than 50 percent of employers believe the law will increase their costs, and more than one quarter think it will do so significantly.
  • Two-thirds of businesses did not expect reductions in employee turnover, and one-third expect unscheduled absences to increase.
  • Attempting to offset the costs of the law, 15.7 percent of employers raised prices, 18.3 percent reduced hours and staff, and 17.3 percent curbed or increased the price of other employee benefits.

While the EPI acknowledges that its survey is not the final word on the policy’s effect on businesses, the results cast serious doubt on proponents’ claims that mandatory paid sick leave would be good for workers and businesses alike.

A second report released in June also reached some startling conclusions about the new policy. Conducted by the University of Washington on behalf of Seattle’s City Auditor, this report likewise surveyed local businesses.

First, the auditor found that employees do not generally come to work sick, “regardless of whether paid leave is offered” by their employer. The report noted that, “When employees are absent due to illness, a co-worker typically makes up the work. This suggests that sick workers already stay home, but under the Ordinance they will now be paid for this time.”

If relatively few employees work sick, it would help explain why so few businesses surveyed by EPI reported workplace sickness as a serious problem.

Second, the auditor reported that employers offering paid sick leave were noticeably more likely to report employees coming to work sick than employers who weren’t offering paid sick leave. The auditor admitted this finding “seemingly contradicts the intent of the ordinance.”

While the report does not speculate the reason for the counterintuitive result, one possible explanation could be that employees with paid sick leave are tempted to abuse their privilege, using their paid time for purposes other than health. After using their paid sick time fraudulently, genuinely sick employees are left with no choice but to go to work anyway.

This explanation is within the realm of possibility. A 2011 study by Kronos, a global workplace management firm, found that more than half of U.S. employees have called in to work sick when they are not actually ill. Such absenteeism is not an insignificant problem. A separate Kronos study further determined that unscheduled employee absences make up to 8.7 percent of employers’ payroll costs.

Paid sick leave laws are generally well-intentioned. Proponents frequently use dramatic examples of sick workers to make their point. Still, individual stories and emotional appeals are not a sound basis for policies that affect everyone.

Both the EPI’s study and the Seattle Auditor’s report seriously weaken the case for implementing mandatory paid sick leave and indicate that the unintended consequences of this one-size-fits-all approach may well outweigh the benefits.

Instead of imposing paid leave requirements from the top down, local officials should leave businesses and employees free to work out arrangements for cases of illness which make the most sense for them.

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